Capital and private equity markets often challenge whether investing in sexy companies will create better return than investing in boring, stable industries. Do I invest in a high profile on-line brand or a non consumer focused roof tile manufacturer? At BrandQuest we claim that a strong brand and marketing strategy will deliver you 1. increased sales; 2. increased profit; and 3. increased company value. But is this true?
Brandz just released their 3rd annual Top 100 Most Powerful Brands Ranking. Brandz, using quantitative research as well as market research, have created a formula for measuring the brand value (in actual $) of a particular brand. Besides being a very interesting read, with Google topping the list with most valuable brand and Blackberry recording the largest increase in brand value (390%), they also measured the shareholder returns of the top 100 Brands that are publicly traded and compared these to the S&P500. The results are staggering.
As you can see, the companies in the Top 100 Brands performed 5 times better than the S&P500. The Strong Brands Portfolio (only the brands in top 100 that had brand value growth of over 30%) performed 7 times better than the s&P500. The real lesson here is that a strong brand seems to protect companies from the full effect of an economic downturn. Now that is really incredible stuff.
