So how much is effective marketing (building a great brand) worth?

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Steinway 50,000
Steinway’s 50,000th piano, manufactured in 1988. (Photo from Wikipedia.)

How much value should you put on the results of effective marketing in the architectural, engineering and construction community? This is a good, but largely unanswered, question. However, there are some studies that indicate that successful branding can increase a company’s value by 20 to 33 per cent. See this fascinating report: “What’s your brand worth?” by  David Edelman at McKinsey.

It turns out that companies can determine how much a brand is worth. We’ve seen this most recently in the bidding war breaking out for Steinway, which is a brand that transcends time and technology. It has legendary cache, in a way that fabled brands like Kodak or Polaroid did not. We know that strong brands with good reputations have 31% better total return to shareholders than the MSCI World average. I love this quote from Kasper Ulf Nielsen, an executive partner at the Reputation Institute, on this topic: “People’s willingness to buy, recommend, work for and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of their products.”

He adds: “It’s also important to bear in mind that this isn’t just a B2C story. The power of brands for B2B companies is critical as well. B2B companies with strong brands outperform weak ones by 20 percent…”

Of course Edelman is using this posting as part of a content-marketing strategy to promote McKinsey (and McKinsey’s brand). The data here, as well, doesn’t specifically relate to the AEC community. I haven’t seen yet studies that correlate effective marketing, branding and business valuation in our sector. The topic might be a relevant research subject for the Society for Marketing Professional Service (SMPS) Foundation. 

My sense is that you could draw a return-on-investment curve on marketing strategies  for this industry which would show a shockingly high return for very little money until you reach a core competency level, and then the results would level off quite quickly to a norm, where, with best practices, you could achieve some incremental gains. In these environments, the 20 to 33 per cent business to business or consumer valuations might be useful in determining your marketing budget and priorities. In any case, the returns from effective marketing can be truly impressive. The challenge is measuring “effective marketing”.

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