What’s the return on investment in your brand-building activities? A question that might seem a bit counter-intuitive at first, given the overwhelmingly brand-driven world we live in. Even more so, when you hear influencers praising the role of design and branding, such as A$AP Rocky at recent SXSW, talking about the Design and branding as a key differentiator in a brand’s success. Or after hearing someone like Gary Vee say that “creatives are the variable of success”.
As much as I’d like to just proudly smile about the industry I’ve been in for a couple of years, I’ve seen the hugely different results branding can deliver and still leave my mind open to question the fundamentals. I do this because assessing the financial contribution of a brand – as well as the return on investing in a brand – can often remain elusive. With an expected $2.1 trillion in total media spend this year, I think it’s even more important than usual to understand what results these investments are yielding.
So, how do we asses the ROI of brand-building?
Measuring brand-building ROI traditionally
Traditionally, to determine brand-building ROI, marketers have subtracted merely the cost from profit and divided it by total value. Well, as easy as it sounds, this calculation of how much sales increased after a specific “marketing investment” doesn’t tell the marketer anything about how your customers actually engaged with the campaign. Also, it doesn’t account for the short or long-term impact on the conversion rate. ROI, based purely on these quantitative metrics, will not give you many insights on how to adjust your future investments or how people actually engage with your brand.
A balanced overview
To give people a more ‘balanced’ view of organizational performance, one of the strategic and non-financial performance measurements to traditional financial metrics is The Balanced Scorecard (BSC). Introduced in early 1970’, BSC is a holistic assessment of your brand’s value. Naturally, with the rapid evolvement of our environment, its usefulness is nowadays discussed. Brands have evolved beyond a single logo and a tagline to serve multiple other purposes.
Yet, now we understand how much of brand’s overall success is determined by its ability to communicate its values, and meaning (purpose), to both internal organizational culture and external brand communities (a.k.a. your customers).
The realization of the human factor, and looking at brand-building as a conversation rather than branded monologue, implies to count both quantitative (traditional) and qualitative measurements like perception, relevance or employee engagement.
To balance out both sides of the spectrum, using a strategic and holistic framework will create a more meaningful view of your brand’s value.