Building a business case for brand investment

Managing Director and Principal at Brand Consulting Firm TenderHelp build business with brand strategy.

Building a brand is one of the most important things a company can do to be successful in the long run. Building a strong brand helps generate leads and communicate with existing customers; According to Analytic Partners, brand messaging actually outperforms performance messaging by 80%. Over 10 years of longitudinal research shows that a strong and consistent brand makes short-term performance marketing more effective, and that effectiveness is often increased when the brand message and performance message are used in the right ratio.

All this is to say that building a brand builds a business. Today, nearly 50% of chief marketing officers (CMOs) believe marketing’s primary role is to drive business growth. But how much should you spend on building your brand?

Brand building is not a one-and-done endeavor. It requires consistent communication over a period of time (years rather than months). There is no silver bullet for determining transaction costs. However, if you triangulate the right data, you should be able to find the right cost zone for your brand, giving your CEO confidence that it’s a solid business-building strategy.

Triangular data to find the right cost zone for your brand

Here are some key questions you’ll need data to answer, but establishing these areas will help you better enter your spending zone.

1. Your competitive voice collection and sharing.

First of all, you need to have an accurate picture of your competitor’s set. In my experience, marketers want to track a small portion of their actual competitive set, so they make decisions based on incomplete data.

When determining your competition, look from your audience’s perspective: Who is talking to them about the type of product or service you sell? That’s your competitive set. Your share of voice (SOV) is how high your volume is compared to your competitors, usually calculated by comparing your marketing spend to your competitive set. Finally, if possible, understand your excess share of voice (ESOV). This is the ratio of your SOV to your market share (SOM). If you have ambitions to increase your SOM, your SOV should be higher than your SOM.

2. Brand health

Next, you need to understand where your brand stacks up on key brand health metrics. For example, is your brand aligned with your audience? How often do you consider your brand compared to other brands in the category? These types of metrics show you where you stand (your “benchmark”) and help you set goals for where you want to increase your SOM and grow your business (in terms of your competition). A marketing mix modeling strategy can help you predict how much you need to spend to achieve those brand health goals. Or, at the very least, you can compare your costs to competitors who get more insight and consideration than you do now.

3. Trade parameters

Another good way to check your spending level is to understand your advertising cost-to-income ratio. How does this ratio compare to your competition? Are you investing relatively? Another good point of comparison is your Net Promoter Score (NPS). This score helps you understand the extent to which your current customer base recommends your brand to others – the most effective marketing method.

Another way to understand how your marketing investment trends with your business is by looking at your brand’s lifetime value/customer acquisition cost ratio (LTV/CAC). This gives you insight into your brand’s health, profitability, and how your marketing investment aligns with it.

By assessing your voice, brand health, and business metrics, you’ll begin zeroing in on your cost zone in a way that supports your business objectives. There is no final magic number, but you can find the neighborhood you want to live in, which will give you a better idea of ​​what it will cost to reach your most important business goals.

“What about my unique brand situation?” You might be wondering? Are you an emerging brand taking on established players? Are you a mature brand that needs to be refreshed due to increased competition? Or are you in the middle of the pack, which you should be looking for. These conditions require specific spending directions over time.

Also, “Where can I find all this information? What if it’s not available? How can I find it?” You might be thinking. The right questions. It takes some time and effort. Some of the data can be obtained from integrated sources, some from surveys, and some from checking financial reports. Finding the answers to these questions and triangulating the results can take time, but doing them well will give you strong confidence in the optimal cost figures within the context of your brand and business goals.

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