I was lucky enough to attend Martin Roll’s breakfast seminar and he was right on the mark in terms of how Asian companies need to be thinking about their brands. A lot of his presentation was about how brands drive shareholder value. One of the biggest challenges, however, is not knowing this; it’s how do PR departments and communications teams convince an often skeptical CFO to invest in the company’s brand.
One very important study was disclosed (Madden, Fehle and Fournier, 2002). The study of SMEs in the US (that’s SMEs and not Microsoft, Coca Cola and Wal-Mart etc.) found that strong brands constitute 37% of the market capitilization of a company. Strong brands also outperform the market with less risk (beta +0.85) and strong brands outperform the market on most financial ratios. This is the kind of language that a CFO responds to and the kind of information he needs to help loosen the purse strings and understand the value of branding from his perspective. Benchmark a measurement of brand equity from various knowledge, perference and financial metrics, and you’re on your way to greatly enhanced dialogue with the man in charge of the beans.
It’s pretty intuitive really, and should be second nature to communications professionals. Speak the CFOs’ language and not your own. Simple.