What’s the ROI of brand? That’s the wrong question —

When discussing a client’s brand strategy, questions often arise about measuring the ROI of brand projects. However, ROI (return on investment) is often misused as a metric in marketing and branding efforts.

Campaigns may lead to increased awareness, responses, press coverage, and sales revenue, but these are not true ROI measures. ROI is a financial ratio that calculates the efficiency of an investment by comparing the return to the cost incurred using the formula: ROI = Net Profit – Cost of Investment / Cost of Investment.

Why Brand Building Matters

Investing in brand building is crucial due to the 95-5 rule, where the majority of consumers are not actively seeking to purchase at any given time. Building a brand creates a future pool of demand and ensures that your brand is top of mind when consumers are ready to make a purchase.

The Value of Brand Investment

Brand investment enhances the efficiency and effectiveness of all business operations. It leads to a growth in potential customers, shorter sales cycles, increased pricing power, and more effective advertising.

Measuring Success Beyond ROI

While ROI may not be the best metric for brand projects, measuring efficiency and effectiveness through metrics like brand awareness, share of search, conversion rates, and customer acquisition costs can provide valuable insights into the success of brand building efforts.

We Can Help

Contact us today to discuss how we can assist you in building a strong brand that drives demand now and in the future.

Frequently Asked Questions

1. What is the true definition of ROI in branding?

ROI in branding is a financial ratio that measures the efficiency of an investment by comparing the return to the cost incurred.

2. Why is brand building important in marketing?

Brand building is essential in marketing to create a future pool of demand and ensure that the brand is top of mind when consumers are ready to make a purchase.

3. What are some key metrics to measure the success of brand projects?

Metrics like brand awareness, share of search, conversion rates, and customer acquisition costs can help evaluate the effectiveness of brand building efforts.

4. How does brand investment impact pricing power?

Brand investment can enhance pricing power by making consumers less sensitive to price increases, leading to increased profitability for businesses.

5. Why is it important to measure brand success beyond ROI?

Measuring brand success beyond ROI allows businesses to gain insights into the efficiency and effectiveness of their brand building efforts and make informed decisions for future strategies.