As the CEO of a branding agency, I’m often asked about the ROI of branding. “What are the real-world business benefits of investing in my brand?” clients wonder. “How is branding going to positively impact my bottom line?”
I’ve written extensively on this subject, but one of the biggest takeaways is that a strong brand makes your marketing initiatives exponentially more efficient and effective, yielding compounded returns over a longer period of time.
The inclination to put too much stock in short-term marketing activations at the cost of long-term brand-building is a trend that’s put the sustainability of more than a few major brands in jeopardy. More on that later.
But exactly how can a strong brand impact your marketing? To answer this question, it’s best to start at the beginning. The difference between branding and marketing is something not everyone understands. Even fewer could clearly explain the distinction if you put them on the spot.
So, what do we mean when we talk about branding and marketing? Let’s start with some practical definitions.
Branding vs. Marketing: What’s the Difference?
Every industry expert worth his or her salt has taken a stab at defining branding at some point in their career. The fact that no two answers are ever quite the same says something about the discipline itself. Here are a handful of worthy attempts at defining brands and branding that I’ve come across over the years:
“A brand is a person’s gut feeling about a product, service or company. A brand is not what you say it is– it’s what they say it is.” – Marty Neumeier
“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” – Jeff Bezos
“A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.” – Seth Godin
“Brand is the promise, the big idea, the expectations that reside in each customer’s mind about a product, service or company. Branding is about making an emotional connection.” – Alina Wheeler
“Your brand is the single most important investment you can make in your business.” – Steve Forbes
At my agency, we define brands as perceptions. Your brand is how your company is perceived by those who experience it. Specifically, they are the perceptions of your employees, your investors, your board, the media, and, perhaps most importantly, your customers. Branding, then, is the act of shaping these perceptions.
As a general rule, definitions of marketing tend not to be as esoteric as those of branding. People are more likely to have a working understanding of marketing simply because it is more practically defined.
“Marketing refers to activities undertaken by a company to promote the buying or selling of a product or service. Marketing includes advertising, selling, and delivering products to consumers or other businesses.” – Investopedia
“Marketing is the process of getting people interested in your company’s product or service.” – HubSpot
“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” – American Marketing Association
Marketing, then, is ultimately about promotion. It often leverages insights from research to enhance the effectiveness and efficiency of promotional efforts whose ultimate goal is the sale of a product or service. As Business Dictionary puts it, marketing is “based on thinking about a business in terms of customer needs and their satisfaction.”
How to Build a Rock-Solid Brand Framework
The reason investing in branding is so important is that a strong brand will always translate into more efficient and effective marketing. Branding ensures a consistent, cohesive, overarching brand narrative that ties each of your marketing touchpoints together.
The value of consistency when it comes to branding and marketing cannot be overstated. Consistency leads to familiarity and familiarity leads to the most ultimate goal of branding and marketing: brand loyalty.
So, in order to get the most out of your marketing, you need a strong brand. But how do you build a strong brand? With a rock-solid brand framework.
Building a rock-solid brand framework starts from the inside out:
At the center is your Brand Compass, which includes core messaging components like your Purpose, Vision, Mission, and Values. It’s important to think critically about this foundational messaging, and know which questions to ask when creating them:
- Purpose: Why does your company exist beyond making a profit?
- Vision: What is the ideal world your brand hopes to bring about?
- Mission: How do you plan to achieve your Vision? What are you going do to? How are you going to do it? Whom are you doing it for?
- Values: What are the underlying principles and ethics shared by your team?
The next layer is your brand’s Positioning, which includes differentiating statements like your Value Propositions, Competitive Advantage, and Brand Promise. Again, the definition of each of these concepts starts with a question:
- Value Propositions: What are the areas of value your brand purports to offer those it serves? What are the needs and challenges of your target audiences and how do you plan to address them?
- Competitive Advantage: What does your company do better than any of your competitors?
- Brand Promise: What is the solemn pledge you make to your customers?
The third layer is your brand’s Personality, which is the set of human characteristics expressed by your brand. Personality is defined by adjectives such as “trustworthy,” “intelligent,” or “fun” that are critical for designers, copywriters, and other creatives to understand when bringing your brand to life. We typically have our clients brainstorm dozens of ideas before narrowing them down to four defining attributes. These attributes answer questions like:
- How would you describe your brand if it were a person?
- How would you want a user to describe your ideal website experience?
- How does your brand look, sound, and act when it engages with the world?
Next up is your brand’s Name, which should relate to your audience on a deep and personal level. Naming extends from your company name to your products and services as well. Naming or renaming a company, product, or service is an in-depth process that starts with extensive competitive research and ends with rigorous trademark screening. The brainstorming that happens in between can be an arduous task. With that in mind, is a rename right for your brand? If the answer to any of the following questions is “yes,” you should probably explore a rename:
- Are you being legally compelled to change your name?
- Have you outgrown your current name?
- Is your name failing to stand out?
- Are you facing an unforeseen PR disaster?
- Have you expanded beyond your current name’s geography?
After your name comes your brand’s visual Identity, which is its face to the world. It includes your logo, color palette, photography, and more. As the cornerstone of your visual identity, your logo should embody a few key criteria:
- It is aesthetically simple. The best logos are uncomplicated, easy to visually process, and even easier to remember.
- It is authentic. It’s true to the elements of your Brand Compass, it’s born from the elements of your Positioning, and it embodies the attributes of your Personality.
- It is a single idea. A logo shouldn’t be expected to embody much more than a singular, central idea. The more ideas you try to pack into a logo, the more confusing it becomes.
Finally, story is the verbal language of your brand. It’s expressed in the voice and messaging that brings your brand narrative to life. The words that make up your brand story should convincingly convey:
- who you are (your Brand Compass),
- what you offer (your Value Propositions),
- what sets you apart from your competition (Your Positioning),
- …all in a way that fosters a meaningful relationship with your customer.
It’s critical to define the above components of your brand framework before you spend the time and money it takes to create the outermost layer of your brand experience: your various marketing touchpoints (website, collateral, signage, advertising, etc.)
In a world saturated with marketing, it’s the meaningful messages that cut through the noise. Branding invests your marketing with layers of meaning tied to the authentic essence of your company. By understanding who you are as a company and why you do what you do, you can develop marketing initiatives that resonate with customers on a deep and lasting level.
A solid brand framework gives you the foundation to tell stories that customers actually want to hear—stories they want to incorporate into their own identities. Branding gives you the tools to create marketing that is often more meaningful than the products or services it aims to sell.
How to Leverage a Strong Brand for Better Marketing
Once you’ve strengthened your brand, the next step is to leverage that brand with effective marketing.
Branding is the foundation on which good marketing is built, but without marketing, even the best brand is a fallen tree in the forest with no one around to hear it.
The functional relationship between your branding and marketing is dynamic and ongoing. Here are 5 of the most important things to keep in mind, when leveraging your brand in your marketing efforts:
1. Branding defines trajectory. Marketing defines tactics.
There’s an analogy that’s often used when talking about how hard it is to change a large system: “It’s like trying to turn an ocean liner on a dime.” Because your brand encompasses every product, service, employee, and touchpoint your company has to offer, branding has to think in ocean-liner terms.
Branding isn’t concerned with the whims of the market because a brand is too big a ship to try and turn on every trend. Marketing, in contrast, is dynamic and nimble, always at the ready to capitalize on shifting tides.
2. Branding is the reason someone buys. Marketing is the reason someone thought of buying.
Marketing is continually in the customer’s ear, urging them to buy (or take a specific action on the road to buying). Branding is what gives them the confidence to make the final click. Marketing delivers your message to the world; branding is what remains after the messenger has swept through town.
Branding is the lasting impression in a customer’s mind, which is why a strong brand makes marketing all the more effective. Branding is the meaning behind the message, the promise delivered.
3. Branding builds loyalty. Marketing generates response.
Marketing is designed to elicit a reaction. Look, listen, try, drink, eat, go, buy. Its purpose is to convince an audience to act in a certain way.
Branding, on the other hand, is designed to engender a connection. Its goal is to position a company so that its customers identify with it on a deep and lasting level. Marketing gets you to buy your first used Subaru at the age of 18. Branding is what gets you to continue buying Subarus for the rest of your life.
4. Branding is macro. Marketing is micro.
Entrepreneur, author, and activist Dan Pallotta once said, “Brand is everything, and everything is brand.” It might sound like a lofty assertion, but it’s true. Branding is a big-picture discipline because your brand encompasses everything within your organization—every last employee, webpage, service vehicle, flyer, and refrigerator magnet.
If your company was a tree, branding decisions would be made at a root level and affect each and every branch, tendril, stem, and leaf. Marketing initiatives often involve multiple branches, but rarely extend to the roots themselves.
5. Branding creates value. Marketing extracts value.
Branding is long term. It generates the equity your company has in the minds of its most loyal customers. That equity is generated over years of experiences those customers have with your brand. They grow to trust your brand and see themselves within it. That’s the value that branding creates.
Marketing is what keeps your brand front of mind when those customers go to make a purchasing decision. It makes sure that the value you’ve created for is cashed in on at the register.
Branding gives customers the knowledge of what you stand for, the understanding to determine whether they like your company, and the insight to decide if they’d like to do business with you.
At the end of the day, marketing promotes and branding reinforces. Marketing is ideal for drumming up short-term leads and sales, but only branding can enhance long-term reputation and strengthen customer loyalty.
How to Strike the Right Balance Between Branding and Marketing
Once you’ve understood the difference between branding and marketing, how to build a strong brand, and how your branding and marketing work together, the question becomes “How much should you invest in branding versus marketing to maximize the impact and effectiveness of both?”
The unfortunate reality is that most businesses spend far too little on their brand, choosing instead to allocate the majority of their marketing budget on short-term marketing activations. There’s even a term for it. Coined by industry experts, “short-termism” describes the increasingly common phenomenon where business owners place outsized value on short-term marketing. Short-termism stems from the misguided assumption that short-term growth automatically leads to long-term growth.
The reality is short-term marketing tactics often stand in direct opposition to sustained, long-term growth. Short-term marketing activation is centered on behavioral prompts that urge customers to buy now. By their very nature, these initiatives—typically deals, offers, news or seasonal messaging—are easily forgotten. Facts, after all, are never as memorable as feelings.
Because they’re not memorable, short-term marketing activations rarely have lasting influence on future purchasing decisions. They don’t accrue brand equity in the minds of customers and, as such, require frequent reminders. It’s a highly inefficient approach that requires continual re-delivery of the same message and does nothing to make future sales targets any easier to reach.
By comparison, brand-building is a long-term approach fostering mental brand equity that primes customers to choose your brand. Winner of the Nobel Prize for his work in behavioral economics, Daniel Kahneman showed that our behavior is most readily influenced by triggers to the part of our brain driven by feelings. The overwhelming majority of our decisions are based on what feels right, not what makes the most rational sense.
We choose brands based on the positive feelings they elicit. We simply believe the brands we like are better than brands we don’t. Branding is designed to appeal directly to customers’ feelings, reinforcing these positive associations over the course of long-term relationships.
It takes time to build the type of positive associations that are the result of brand-building. It’s no surprise, then, that business owners who are hyper-focused on short-term returns often fail to appreciate the value of a strong brand.
The reality is that the memory structures that are created by sustained, long-term brand-building are immensely durable, and only strengthen over time if invested in.
So, how much should you be investing in branding? The solution isn’t to divert all of your marketing spend into long-term initiatives, after all. As we’ve seen, branding is highly dependent on marketing to realize its full potential. The goal is to find the right balance between short-term marketing and long-term brand-building.
Studies have shown that the ideal ratio of budget allocation is typically around 60% for branding and 40% for marketing.
This ratio varies depending on the type and circumstance of your brand and market landscape. Financial services industries, where consumers are relatively less confident, often require ratios closer to 70:30 branding:marketing.
In industries like travel and food service, where products and services are highly perishable, the ideal ratio of investment shifts to 50:50 branding:marketing. The median, rule-of-thumb target should generally be close to 60:40, though. Diverging too far from this ratio hampers your brand’s ability to accumulate the necessary brand equity for future sales growth.
One of the most surefire ways to supercharge your marketing is by investing in your brand. That’s because branding and marketing are highly dependent and interconnected. A strong brand is the foundation on which consistent, compelling marketing is built. Well-defined branding makes each and every one of your marketing initiatives more efficient and effective, positively impacting your bottom line for years to come.