WPP’s and Kantar Millward Brown’s launch of the first BrandZ Top 30 Most Valuable South African Brands report at the Johannesburg Stock Exchange was a lively and thought-provoking event.
One quite simple, quite beautiful and profoundly persuasive chart has stuck in my mind; it compared the value performance of the BrandZ Global Top 100 Strong Brands Portfolio with those of the S&P (Standard & Poor’s) 500 and the MSCI (Morgan Stanley Capital International) Index over a 12-year period. Over this time, the value of the S&P, 500 increased 102% but the BrandZ brands, those with the strongest brand equity, increased by 172.1%!
Moreover, the performances of these strong brands were less affected by the 2008 financial crisis and recovered a good two and a half years earlier than the other brands. The chart was a remarkable demonstration that strong brands generate significantly superior shareholder returns.
In a salutary reminder of how turbulent the last decade has been, Doreen Wang, global head of BrandZ at Kantar Millward Brown, pointed out that 48 of the Top 100 brands have been displaced in the past 10 years. Farewell Blackberry and Nokia; hello Uber and Instagram. Fortunately, Wang was able to dispense sage advice as to how to build strong global brands.
The first of five key drivers she highlighted was ‘brand purpose’. Now this purpose clearly is more than simply delivering profit, but it need not be earth-shatteringly revolutionary. Adding value by making consumers’ lives better or easier is a good enough purpose for any brand. Of course, being able to successfully anticipate and fulfil consumers’ needs and wants, requires a commitment to being fully consumer-centric. The rewards are impressive: such brands have shown 175% growth over the past 12 years. It is true that some examples of such brands e.g. Airbnb, PayPal and Amazon, have also been true disruptors.
The second driver Wang pointed out was that brands perceived to be highly innovative are likely to enjoy a stronger growth trajectory: a remarkable seven times those in the lower two thirds. Importantly, it is crucial that consumers recognise, appreciate and endorse this innovation. Perhaps it is unsurprising that innovative brands actually invest more in advertising than their less visionary counterparts; if there is a worthwhile story, then it makes sense to tell it.
Indeed, Wang highlighted stated that that strong communication gives brands a distinct advantage. This was doubtless music to my agency colleagues’ ears. Strong communication extends beyond traditional advertising; great consumer insight, creativity and covering off the relevant consumer touchpoints are important components.
In this digital and data rich era, Wang pointed out the role for targeted personalised ads with specific purposes. Once again, the numbers were impressive, brands which enjoyed both meaningful differentiation and strong communication, benefitted from significantly accelerated brand growth: 187%, double that of differentiated brands with weak communication.
As brand engagement and transaction are beginning to merge, it is little surprise that brand experience across the entire brand ecosystem plays an important role in cementing consumer relationships. Clearly Amazon excels at this, and it has been fundamental in Alibaba’s success; personally, I rate Apple as a maestro here.
The fifth driver Wang referred to was ‘love’, which she described as being a trigger for preference. It is not enough for successful brand to simply fulfil functional needs, they need to touch consumers’ emotions. The act of choosing a brand has an intangible and subjective element: that it should be pleasurable, or, at least, agreeable.
She pointed out that ‘brand love’ is an important cushion. It is difficult to sustain constant innovation; positive emotions help consumers to sustain their loyalty during innovation troughs. Again, Wang put numbers to this more abstract aspect: over the past 12 years brand in the high ‘love’ sector have enjoyed value growth of 191%, compared with their low ‘love’ counterpart’s growth of a mere 32%.
The final slide delivered a particularly heartening message that technology-enabled human-centric brands will win. Human insight remains as important as AI and algorithms.
Having spent some decades working in the media agencies, Britta Reid now relishes the opportunity to take an independent perspective on the South African media world, especially during this time of radical research transformation.
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