Answering the Million Dollar Question: What’s the ROI on Brand Development?

It seems that any business recommendation provokes the same question: “What’s the return on investment?” And, where brand issues are concerned, the question is often met with uncomfortable silence.

What's the ROI on brand development?

Companies that value brand and recognize it as an asset, also develop metrics to measure brand performance and its impact on the company’s bottom line.

It seems that any business recommendation provokes the same question: “What’s the return on investment?” And, where brand issues are concerned, the question is often met with uncomfortable silence—unless you’re fortunate enough to be one of the few who understands the value of brands and how to measure them.

Most companies don’t truly understand brand development or how to manage it, measure it or budget for it. Brand development is not a marketing initiative—it is a corporate initiative. A brand is not a logo or advertising campaign, although that is how a brand is communicated. A brand it is the essence of a company.

How can something intangible be worth so much?
At one time, Chevrolet marketed the Prism, a car nearly identical to the Toyota Corolla. In most years, Toyota sold 250,000 Corollas to Chevy’s 65,000 Prisms.

Chevy doesn’t sell the Prism anymore—but you’re almost guaranteed to see a Corolla on the road. The difference that allowed the Corolla to excel while the Prism declined is all in the brand. Toyota’s brand is about building reliable small- to mid-size cars at affordable prices, while Chevy’s brand is still undefined. Toyota’s ability to leverage its brand and its promise that it can deliver again and again is what makes its brand more valuable.

How do I measure the roi on my brand?
Well-developed brands pay out in many ways over the course of time through stronger sales, higher margins, more focused operations and more effective marketing. Many CEOs are recognizing that the brand is an asset with a value similar to buildings, equipment and key employees.

As an asset, the return on brand investment is measured not in operating income, but in the improvement in the value of the brand as an asset—the brand value. The fact that well-developed brands drive company earnings is not theoretical. We all see it every day—which is why for most successful companies, its unique brand forms the greatest part of its value.