Building a brand is like building Rome – you can’t do it in a day.
Two thousand years ago, Rome was the fulcrum of the biggest empire (27BC – 395AD) the world had ever seen. The Roman brand had enough mojo to conquer most western civilizations under its banner of a rampant eagle, a banner that signified ‘submit to Rome or perish’. “Peace” and especially trade flourished during the period of the Roman empire, like it had never done before.
Any brand, as was the case with Rome, takes a long time to build. If it is built right and has enough mojo, it can grow the perceived worth of any product under its name well beyond its intrinsic physical worth. For example, a product under the Woolworths banner is perceived to be worth more than an identical product under the Pick n Pay banner. (If you don’t believe this, go and check the price of 3 bananas in Woolworths and then check the price of 3 bananas at Pick n Pay.)
So, what has this got to do with measuring ROI?
Well, most marketing departments and marketing experts have become pretty obsessive about measuring the direct return on investment attributable to marketing expenditures. In principle, this is a very rational and responsible approach to managing the marketing budget, but it overlooks the fact that marketing is about managing consumer perceptions and consumers are famous for being neither rationale nor responsible. (But accountants love ROI and most companies are run by CA’s.)
There is room for the need to measure ROI (or in the context of Marketing expenditure – ROMI – return on marketing investment) in respect of marketing expenses, but there are two types of marketing expenditure that need to be considered:
- Promotional expenditure. This is expenditure designed to grow sales and / or profits in the short term. Here it is relatively easy to quantify, in money terms, the return on the investment of the marketing expenditure. You know how much you spent on discounting, merchandising, labelling, advertising and so on. You also know the increase in sales revenue resulting from the promotional expenditure, so it is easy enough to calculate the ROMI.
- Brand building expenditure. This is expenditure designed to grow brand image in the long term. This is the stuff the builds brand mojo and if you are Woolworths, enables you to get away with charging twice the price of your competitors for bananas. Here it is not easy to quantify the ROMI in money terms – at least not in the short term. Like I said earlier, Rome was not built in a day. When it comes to measuring the ROMI in respect of brand building expenditures, you need to measure the return not in terms of money, but in terms of measures that are a much more tricky to quantify because they require primary consumer research before and after the marketing expenditure to gauge the effect of the expenditure on consumer perceptions. Here are some examples of essential soft measures to determine the effects of brand building activities:
- Brand awareness. You will probably agree that the higher the level of brand awareness the better the chance of a brand commanding a price premium over its lesser-known competitors. Activities geared towards boosting brand awareness must be measured to check the degree of awareness improvement achieved.
- Brand affinity / NPS. By the same logic, brands that are more loved by consumers are perceived to be worth spending more money on.
- Brand attributes. In addition, brands that are better perceived to satisfy customer needs – both rational and especially emotional (brandmojo) – are more likely to be loved.
Progress towards achieving clearly set targets around these types of brand objectives can and must be measured in order to determine the ROMI. Brand building expenditure is investment in brandmojo for the future rather than investment for an immediate money return. You can always put your promotional expenditure on hold to retain cash in the short term, but you should NEVER put your brand building expenditure on hold.
In the long term it is your brandmojo that will sustain your brand through tough times and boost your sales in the good times, even if it is difficult to determine the ROMI.
Just how well do you understand your brandmojo?
If you would like to find out more about All Told and what we offer, please visit our website www.alltold.co.za.
Or if you would like to discuss brandmojo or ROMI with us and share your thoughts, please contact Megan (firstname.lastname@example.org / 072 060 5421)