Corporate branding should improve the bottom line, not dent it

Posted on October 1st, 2008 by Michael Ervin | Filed under: Soap Box

(By Michael Ervin, published in Orange County Business Journal)

Throughout the past decade, the focus on corporate branding has led to a heightened awareness of the critical role a branding campaign plays in the communications mix. We know that effective promotion of a brand helps customers, employees and shareholders better understand a company and its offerings. It enhances the confidence that stakeholders have in that business and its activities. It differentiates the company from its competition. And, we now see that all of these attributes can have a positive effect on a company’s fiscal health.

Unfortunately, the last decade also found those who believed that companies could “out brand” their competition simply by outspending them. Often, corporate branding campaigns offered high hopes at a hefty price. There were those who thought that the more money spent to “invent” a company’s brand, the more powerful it would become. But now, more than ever, we know that smart—not necessarily costly—branding is effective and essential. And smart branding is based on a company’s current, definable practices, activities, philosophies and personality.

A truly effective marketing communications program will uncover the strongest brand identity for a company when it is based on reality. By showcasing a company’s greatest strengths—hopefully those that also differentiate it in the marketplace—a company can build valuable credibility that resonates with its customers, employees and shareholders. Since a corporate brand is a reflection of what is true about a company, no amount of money thrown at “inventing” a brand will be successful—the company must walk the talk of the brand image it promotes. A well-researched, efficiently crafted, reality-based branding communications effort, therefore, need not be a multi-million-dollar proposition.

Not only is branding based on facts essential for enhancing a company’s goodwill, it has also become a necessary business practice to fortify balance sheets. Recent studies show that a brand’s power accounts for a whopping five percent of those things that contribute to whether the stock price will go up or down. When you consider the fact that a company’s “financial strength” factored in at only six percent—a mere percentage point difference—you can see how much power a brand wields.

Of course, stock price or shareholder confidence is one thing. A strong brand can also impact a company’s bottom line by affecting its ability to retain employees, attract customers and, ultimately, reduce costs by building momentum on its marketing dollars.

Gone are the days when branding efforts were optional. In today’s competitive marketplace, building corporate brand identity is critical to gaining ground on competitors. And while it shouldn’t place a heavy financial burden on a company, branding is simply something we can’t afford not to do.

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Tags: asset, brand, brand-asset, branding, corporate, corporate-identity, identity, Investor Relations, marketing

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