The ROI of Branding: How to Measure & Why Long Term Brand Building Matters

Recently, marketing teams and industry leaders have shifted their campaign strategies and resources from brand building to demand advertising.

Their reasoning? Metrics and time investment.

Demand generation initiatives, for instance, are easier to measure and can drive an immediate impact. Faced with constrained budgets and mounting pressure to produce tangible results, marketers can clearly point to the one-to-one data to justify their strategic decisions.

For a nebulous concept like brand building, ROI is harder to gauge. Tracing the straight line between cause and effect is an extraneous exercise—measuring the dollar spent to the outcome returned seems like an arbitrary endeavor.

Unfortunately, this philosophy works to the detriment of many businesses, as the payoff from brand investment—over the long term—can far exceed the ROI of any demand generation initiative.

For that argument, here’s this primer: Welcome to the return on brand (campaign) investment guide.

What is brand building? And why should I care?

Your brand is more than a logo, color scheme or tagline. While your brand could be boiled down to “name recognition,” today’s brand archetype is an individual—it’s an entity that has its own identity, speaks in a specific dialect, represents certain values and even has a heartbeat.

It’s 2022. Branding is now intricately linked to consumer perception. In addition to your products and services, consumers want to understand your values, purpose, culture and unique characteristics that distinguish you in the marketplace (yes, everyone wants to feel special, even if that means committing to the business that is).

As Stephen A. Greyser, Richard P. Chapman Professor Emeritus at Harvard Business School, notes in Harvard Business Review:¹

“A corporate brand serves as a north star, providing direction and purpose. It can also enhance the image of individual products, help firms recruit and retain employees, and provide protection against reputational damage in times of trouble.”

In short, brand campaign planning is a long-term strategy meant to steadily expand your total audience over time. Lead generation, on the other hand, is a short-term tactic meant to help marketers identify and then target ready-to-buy consumers.

The beauty in building brand awareness

In today’s purchasing climate, consumers need to know your brand. Without that awareness, they probably won’t consider your product or service, let alone make a purchase.

If they can associate your company name with a commercial, jingle, logo, unique selling proposition or a branded asset, you’ll have successfully created a competitive advantage over brands that people haven’t interacted with.

To that end, brand awareness breaks down into two elements:

1. Unaided brand awareness—Also known as brand recall, this assesses how well your brand is associated with a product, service or subcategory without the consumer being prompted. It answers whether your brand is top of mind with consumers, which is a strong predictor of choice and preference.
2. Aided brand awareness—Also known as brand recognition, this assesses whether consumers can link your product with the more tangible branding elements. It demonstrates that they’re aware that the brand exists within the market.

There’s a duality in a brand awareness campaign. On one side, it’s education. On the other side, it’s relationship building. The purpose of the initiative is to carefully interlace your story, the problem that consumers face, the solutions you propose and the experience consumers undergo along the buyer’s journey.

The success of your efforts depends on how skillfully (or artfully) you can weave your branding tapestry to answer consumer questions and communicate the deeper meanings.

If you manage to provide that value and deliver on your promises, your audience will remember you. When that happens, you increase the likelihood that they’ll consider your brand when they have a need only you can meet.²

Measuring the ROI of your brand awareness efforts

Brand awareness represents the initial step down the sales funnel. As such, it’s the first aspect of your branding campaign that should be quantified.

Consumer recognition—whether prompted or unprompted—isn’t the ultimate goal of a campaign.That would be brand salience.

For brand salience, your company must be top of mind when a potential lead prepares to make a purchase decision (i.e., they’re considering you as the need for the product/services comes to mind).

Your mission is to build awareness and then maximize salience by instilling branding cues at each stage of the buyer’s journey. Then when a consumer arrives at a certain stage of the funnel, you can meet them with content that entices an action (often a purchase conversion).

If you want to measure your brand investment, there are two meaningful tools you can leverage:

• Surveys—Surveys provide actionable insights about customers’ brand recall and recognition. When you ask questions, be sure to measure only brand awareness that’s relevant to your business strategy.
• Website traffic—If you experience an increase—and then a retention—of traffic, that’s a sign that your branding efforts are reaching more people and producing enough impact to convince them to visit your digital hub.

How to measure branding ROI

“So I understand the application of these metrics, but what’s the ROI on branding as a whole? How do we look at the output holistically?”

For starters, creative and attractive branding entices a larger volume of customers at a lower cost-per-acquisition. The customers acquired through branding also tend to spend more and purchase at a higher frequency.

Furthermore, myriad studies and historical market data have demonstrated that there are several other related advantages for companies that invest in their brand, including:

• Deeper customer relationships—Effective branding will foster customer relationships and inspire further engagement. When customers are engaged, they buy 90% more frequently, spend 300% vs. others annually and are five times more likely to only purchase from that brand.³
• Steady long-term growth—Brand value grows cumulatively. Over time, it generates more long-term value compared to marketing-driven sales activation and the increased awareness decays at much slower rates.⁴
• Strengthened reputation—If you deliver on your brand promises and customers acclimate to your business, they’ll begin to trust you. As your relationship with the consumer deepens, your reputation fortifies. Eventually, your efforts may convert customers into brand advocates (the ultimate feat of any marketing endeavor).
• Increased word-of-mouth recommendations—Brands that successfully turn their customers into brand advocates (which foster higher emotional intensity) are three times more likely to benefit from word-of-mouth marketing as less-emotionally connected brands.⁵
• Premium pricing—Companies that have a strong brand presence can charge a 13% premium and capture, on average, three times more sales volume compared to weaker brands.⁶
• Heightened web traffic—Your content marketing, social media marketing, paid media, SEO and link building are all essential elements of building brand awareness that serve to increase both your web traffic and sales conversions.

To that last point above, one of the reasons why branding ROI is difficult to quantify is that its impact can be felt across dozens of different touchpoints.

Whether it’s a visit to your website, reading your content, a customer service experience or seeing your logos, taglines and advertisements, each interaction has the potential to impact the way a consumer perceives your company.

It has the potential to build the most important relationship dynamic in marketing—trust.

With that said, there are three overarching categories you have to consider when measuring the total ROI of your branding efforts.

#1 Brand value

Brand value is any element that a consumer associates with your company or that may impact their purchasing behavior, such as brand recognition, image, usage and deeper relationships.

Brand value is considered an intangible asset unconnected to sales, which adds a percentage of value to the company as a whole. There are several ways to measure the total financial value of a brand, including but not limited to:

• Cost-based valuation—Calculates the costs required to build the brand by accounting for various assets like:
• Promotions
  • Branding agency contracts
  • Trademarks
  • Marketing
• Market-based valuation—Estimates the value of your brand compared to sale prices, valuations and the performance of similar brands
• Revenue premium valuation—Compares your brand to non-branded alternatives to identify how much extra customers would be willing to pay
• Royalty relief analysis—Sets a price that a third party would have to pay to license your brand

#2 Customer value

Customer value is the impact your branding efforts have on consumer behavior. This is one of the more quantifiable aspects of brand campaign investment ROI since it’s often tied directly to customers’ perceptions, purchase habits and advocacy.

With the help of consumer surveys and automated data and analytics, companies can perform comprehensive customer research to measure the link between branding and:

• Purchase intent
• Brand relevance
• Brand esteem
• Brand knowledge
• Likelihood to recommend
• Net promoter scores

#3 Business value

Pointed and creative branding doesn’t just sway consumers, it can also improve your organizational and internal processes in several ways, including:

• Bolstering employee recruiting by making it easier to attract high-quality workers
• Altering negotiations with business partners, who may be more inclined to do business with you thanks to a powerful brand association
• Improving talent retention and employee engagement by connecting people with the company’s mission and values

Once more, internal employee surveys and external client (or partner) surveys can provide meaningful insights into the impact of your branding efforts.

The hybrid between brand campaigns and demand generation

A common mistake made by business leaders is focusing on branding or demand generation in silos, when they could instead use branding and demand generation in tandem.

They’re complements, not substitutes.

Companies that use both methodologies in conjunction can significantly improve their brand awareness and perception, which drives lead generation and increases revenue. This partnership is also known as brand and demand advertising flight interlocks. According to a Forrester study:⁷

“Brand and demand advertising flight interlocks are purpose built to increase reputation value while driving short-term lift in demand within a subset of the same audience. As brand advertising flights influence a greater percentage of attitudes about the brand, demand advertising flights interlock to influence a greater percentage of buying behaviors, and buying groups within the same audience recognize a business need.”

But what mixture—as a percentage—of flight interlock should you deploy? There’s no one-size-fits-all answer. It drastically depends on your business.

Factors like category, price point, industry and team size can play a significant role in the decision. Additionally, whether you’re a B2B or B2C business will likely impact allocation. To that end, a LinkedIn study determined that the optimal mixes for either went as follows:⁸

• B2C—60% of the communications budget is devoted to brand, with the remaining 40% allocated to activation.
• B2B—46% of the budget is allocated to brand, with around 54% allocated to activation.

While these percentages won’t be ubiquitous across verticals and ventures, they’re a fantastic benchmark to keep in mind.

Liquid Agency—dripping your brand in gold

Admittedly, our thesis does not negate the necessity of demand generation. Rather, brand awareness acts as the nucleus of all your marketing initiatives, improving the viability of each channel you’re using.

To drive meaningful ROI, brand awareness needs to be in lockstep with demand generation.

Companies that prioritize demand generation in lieu of branding are too blinded by “immediate ROI” to understand the opportunity cost of neglecting their brand building efforts.

Yet, finding the balance between these two elements is an art that takes skill, dexterity, creativity and an entire catalog of experience. Here at Liquid Agency, we believe that your brand is a measure of meaning—it’s the belief system consumers need to subscribe to in perpetuity.

If you’re looking for a partner that can engineer a two-pronged campaign strategy tailored to your brand and target audience, you’ve come to the perfect waypoint.

We’re in the business of building brands people believe in.

That starts with you.

¹ Harvard Business Review. What Does Your Corporate Brand Stand For? https://hbr.org/2019/01/what-does-your-corporate-brand-stand-for

² Forbes. To Convert More Customers, Focus On Brand Awareness. https://www.forbes.com/sites/forbesagencycouncil/2019/10/22/to-convert-more-customers-focus-on-brand-awareness/?sh=23eba1082075

3 Rossetta. Customer Engagement from the Consumer’s Perspective. https://static1.squarespace.com/static/5a7103d96957dafbfdbc2537/t/5cae288d9140b70a01ca161c/1554917521632/Customer+Engagement+from+the+Consumer%E2%80%99s+Perspective+-+Rosetta+Consulting.pdf

⁴ The ARF. Marketing Effectiveness in the Digital Era. https://thearf-org-unified-admin.s3.amazonaws.com/ARF%20Audience%20Measurement/AxS_2019/MainStage/Marketing%20Effectiveness%20in%20the%20Digital%20Era.pdf

⁵ Invesp. The Importance of Word Of Mouth Marketing – Statistics and Trends. https://www.invespcro.com/blog/word-of-mouth-marketing/

⁶ AshokCharan. Millward Brown—The Meaningfully Different Framework. https://www.ashokcharan.com/Marketing-Analytics/documents/MeaningfullyDifferentFramework.pdf

⁷ Forrester. The Forrester B2B Advertising Spectrum. https://www.forrester.com/report/the-forrester-b2b-advertising-spectrum/RES171562

⁸ LinkedIn. The 5 Principles of Growth In B2B Marketing. https://business.linkedin.com/content/dam/me/business/en-us/amp/marketing-solutions/images/lms-b2b-institute/pdf/LIN_B2B-Marketing-Report-Digital.pdf