Tom Roach, Managing Partner of ad agency Bartle Bogle Hegarty, wrote an open letter to CMOs titled The Most Valuable Business Tool Ever Invented providing data points to help convince their CEOs and CFOs of the value created by investing in brand equity.

A strong brand is a business’s most valuable commercial asset. It increases the chances of customers choosing your product or service over your competitor’s, attracting more customers, at a lower cost per sale, who are happy to pay a little more, and will buy it a little more often. A strong brand will deliver more revenue, profit and growth, more efficiently, year after year, and so generate more shareholder value. It can help attract, motivate and retain your second most important asset: your people. And can work as a barrier to entry for future competitors…”

A few samples of the research cited:

  • Strong brands command a 13% price premium over weak brands, and 6% above the average brand.
  • “The optimum split in investment between brand-building and sales activation is on average 60% brand-building, 40% activation. Invest less than 60% in brand activity and the brand equity required to generate future sales will not accumulate.”
  • “Online businesses in the UK now spend more on brand-building advertising than any other industry sector, £700m on TV alone in 2017. When Google, Amazon and Facebook are amongst the biggest spenders on TV, it’s a pretty big clue that they’re deeply aware of the limits of the digital channels and formats in their own armouries to help them build their own brands.”

Link to the full article: Fwd to CEO: THE MOST VALUABLE BUSINESS TOOL EVER INVENTED

 

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