Why Brands Matter More Than Ever?
Brands have the potential to create incredible value for companies and corporations. “People buy brands, not products” – this sentence is valid especially in the global communication society. No brand – no differentiation, no long-term profitability. People don’t have relationships with products, they are loyal to brands.
It’s not a secret that the brand is much more important than the product itself. Brands can live forever and definitely much longer than products. Brands can inspire people to join a community, to follow an idea, or also motivate people to change the world. Products can’t do that, they are only one dimensional, which is not enough in out today´s global communication society.
More and more corporations and companies put the value of their brands on their balance sheets. Brands are often worth more than all other assets of companies combined. Property, locations, factories, machines, materials, staff, etc. therefore often depreciate compared to brands.
Therefore many efforts should be placed on the right brand management. The best brands today are based on a strong idea. When creating a new brand there are fewer brand names to choose from, therefore existing brands become more valuable.
Brands and the Digital Era
With so many short-term pressures to deal with, many marketers have arguably become too focused on near-term concerns. And taken their eye off long-term brand building. The digital era may be making life tough for brands, but they neglect long-term brand building at their peril.
There are three key reasons why brands matter more today: valuation, differentiation and resilience.
First, although difficult to quantify, brand value accounts for a significant part of the balance sheets of world’s top companies.
According to a long-term study by Ocean Tomo, intangible value constituted just 17% of the market value of the S&P 500 in 1975. Forty years later that proportion reached 87%.
Within intangible value, the brand is often the single largest item on the balance sheet. Any loss in brand value would therefore have major implications for the valuation of businesses, individually and collectively. This in turn could have a negative impact on the ability of businesses to raise capital. As well as realize opportunities for growth and synergy through mergers and acquisitions.
Second, while today’s consumers might like the convenience, price point and user experience that digital disruptors offer. Many also crave empathy—to align themselves with brands that fit their sense of self and reflect their identity.
And, in a world of near-perfect competition where platforms have the data, scale and financial muscle to compete and win almost anywhere, competing on emotions like empathy and trust is perhaps the only sustainable source of competitive advantage and differentiation. The digital era has given us reach—but brands must equally focus on meaningful consumer engagement if this is to bear fruit.
Third, while it could be argued that established companies have a valuable head-start over digital disruptors when it comes to building (and rebuilding) trust in brands, the disruptors are catching up by adopting more tried and tested methods.
The New Brand Balance
The insights contained in this article won’t be easy to implement. The overall imperative is to strike a new balance—between the best aspects of traditional brand-building and the exciting opportunities on offer with new digital toolkits; between the enduring purpose of a brand and the more immediate role it plays in people’s lives; and between short-term optimization and long-term strategy-setting.
The most successful players in this new age will be those that recognise that these are complementary, rather than opposing, forces. It’s at these intersections where real innovation and enduring brand value lies.
In a world of almost infinite choice, consumers want strong brands that will help them to reaffirm who they are and what they stand for.
Investors, too, are looking for strong brands to deliver sustainable value and a point of differentiation in a landscape of increased competition. Digital disruptors are discovering the importance of enduring brand value that develops resilience and are turning to traditional brand-building methods to help them develop that value.
At the same time, legacy brands can benefit enormously from the increased insight, agility and responsiveness that the digital era has brought to unlock their brand value in performance.
All businesses can unlock new value in their brands, but it will take different keys depending on their specific context. Embarking on this journey will help businesses embrace the potential of disruption and find a new brand balance.