Strong brands deliver higher shareholder returns

In the UK, the top 50 brands delivered returns 30% higher than the FTSE 100 in 2021, and among those organisations whose brands make up a larger share of their total value that figure rises to 80%.

That’s according to a new Brand Finance report, Why Brands Matter 2022: New Evidence from the UK, commissioned by the IPA and based on analysis of S&P and new data from the FTSE 100 benchmarks.

Why it matters

The report concludes that not only are strong brands a critical strategic asset delivering value, but that their budgets are an investment not a cost.

Takeaways

• Strongly branded companies recover quickly after a crisis and retain their performance. Brand Finance’s UK data proves this for each crisis – 2012 / 2018 – and it now has data for 2020 which again demonstrates this speed in recovery.
  
• Investors consider companies with strong brands to be less of a risk, meaning the cost of capital is less and they pay less on debt.
• Brand Finance estimates that intangibles represent over half of total organisational value. Of this, marketing-related intangibles represent at least 20% of organisations’ intangible assets. 
• McKinsey has found that top-growing companies invest 2.6 times more in intangibles than low growers across sectors.
• Brand Finance’s BrandBeta metric, which measures the popularity and mental availability of brands, demonstrates that 80% of the variance in market share is explained by these two metrics of familiarity and consideration; a 1% increase in a BrandBeta score equates to a 12% increase in claimed usage.

Key quote

“Those brands who keep their nerve and ensure the strength of their brand are more likely than ever to come through the other side from any disruption not only quicker but stronger and more profitable” – Annie Brown, Brand Finance General Manager UK Consulting.

Sourced from Brand Finance