brand investment not cost

Branding. An investment, not a cost.

Jon Scott
Markus Spiske

When a business, charity or organisation is looking to create or evolve its brand, the conversation usually starts with “How much will that cost?”. This is wrong. As so eloquently put by the writer Oscar Wilde, people ‘know the cost of everything and the value of nothing’. We can learn a lot from this perception. We should spend more time asking questions such as  “What return will we receive on developing our brand?” or “How will developing our brand help achieve our business or organisational objectives?”.

The culture of cost leads far too often to Brand Managers or Marketing Managers finding it difficult to get their budgets signed off by the powers that be. This is because the process of brand development is seen as a cost and not an investment. It’s time to change this perception. This will not only make it easier to unlock budgets, it will also lead to a greater culture of results-driven design, and ultimately to more effective design. A win-win situation.

Fortunately, there are a number of institutions that have conducted research that provides compelling evidence to support the assertion that branding is an investment not a cost. I’ve shared a few of these below. I suggest you do your own research too, as there is plenty of evidence out there.  

Your brand is your reputation

Let me explain. From the perspective of your brands components, it should include such things as your logo, colours, images, how you greet new customers and how you treat loyal ones. It is the sum of these component parts and experiences that inform a set of associations in the minds of your customer, in just the same way you form opinions of your friends and family. Therefore your brand is your reputation. And as we know from the rise of social media, it is as easily lost as it is gained (think Elon Musk).

Within the charity sector Reputation is amongst the highest scoring ongoing concern, at 66% after Impact of Government Changes at 72% and Funding at 84%*. So, if your brand is linked to performance of your reputation, it should be the third highest investment made by a charity after policy and funding. Currently, this is not the case, with the average marketing budget at around 20% of total expenditure.

The clever people at the Reputation Institute measure companies reputation, giving them a monetary value. Can you guess what Amazon’s reputational value is? Well, it’s £234 billion. That’s 65% of Amazon’s total market value. So looking after your brand is important.

60% of our decision making is based on our perception, and 40% is based on the product or service

The Reputation Institute also tell us that a customer’s decision to buy your product or service is based more on their perception of you than the product or service itself. 60% of our decision making is based on our perception, and 40% is based on the product or service. Again, back to reputation. It’s not just what you offer it’s also how you offer it. And that is the role of your brand. I would recommend taking a closer look at the Reputation Institute’s work as it will be a valuable source of insight for your brand development

Branding. A higher return than the stock market

The concept of investment over cost was the subject of a study by the Journal of the Academy of Marketing Science. The conclusion of their study was that investing in your brand returns a higher rate of return of +3% against the average stock market. 

Increasing turnover and boosting profit
In their report ‘Design delivers for business’ The Design Council detail two compelling results orientated statistics. 

  • Increases turnover: For every £1 invested in design, business can expect over £20 in increased revenues
  • Boosts profit: For every £1 invested in design, business can expect over £4 in operating profit

The five pillars of your brands return on investment

We are often asked by clients to summarise the key benefits of investing in your brand. Here is our current thinking.

Brands stand out in the market leading to a higher level of awareness.

Brands influence choice leading to an increase of enquiries.

Brands create loyalty and advocacy commanding a higher market share and experiencing higher staff and customer confidence.

Brands command a price premium improving your bottom line.

Brands provide a platform for growth accelerating new ideas and opening up new markets.

When actively managed, these five pillars of brand performance can be used to support stronger business growth. Go forth and invest.

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