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The Conversation

Brands Are Company Assets: Is The Message Finally Getting Through?

New IPA research suggests analysts now see brands and marketing as key to company success

By Creative Salon

It’s not often that analysts (particularly financial ones) tell you what you want to hear.

But the City analysts who spoke to the IPA for its latest Investment Analyst Survey had good news to share. “Strength of brand/marketing” was the factor most frequently cited by the 200 analysts surveyed (at 79 per cent) when asked how they appraise the companies they cover, leadership quality was the second biggest factor (76 per cent) and technological innovation (72 per cent) the third.

And there was more good news: more analysts (37 per cent) see marketing as an investment than a cost (24 per cent), with 90 per cent agreeing that marketing spend should be capitalised, like Technology R&D, either all or part of the time.

So the power of marketing and brand – so often dismissed as a mere intangible on a balance sheet – is increasingly being recognised by those people many company boardrooms are desperate to please most: analysts (not consumers).

But there is still work to do. When asked what they would think if one of the companies they analysed had decided to slash their marketing spend, only 36 per cent of analysts felt it would a ‘short-term fix with long-term negative consequences’, compared to over half (52 per cent) who saw it as a ‘positive cost-saving measure’

Creative Salon’s Claire Beale took to the stage with the WPP chief executive Mark Read at the IPA’s EffWorks conference this week to address the fact that, while analysts acknowledge marketing’s contribution to “profit margins” and “sales volume”, they were less sure on “sales price” and “share price”.

While food inflation is starting to drop from the eye-watering and record 19.2 per cent in March it was still 11 per cent in the four weeks to 1 October, according to figures just released by Kantar. FMCG manufacturers therefore continue to face many challenges. However, Read pointed out that some FMCG manufacturers – he cited Kraft as an example – have managed to put up prices but use an increase in marketing spend to mitigate a negative reaction at the tills. They have confidence in the resilience of their brands, despite the necessary price increases that have had to be passed onto consumers due to inflation.

This is supported by research from Liberty Sky’s Ian Whittaker, also unveiled at Effworks, which shows how strong brands have managed to retain volume share despite price increases though the current economic crisis – particularly timely given this week’s International Monetary Fund figures predicting that UK inflation will remain stubbornly high in 2024.

All of which circles back to a perennial question: why do so few major companies (less than a third) have board-level marketing positions.

The case for more marketing influence in the boardroom was already clear enough to anyone who understands marketing: because CMOs understand user experience, they ask the right questions about strategy in the boardroom, they can drive better decisions by connecting the abstract of long-term business goals to the tangible real-world impact on stakeholders, and they are problem solvers who can translate the complex – like the expression of brand purpose through digital transformation – into products and services that consumers want. When CMOs are left out of the boardroom, their insights — and the business risks and opportunities that their expertise might identify — are lost.

Analysts it seems are starting to grasp this. When will CEOs cotton on?


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