Table of Contents
Impact of Branding on Business
Branding is beneficial to businesses as it contributes positively to revenue, customer acquisition, customer loyalty and advocacy, brand trust and perception, profitability, market value and enterprise value, price, share of wallet, and return to shareholders. Statistics that demonstrate this are provided and explained below.
1. Revenue
- The impact of branding on revenue can be seen in how the most relevant brands in the world outperform the S&P 500 average in terms of revenue growth and how the sales volume of strong brands compares with that of weak brands. According to the Prophet Brand Relevance Index, the revenue growth of these most relevant brands is 28% higher than the average revenue growth of the S&P 500. Moreover, according to Millward Brown, “three times the sales volume of weak brands” can be captured by strong brands on average.
- Based on Lucidpress’s State of Brand Consistency Report, businesses with consistent branding can realize revenue increases of as much as 33%.
2. Customer Acquisition
- The impact of branding on customer acquisition can be seen in the percentage of American consumers aged 18-65 who are inclined to engage with a brand with a positive brand reputation. According to New Knowledge’s 2019 Brand Disinformation Impact Study, 74% of these consumers are “more likely to do business with a brand that has a positive brand reputation.”
3. Customer Loyalty and Advocacy
- Branding’s impact on customer loyalty can be seen in the percentage of consumers who will still purchase their favorite brand despite being presented rival brands that are cheaper and more convenient to purchase. According to KPMG”s report “The truth about customer loyalty,” 52% of consumers in 20 countries including the United States say they will purchase their favorite brand even if there are cheaper and more convenient choices.
- Branding’s impact on advocacy can be seen in the behavior of consumers who feel connected to brands. According to Sprout Social, of consumers who feel connected to a brand, 68% are more inclined to recommend that brand to a friend, 76% are more inclined to buy that brand over a competitor, 64% are more inclined to be loyal to that brand, and 38% are more inclined to purchase that brand even after a bad experience.
4. Brand Trust and Brand Perception
- The impact of branding on brand trust can be seen in how brand trust increases as the number of channels through which the same brand message is conveyed increases. Based on Edelman’s 2019 Trust Barometer Special Report, a report based on a survey of consumers in Brazil, China, France, Germany, India, Japan, the United Kingdom, and the United States, the percentage of consumers who strongly trust a brand message increases from 32% to 87% as the number of channels through which that same brand message is conveyed increases from 1 to 6.
- Branding’s impact on brand trust can also be seen in how the percentage of consumers who trust a brand message changes with the sequence by which they were exposed to branding channels. Edelman’s 2019 Trust Barometer Special Report shows that among consumers who are not yet customers of a brand, the percentage of consumers who trust that brand’s message is highest (74%) when their first exposure to the message was through a peer and their second exposure to the message was through social media.
- The effect of branding on brand trust and perception can also be seen in the trust rating of the 100 most prominent brands in the United States. According to Morning Consult’s Most Trusted Brands 2020 report, 59% of adults in the country assign a positive trust rating to these brands, and only 13% assign a negative trust rating.
- Based on Bynder’s survey of marketing and branding professionals in the United States and the United Kingdom, the branding channels that have the biggest impact on brand perception and visibility are social media and influencers/analysts. 39.4% of these professionals believe social media have the biggest impact on brand perception and visibility, while 20.2% believe it is the influencers or analysts who have the greatest impact.
5. Profitability
- Branding’s impact on profitability can be seen in how the most relevant brands in the world outperform the S&P 500 average in terms of EBIT growth. According to the Prophet Brand Relevance Index, the EBIT growth of the most relevant brands in the world is 205 times faster than the average EBIT growth of the S&P 500.
- In MBLM”s 2019 Brand Intimacy Study, the profits of the ten most intimate brands in the United States were shown to have grown by 44.98% on average during the period 2008-2017. The average profit growth rates of S&P Global companies and Fortune 500 companies during that same period were only 6.37% and 20.45%, respectively.
6. Market Value and Enterprise Value
- The impact of branding on market value can be seen in how much of the market value of all United States stock listings is accounted for by the ten most relevant brands in the world. According to the Prophet Brand Relevance Index, though the ten most relevant brands in the world account for only 0.1% of all United States stock listings, they account for 10% of the $26-trillion market value of all United States stock listings.
- Branding’s impact on enterprise value can be seen in how much brands contribute to a company’s enterprise value. According to the Marketing Accountability Standards Board (MASB), “brands contribute on average 19.5% and in many cases well over 50% of enterprise value when the impact of brand on firm cash flow, profits and firm value are properly measured.”
7. Price
- Branding’s effect on price can be seen in the percentage of consumers who are willing to pay a premium for brands that have their desired traits. An IBM-commissioned survey of consumers in 28 countries including the United States shows that more than 70% of consumers who find sustainability very important would be willing to pay a premium of 35% for brands that demonstrate sustainability.
- MBLM’s 2019 Brand Intimacy Study also shows that compared to less intimate brands, the top intimate brands in the United States have twice the number of consumers who are willing to pay a premium of at least 20%.
8. Share of Wallet
- The impact of branding on share of wallet can be seen in how meaningful brands are performing in this regard. Based on Havas Group’s global study, meaningful brands are “seeing their share of wallet multiply by 9.”
9. Return to Shareholders
- Branding’s impact on the return to shareholders can be seen in how top brands outperform companies in the MSCI World index. According to McKinsey & Company, over the 20-year period ending in 2019, the 40 strongest brands in the world yielded a return that was 96% higher than the return of the MSCI World benchmark.
Importance of Logos, Website Design, and Content Quality in Branding
Impact of Logo on Branding
- An article published by the Harvard Business Review demonstrates the importance of effective logo design. This article shows that unlike non-descriptive logos such as those of McDonald’s and Minnesota Wild, descriptive logos such as those of Burger King and New York Islanders are associated with higher brand equity.
- Based on a survey of 2,630 individuals and an analysis of 597 logos, descriptive logos lead to greater brand authenticity and increased sales. They also lead to increased willingness to buy and better brand evaluations on the part of consumers.
- A survey also shows that logo designs have an effect on brand trust and logo trustworthiness varies across industries.
- In the jewelry industry, for example, the most trusted logo design appears to be the horizontal style and the best-fit logo color scheme appears to be purple and silver. Of adults in the United States, 23% say they trust the horizontal style the most, and 57% say a purple and silver color scheme best fits the jewelry industry. For adults in the country, modern, fun, and innovative are the words that best describe a trustworthy logo in the jewelry industry.
- For law firms, the most trusted logo design appears to be the filled style and the best-fit logo color scheme appears to be grey and blue. Of adults in the United States, 48% say they trust the filled style the most, and 30% say a grey and blue color scheme best fits law firms. For adults in the country, professional, traditional, and knowledgeable are the words that best describe a trustworthy logo among law firms.
- The colors used in a logo appear to have an effect on brand recognition as well. A signature color scheme has the potential to increase brand recognition by as much as 80%. When more than 2,500 consumers were provided only 10 minutes to study five new made-up logos, only 43% of them were able to recall the brand name, but 78% were able to remember the primary color of the brand’s logo.
- An article from Entrepreneur also shows that 62% to 90% of a consumer’s initial assessment of a product is based on the brand’s color. Based on this same article, it seems unwise for a brand to keep changing its logo. PepsiCo, which is known to periodically change its logo, has a brand equity that is $40 billion lower than that of Coca-Cola.
Content Quality and Business Branding on Websites
- A number of statistics convey the importance of content quality and business branding on websites. For example, a survey by Clutch shows that 83% of people appreciate an attractive and up-to-date website, 50% of website users will leave a website for good if it contains irrelevant content, and 91% of people find visuals and product descriptions equally important.
- An article from Key Medium also shows that 75% of website users assesses a company’s credibility and brand based on that company’s website design.
- A Forbes article lists ten best practices for ensuring visual content is aligned with branding. These best practices were gathered from insights provided by ten experts from the Forbes Communications Council. According to this article, these ten best practices are asking customers for feedback, building content brand guidelines, investing in original photography, creating templates with the use of brand design, controlling every visual aspect, branding graphics, being consistent, building a library of brand assets, keeping the team compact, and letting design tools do the hard work.
- Branded visual content seem to be a priority for marketing and branding professionals in the United States and the United Kingdom. Fifty-four percent of these professionals say they intend to allocate more resources to creating branded visual content. For 18.5% of marketing and branding professionals in these countries, visual brand identity will be the leading brand differentiator this year.
