Understanding the power of brand

Tim Lenton, digital innovation and strategy director at Purpose Media, explains why it is vital for businesses seeking long-term success to invest in building their brands.

How do you put a value on the importance of brand?

Marketing sceptics will often question investment poured into establishing the identity of a business or product and in positioning them as distinctive within their sector.

It is, after all, a long-term play and one whose results won’t instantly be apparent on a company balance sheet.

But research conducted by global marketing experts Kantar, examining 6.5 billion attitudinal and purchase data points from the last decade, has underscored just how important strong brands are to sustainable success.

Its Blueprint for Brand Growth study establishes that brands which are viewed as “meaningfully different to more people” command a better market penetration, are more likely to grow future volume share and are able to charge higher prices for their goods or services.

Of course, big business has understood this for years.

Red Bull, for example, is thought to have consistently invested between 25 and 30 per cent of its £8.5 billion annual revenues back into marketing – and brand building has been key to its development from energy drink manufacturer to one of the most recognisable businesses in the world.

When it launched 30 years ago, the company had little choice but to focus on forging an identity.

It was pioneering a new category and founder Dietrich Mateschitz spent three years working on the concept and positioning the brand before its first can –  deliberately made thinner and taller to distinguish it from those favoured by other drink manufacturers – was sold in 1987.

It directly targeted 18 to 35-year-old males at colleges, gyms, coffee shops and bars, giving away free samples to gain exposure and create a buzz, and even today the firm continues to ensure its brand is visible wherever that key audience is hanging out, sponsoring major music festivals and gaming events.

It has also become synonymous with high-performance sport, owning its own football and Formula 1 teams and supporting scores of professional athletes across the globe.

Instead of directly marketing its product, Red Bull promotes the values that are important to its audience demographic – freedom, aspiration and exhilaration – and its slogan, ‘Red Bull Gives You Wings’, was created to suggest that its drinks are able to help buyers achieve their ambitions or dreams.

It’s a strategy that’s certainly helped the company achieve big – with Red Bull now selling more than 12 billion cans a year worldwide.

But creating strong brands is not just important for large corporates – those in the start-up and growth phases should also treat it as a priority.

The founders of Liquid Death demonstrated its importance when they launched into the drinking water sector in 2019.

Until that point all the established players had followed a similar model, targeting the aspirational health and wellness category with bottled products, often decorated in pastel colours and featuring logos of babbling streams or mountain ranges.

The newcomers instead sold water in skull-logoed cans, with a tagline ‘Murder Your Thirst’, taking inspiration from the heavy metal and punk rock genres and focusing on an entirely new segment of the market: young men who previously might only have drunk water at the gym.

Their tongue-in-cheek marketing positioned water as the deadliest substance on Earth, ‘killing thousands of innocent surfers, snowboarders and kayakers every year’.

At the same time, Liquid Death set about sponsoring rock music tours and creating a series of viral stunts, including selling a limited range of skateboard decks painted using blood donated by skate legend Tony Hawk!

After just five years, the brand is generating annual revenues of around £90 million and has amassed more than 1.3 million Instagram followers.

Advertising executive Rory Sutherland, the vice chair of international agency Ogilvy, is in no doubt about the importance of creating strong brands.

“Having a great brand means you get to play the game of capitalism on easy mode because people are drawn to you and are more likely to trust you,” he says.

Despite his words of wisdom, many businesses still disproportionately focus their marketing on short-term activity in a bid to drum up sales in the here and now.

They fail to grasp that only a tiny percentage of their prospective customers will actually be in the market to buy at any one time.

In fact, research by the respected Ehrenberg-Bass Institute puts the number at just five per cent. This means that 95 per cent simply aren’t interested in purchasing at that moment … however good a company’s marketing is.

It’s vital, therefore, that businesses devote time and resource to building their brands and developing visibility to ensure that it is their products and services which come to mind when a buyer is ready to proceed.

Professor Mark Ritson is amongst those who advocate that businesses should spend at least half their marketing budgets on brand.

“We know that growth and financial success come from a combination of both long-term brand building and shorter-term sales conversion. We also know that these two alternatives each require approximately half the marketing budget, for that success to eventuate,” says the consultant and academic, who has taught at the London Business School and Massachussets Institute of Technology.

“We also know that the two don’t just require separate investments, they demand different objectives, tactics and timelines.

“And we know that, if you look for returns from your marketing on a 12 month or shorter timescale, you will inevitably undervalue long-term brand building and move too much of your marketing investment into shorter-term tactical fare.

“This will result in superior ROI initially and, over the next 18 months, a better commercial outcome.

“But if you compared the performance of a company that spends most of its money on shorter-term marketing tactics with one that split its investments equally between longer and shorter-term stuff, you would see two very different stories emerge over the next five years.

“The short company would peak at 18 months and then flatline. The long/short version would eventually grow more and, by the five-year mark, all other things being equal, generate significantly more profits in total.”

Your business may not have the marketing millions of a global drinks giant, but there’s no reason why you can’t think ‘more Red Bull’.

To achieve success, you’ll need to be clear that a well-defined brand is much more than just a logo or catchy tagline; it is the essence of a business, representing its purpose and unique identity.

You’ll need to be equally clear about your target demographic and what it needs and loves – and to understand the part you can play in helping satisfy those desires.

Use your company’s values to guide you in the way you engage that audience.

How you present yourself, the interactions you have with customers and the content you produce should always align with your beliefs and what your business stands for.

This makes your brand authentic and builds trust with your audience – so, when they need the product or service you supply, you’ll be the only company they ever think to call.