What's Happening?
IMS has launched a new tool called BrandEquity ROI, designed to measure the impact of brand investment on a company's revenue. This tool uses various metrics such as brand awareness, sentiment, and reputation, aligning them with business key performance indicators like sales and leads. The tool aims to identify the influence of brand advertising on business goals and determine strategies that can lead to long-term growth. According to IMS, companies that cease brand investment for five years may need to spend seven times more annually to maintain sales levels compared to those that continue investing. Alex Vass, the founder and CEO of IMS, emphasized that BrandEquity ROI provides a financial rationale for sustained brand investment, helping
to protect mature brands from decline.
Why It's Important?
The introduction of BrandEquity ROI is significant as it addresses a common issue faced by mature brands: the tendency to cut brand-building budgets to protect short-term margins. This often leads to a decline that is difficult to reverse. By providing a financial case for continued brand investment, the tool supports chief marketing officers and chief financial officers in making informed decisions that can prevent long-term revenue decline. This development is crucial for businesses aiming to maintain their market position and ensure sustainable growth, especially in competitive industries where brand perception plays a critical role in consumer decision-making.
What's Next?
As companies begin to adopt the BrandEquity ROI tool, it is expected that there will be a shift in how marketing budgets are allocated, with a greater emphasis on sustaining brand investment. This could lead to a reevaluation of marketing strategies across various industries, potentially influencing how businesses approach brand building and advertising. Stakeholders such as marketing executives and financial officers may need to collaborate more closely to align brand strategies with financial goals, ensuring that brand investment is seen as a long-term asset rather than a short-term expense.
