Brand value: what is the ROI of investments in Branding?

May 27, 2020

Making the case for Brand Assets and Brand Management Tools

Making the case for investments in branding can be difficult. But we know it investing in it is how you grow your brand value. How do you calculate the ROI and make the bottom-line business case for a new logo, Style Guide or Brand Book?

In this article, we discuss making the case for investments in branding in general, using the example of a Brand Book specifically to show you how to lead with arguments about the core value of branding. If you then have to resort to throwing numbers to pacify opponents to your plans, we also offer you some resources for that. 

Creating consensus for change

People often don't realize how much of an opinion they have about their organization's brand. Until you start changing it.  

“Why did we have to go and invest [X amount of money] in this new logo? I don't even like it. I think the old one worked fine as it was. And then just wait ‘til we're told we have to cut costs again... 

Changing anything about the brand can result in all kinds of reactions, and will only have a meaningful beneficial impact if you get all the relevant stakeholders on board. That means not only the marketing team and some of your sales colleagues. Relevant stakeholders include – but are not limited to – the board of directors, management, employees, business partners, vendors, and last but not least your customers.  

If the majority of all these groups of people understand why it's important to introduce a new element or document to the core of your brand, or to change it altogether, you'll have a much better chance of seeing your project succeed and bring value in the long run. Talk about your ROI. 

Now, how do you get all these people on board with a change and a new investment in anything brand? 

Making the case for investments in branding - brand stakeholders & brand value

Your brand occupies the space between the intangible ‘gut-feel’ that people actually have when they think about your organization, and the way you want them to feel when they do. Your brand identity is most often described as a collection of all of the ways your brand is made tangible – for instance with the visual assets you use. 

Brands are intangible assets, but at the same time we know for sure that they carry financial value. You can see this in the valuation of companies on the financial markets and in the models financial analysts use to gauge, monitor and predict a company's value.  

But what we need to understand is that the financial value is the external end point: the value of the brand starts from within your organization. 

Your brand is based upon the core idea, the Purpose – the mission or story that drives your organization and the people in it forward. It is the story that binds them to each other and the story that binds your partners and customers to you as well. 

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As such, a brand is not only an asset for marketing; it's an asset for management, for HR, and recruitment, first, and an asset for marketing and sales, second. That's because making people in the market feel your brand starts with people in your organization feeling the brand, first. This is all the more true in the open-wide, incredibly transparent internet-era we live in, today. 

The case for your Brand Book 

Now, let's look at the creation of a Brand Book as an example of a specific brand asset you would like to invest in. A Brand Book is a great example for two reasons. One reason is that creating a good Brand Book is a very good way to pin down your brand identity and it therefore adds a lot of value – the other reason is that creating a good Brand Book can be a fairly substantial investment. 

A Brand Book is related to, but different from a Brand Style Guide. A Brand Style Guide helps the people inside and outside of your organization who use your visual brand assets, to use them consistently and correctly. 

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A Brand Book is a tool for brand management that sits closer to the core of your brand identity. It inspires and helps keep people in your organization aligned with the Purpose or core idea of your organization, and helps them think, communicate and act from that Purpose as a starting point.  

There are many ways to go about creating a Brand Book

. However, as we believe it to be a fundamental tool to reinforce an existing or new brand identity throughout your organization and any stakeholders that you feel it may be of value to, we advise that you take the project very seriously. 

That means making space, time, and resources available. Think about finding an (internal or external) brand identity specialist and the hours this person needs, but also photography, visual design and styling. You also need to think about the interviews with internal and external stakeholders that will help you answer the questions you need to answer in order to tell your brand story in a compelling, complete and correct way. 

Making the case for your Brand Book is therefore something you need to take seriously as well: you have to make sure that all relevant stakeholders are on board with the investment it will take to create one. How do you do that? It depends on the situation you're starting from. Very broadly speaking, it usually makes most sense to create a Brand Book (or any other new asset) in one of the following situations: 

  1. You’re working on a re-brand 
    If you happen to be in this situation when thinking about creating a Brand Book, it's simply one of the tools that you will list in your plan as to how to solidify, implement, and manage the newly formed brand identity.
     
     
  2. You want to solidify your existing brand 
    Various internal and/or external circumstances can trigger a desire or perceived need to solidify an existing brand. Perhaps your organization is having trouble in maintaining a consistent brand identity in outward communications.  
     
    Perhaps you feel employee engagement is dwindling and you need to reinvigorate a sense of pride and purpose for your employees. Perhaps customer satisfaction research has shown alarming facts and you feel that reinvigorating a sense of Purpose and aligning everyone's connection to the brand and its purpose can be of help. 

In this situation you'll have to make the case that the asset you want to create can help in these areas.  

What you will want to do is of course make the case for the Brand Book as if it were any other investment in the invaluable intangible asset that is a brand – to that end we refer you to the arguments listed in the section under “Making the case for investments in Branding” above, and the section under “Making the financial case” below 

However, the main argument for creating a Brand Book specifically, aside from its aiding in managing and strengthening your brand from the inside out is: 

There is no better way to solidify the core idea and the story of our brand or organization than to sit down with the relevant stakeholders, come to a unifying story, and to then write it down.  

There's also no better way to guarantee that a newly formed or consolidated brand identity will be properly managed carrying forward into the future, than to have the right stakeholders involved in the process of pinning it down.  

Lastly, this point applies to more than just a Brand Book.  

Creating or changing any significant brand asset – a new logo, design style, Style Guide - or the entire brand identity, requires getting stakeholders involved and on board. The process you have to get through to get there, is invaluable in and of itself when it comes to solidifying and reinforcing the newly formed brand identity/asset.  

Making the financial case 

As noted above, a Brand Book is a great example of an investment in your brand that brings fundamental value yet also requires substantial resources. So, let's stick with that example for a little while longer. 

Managing the project around your new Brand Book properly means making space, time, and resources available. Much like with any other larger scale project or investment you want to do to strengthen your brand.  

Sometimes, you'll have to deal with pushback on the resources it would take to see your project come to fruition. And sometimes, you won't be able to convince every stakeholder with more essentialist, philosophical arguments about the value of a brand. 

So, what are the financial arguments you could use? 

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The financial value of a brand (book) 
Brands create financial value for their owners, and well-managed and consistently used brands more so than others. 

According to Millward Brown Optimor’s analysis, in 1980 almost the entire value of an average S&P 500 company was comprised of tangible assets (chairs, factories, inventory, et cetera). In 2010, tangible assets accounted for only 30 to 40 percent of a company’s value. The rest is intangible value, and about half of that intangible portion, close to 30 percent of total business value, is attributed to brands.  

In 2015 Millward Brown showed us that in the 10 years before that, the strongest brands in the BrandZ Top 100 Most Valuable Global Brands list increased in value by 102.6%. In contrast, the MSCI World Index, a weighted index of global stocks, had appreciated by only 30%. 

Even during the turbulent period since 2006, the BrandZ™ Top 10 Most Powerful Brands Portfolio of stocks grew two-and-a-half times faster than the S&P, proving that investment to create and sustain strong brands delivers superior shareholder returns. Brand building is an investment, not a cost. 

Furthermore, brands that are consistently presented can expect to see an average revenue increase of 33%.  

Estimating the ROI of Branding 

So it's fairly obvious. Brands irrevocably add value to a business. Managers know it, and financial analysts and investors know it as well. Although even in financial markets the intangible asset that is the brand of a company is getting more and more weight over the last few years, any method or model to gauge it is, essentially, only an estimate.  

As Wally Olins has said: ‘There's only one true way to gauge the value of a brand, and that is to sell it.’ 

We feel strongly that the arguments for creating a Brand Book and investing in it, should be mainly strategic. However, it may be the case that you have more bottom-line oriented decision makers you need to get to agree to your plans. How do you go about it? 

Various methods exist to measure the value of a brand, and to estimate the ROI of an investment to increase the strength and value of it. If the stakeholders you need to get on board for your Brand project need more convincing than with the information and arguments we have already shared here, pick one of the methods listed here, do the (tangential) math and give them the final push for persuasion with the expected ‘bottom-line’ numbers. 

The single source of truth for your brand assets — DAM platforms 

Lastly, it's great and clearly very beneficial for your organization to have a clear, well-managed and consistently used brand, including all of the assets you can think of. But it's equally great to have guidelines, processes and structures in place to help everybody who handles your brand assets to do so correctly.  

This is why a cloud-stored Brand Book that everyone can have centralized access to, is a good idea. The same applies to a Style Guide. These are both great tools to help you manage your brand. 

A DAM (Digital Asset Management) system then, could be the master tool to manage your brand and its consistency. It is the centralized location where you can store not only your Brand Book and Style Guide, but also every brand asset (logo, colors, photographs – and every publication anybody in your organization has ever created). 

Especially for marketing teams who are collaborating remotely with each other, their internal and external marketing ecosystem and other internal and external stakeholders, a Digital Asset Management platform like Lytho can add a lot of value. Applied strategically, you will be sure to get the most value out of your brand and the related assets by using a DAM system. 

A few things a Digital Asset Management system can help you achieve are: 

  • Using one source for all content 
    Instead of scattering your content over different tools, a DAM gathers all your marketing content in one place. This is also why a DAM platform is the most logical place for your digital Brand Book to live. 
  • Creating your own designs  
    With a DAM that incorporates ‘Create & Publish’ functionalities, everyone is a designer. Predefined templates make it easy to create advertorials, websites or brochures within your content hub – and always on-brand.  
  • Saving up to 70% of your time  
    Advanced search options and easier feedback processes within DAM systems such as Lytho allow you to spend time on what matters1. 

Want to learn more about the benefits of a DAM system to your brand management efforts? 

  • To learn more about the added value of a DAM system for managing your brand, download our whitepaper “Improve your Marketing Performance with DAM.” 
  • To learn more about the Lytho DAM platform and its core capabilities, click here or go right ahead and book a demo with us. It's free and online, and takes up no more than about 20 minutes. 
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