Investing in Marketing is Good Business

So much of today's business world is based on short term metrics. In the world of marketing, this has translated to brands rightly spotting an opportunity to use data and technology to drive ever more efficient and effective media buys. 

The focus is on performance and results. Sales. Bottom Line. 

There isn't anything wrong with that, but it pays to also look at the bigger picture. I recently wrote about one example where  a discussion with a senior marketer about the role of programmatic in her marketing strategy gave me pause to think about the importance of putting customers at the heart of everything, and investing in that relationship. 

WPP recently published its annual BrandZ top 100 brands, and it makes interesting reading. This is almost without a doubt the most rigorous and most quantitative analysis of the value of brands that exists in the world today. There are various versions (the global top 100, the China top 100 etc). 

But the thing that interested me was a presentation that WPP CEO and Founder Sir Martin Sorrell delivered at the launch of the China Top 100, in which he clearly articulated a case for the value of investing in brand. 

Here it is:

So effectively if you had invested $1,000 each year on an unweighted basis in a portfolio made up of the top 100 BrandZ brands in that year, you would be up 106% today. This compares very favourably to the S&P500 and the MSCI at 60.7% and 20.1% respectively. 

And the same trend can be seen with the BrandZ top 100 brands in China.

Portfolios made up of the top 100 brands clearly outperform the MSCI China index (which actually is negative for the same period). 

So yes, business results and performance matter. But the above clearly shows that investing in brand, and the long term relationship of that brand with customers matters too. Pity its so often forgotten these days in the rush to drive performance.