Brand ROI: What Is It and How Can You Measure It?

Proving Brand ROI from Brand Management Tools

How do you calculate brand ROI and make the business case for a new logo, style guide or brand book? In this article, we’ll be exploring investments in branding. We’ll be using the example of a brand book to demonstrate how to argue in favor of branding. Do you need to back up your claims with solid numbers? Not to worry – we have some helpful resources for you.

Explore the Branding Series:

Employer Branding: What Do Great Brands Do Differently?
How to Build Brand Trust Through Social Media
Is Brand Consistency Important?
Cognitive Dissonance in Branding: What Is it and Why Does it Matter?
Brand Value: What Is It and How Can You Measure It?
Tame The Chaos of Constant Output to Achieve Better Outcomes

How to Get People Excited About Revising the Brand

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

Changing a brand comes with reactions and will only have a beneficial effect if all relevant stakeholders are on board. That means not only the marketing team and some of your sales colleagues. Relevant stakeholders can include the board of directors, management, employees, business partners, vendors, and your customers.

If the majority understand why it’s important to introduce a new element or document to the core of your brand, you’ll have a much better chance of seeing your project succeed. It’ll surely help for you to talk to them about the expected brand ROI.

Now, how do you get all stakeholders to support your proposed changes? And how do you get them to invest in the brand?

Brand ROI, Stakeholders & Value

Your brand occupies the space between how people instinctively feel about your brand, and the way you want them to feel about it. Your brand identity is a collection of all the ways your brand is made tangible.

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
  • The models financial analysts use to gauge, monitor and predict a company’s value

Financial value is the external end point – brand ROI starts from within your organization.

Your brand’s purpose is the story that drives your organization and its people forward. It’s the story that brings them, your partners, and customers together.

As such, a brand is never merely an asset for marketing. Rather, it’s an asset for every department in an organization. If you want people in the market to feel your brand, then you have to make your own people feel it first.

The Case for a Brand Book

Let’s take a brand book as an example of a specific brand asset you’d like to invest in. A brand book is a fitting example since:

  • The creation of one is an incredibly effective way to pin down your brand identity
  • Creating a good brand book can be a substantial investment

There are many things that go into creating a brand book. You need to find a brand identity specialist, a photographer, and a visual designer. Then, you must think about internal and eternal interviews to help you tell your brand story in a compelling way.

Making the case for your brand book is, therefore, quite the task to undertake. Make sure that all relevant stakeholders are on board with the investment it takes to create one. And how do you do that you may be wondering? Broadly speaking, it usually makes the most sense to create a brand book in one of the following situations:

You’re Working on a Rebrand

Is your brand going through a major transformation? Then, this is the best time to make the case for and create a brand book. Having one will significantly support, coordinate, and simplify your efforts to re-imagine the brand. Having one will ensure consistency in messaging, visuals, and copy.

You Want to Solidify Your Existing Brand

Various internal and 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.

The argument for creating a brand book, is that it’s the best way to communicate the core of your brand. It’s also the best way to guarantee that a newly-formed brand identity will be responsibly managed moving forward.

Creating or changing any significant brand asset requires getting stakeholders involved and on board. The process you must go through to get there is tough, but also invaluable in and of itself.

Making the Financial Case

As noted above, a brand book is a fitting example of brand ROI 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 strengthen your brand.

Sometimes, you’ll have to deal with push back 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?

The Financial Value of a Brand (Book)

Brands create financial value for their owners, and well-managed and consistently used brands are 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 formed of tangible assets. 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 part, 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 (TM) 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

Brands irrevocably add value to a business. Managers know it, and financial analysts and investors know it as well. Although branding is gaining increased weight in the financial markets, any method and model to gauge it is just 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 that you have more stakeholders 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. Learn how to estimate the ROI that increases the strength and value of your brand by reading this blog post for more information.

Which Types of Brand Value Exist?

Financial Value

In reality, there is no clear way to define what counts as value. One, perhaps the most common way to attribute value to a brand is of course through financial value. How much money does branding add to your bottom line?

Customer Value

The second part where a strongly managed brand adds value is to your customers. Concepts like brand trust, brand recognition, and brand awareness are all linked to how your brand resonates with consumers.

Operational Value

Branding initiatives add operational value by improving efficiency, processes, workflows, as well as consistency. Well-thought-out branding activities don’t only add value through customer loyalty and recognition, they also save time, effort, and resources.

Employee Value

We know that an increasing number of employees would rather work for a company whose values and mission they share. A clearly communicated brand will increase employee retention rate, employee happiness, motivation, and brand ambassadorship.

Source of Truth for Digital Assets – DAM Platforms

It’s beneficial for your organization to have a clear, well-managed, and consistently used brand. It’s also equally beneficial to have guidelines, processes, and structures in place to help everybody who handles your brand assets do so correctly. Therefore, a cloud-stored brand book for all is a promising idea. The same applies to a style guide. These are both great tools to help you manage your brand.

A Digital Asset Management system then, could be the primary tool to manage your brand and its consistency. It is the one place where you can store all brand assets.

Further reading: What Is Taxonomy in Digital Asset Management and Why Does It Matter?

Lytho helps you streamline your entire workflow and harmonize all brand collateral under a single, uniform platform. Feel free to reach out to us by scheduling a demo and learning how our creative solutions can boost the effectiveness of your creative projects. We look forward to speaking with you!