Return on Brand Investment

By Eduardo de Mello e Souza, Dannemann Siemsen

How do you know if your brand is working for you? One clue can be gathered by looking at your ratio of marketing expenditure to sales over time, i.e. how much do you have to spend in order to generate one Dollar’s worth of sales.

Startup businesses, early on, often run a one-to-one or higher ratio, having to spend one or more Dollars in advertisement, business trips and networking conferences, for every Dollar in sales. But hopefully that's an extremely short-lived phase, as it is impossible to build a successful company on that basis. More often than not, companies go thru a growth phase and after a while their brand picks up momentum and sales grow on their own, without the need for matching increase in expenditure, and often allowing for a scale down in the ratio, up to a steady state point. Firms not experiencing a decrease in their ratio should consider this a sign that something may need to be done.

Brands can also fail large firms, if they become synonymous with negative attributes such as high fees, low flexibility, or conflict of interest in the eyes of the market. In these cases, when changing the traditional brand is either not possible or undesirable, creating new and separate working groups under different brands for new markets, or market segments, is one way to get back on a growth path. This requires both innovation and the use of objective metrics to ascertain performance, lest the issue becomes the topic of endless partner meetings that lead nowhere.

How do you fix the problem? First, heed the old adage that says you should start by fixing your product. No amount of branding effort will save a bad product. This requires getting out of the building and listening to your clients’ needs, even those they are not telling you about, but signaling with their new purchases. For instance, trademark attorneys will likely note the increase in use of automated filing systems, and even the outsourcing of entire departments to these automation providers, by clients who wish to focus on their core business.

Having collected a list of expectations and desires don’t rush to implement them. Look for those which will benefit from synergies within your current practice, likely to result in the most valuable and unique offering to the market. Ideally, if the solution requires incorporating new technologies, seek exclusive agreements so that you will be the only one in your territory with that offer. Last and most important write down the objective metrics by which you define success and track them vigorously.

Branding efforts, here defined in the broadest possible sense to include how to change the market’s perception of your firm, can be undertaken through several different strategies. But without objective metrics, such as your marketing to sales ratio, it is hard to measure actual progress. At your next strategy session, after considering how you can improve your product offerings, rather than argue in fuzzy concepts about your firm’s sales, recognition and branding efforts, look for quantitative measures to gage the return on investments in your own brand.

About the author
Eduardo C. A. de Mello e Souza is head of IP Valuation for Dannemann Siemsen, with over 15 years of experience in intellectual assets valuation, negotiation and business development throughout the Americas.