The Value of Branding ROI vs. Advertising ROI

The value of branding constantly comes up in conversations we have with potential clients that are looking for a better way to chart a path forward for their marketing, sales, and internal communications strategies. Branding and advertising have two very different outcomes that can both be beneficial.

So let’s get really personal with our exploration of this topic and related it back to something almost everyone understands… Coffee. Everyone loves coffee (even if you don’t, just read this anyways).

Think about the last time you went to get a coffee and what went through your mind before choosing where to go. Am I staying there to drink it? What’s the vibe like? How much money do I have? Do they have the types of coffee drinks I like? Am I comfortable there? Will it be busy? Am I willing to wait? Will my friends be jealous I went? There’s a ton of considerations. Some of these questions are related to branding and others are more related to a purchasing need. All of these are considered in just this one simple purchase process. So where is a brand supposed to start?

Before we dig in, it’s important to note that this is not an either/or situation. Branding and advertising belong together. This article is a reminder that both should be part of the plan and how they each contribute.

The Value of Branding & Branding ROI

The purpose of a brand is to attract consumers and embrace them to the point that they willfully become loyalists. This is done over time and takes a considerable amount of foundational work, a high level of detail, caretaking, and ongoing engagement.

Brand strategy starts with self-reflection, typically in collaboration with an objective outside party (an agency or consultant). This process takes time and costs money, both of which are a scary proposition for some. Developing a true, documented and vetted brand strategy is an investment in all future activities ranging from advertising to customer experience. Every piece of creative collateral such as brochures, business cards, postcards, print ads, digital ads, websites, landing pages, search ads, paid editorials, wall wraps, interior design, packaging, and countless other pieces will be influenced by this work. These are not one-time projects, these projects will be happening for years to come and each one will borrow some level of knowledge and inspiration from the brand strategy to meet the customer’s expectations.

At Luminus, we define brand as “the sum of all interactions between an organization and its audience.”

The end result of this approach is consistency in presentation, customer interactions, and delivery of the brand promise (product and/or experience).

Let’s bring this back to our coffee story. Without naming the company, let’s describe their brand strategy and see if you can guess who it is.

This coffee company prides itself of responsibly sourced beans and exemplary treatment of its employees. Their locations offer a true cafe experience with dark woods, stylish design, comfortable furniture, and meeting spaces for small groups to collaborate. Their beverages are carefully prepared from scratch every time and handed off at the counter by saying the customer’s first name. If the drink isn’t prepared correctly, they will immediately remake it to your liking, no questions asked. They choose to defy the norm and use a foreign language to describe their drink sizes rather than small, medium, and large. Their coffee mugs and accessories are popularly used by loyal customers to reduce waste as well as maintain brand association from their friends.

You know who this company is. You know who they are through brand awareness, even if you don’t prefer their product. This company rarely utilizes traditional advertising tactics, yet their brand grows in value and their customers remain loyal as they age, travel from city to city, or find themselves having to wait in long lines.

To achieve this level of brand strategy success you must take the time to diagnose the brand’s path forward, foundational guidelines, and future considerations before executing tactics over time and letting the experience grow in a compound way.

Customer loyalty and preference. This is the value of branding. This is branding ROI.

The Value of Advertising & Advertising ROI

The purpose of advertising is to reach new audiences, typically with the intent to inform and sell.

Advertising is a way to gain direct exposure in a short amount of time to a large amount of people. Creating brand awareness through repetition will open the doors to new customers who could potentially become brand loyalists. Advertising is a short-term strategy that can easily change as markets, audiences, or societies shift over time.

Advertising can come in many forms such as print, digital, experiential, tv or radio commercials. When done correctly, multiple channels are used to reach the target audiences in as many different ways as possible. Some tactics such as giveaways, coupons, sales, and limited time offers are also incorporated as hooks.

Creative is a big part in what makes for a successful advertising campaign. In order to launch an integrated marketing campaign across multiple channels, you must have a strong creative concept that can be repurposed in multiple mediums.

For an advertising campaign to be successful, it needs to adhere to brand standards for visual presentation, voice & tone, and messaging. Any company that’s established a brand strategy and documentation will have no problem with this. Others may struggle with maintaining consistency between campaigns and in turn struggle with consistency in successful results.

With the combination of strong creative and an ad architecture that’s dialed in for the right audience, an advertising campaign can help generate sales while it’s running and see a direct ROI for dollars in vs. dollars out. These activities can be tracked directly and calculated as costs through the entire funnel down to the cost per conversion. When paired with strong financial reports from the company’s business reports, you can easily see a return on advertising spend right away and make any adjustments necessary to maintain or improve the performance.

Now we’ll bring our coffee example into play here. I’ll describe a coffee company that advertises and you try and guess who it is.

This company prides itself on being the “stop on the way to work” for a quick cup at a low price. They regularly place coupons in the Sunday newspaper and monthly mailer. They offer combinations that discount the price of a coffee if it is purchased with another product like a food item. Some of their drinks are pre-portioned and machine made. As part of their growth model, they’ve partnered with gas stations to have counters inside. The drive thu at their locations is typically backed up to the street during the morning rush on weekdays.

My guess is, you’re struggling to think what company this may be as you consider a few different options you’ve encountered in your market. That’s not to say that each doesn’t have its own brand loyalists developed over time who love the routine, convenience and idea of saving money. Companies that focus on advertising first can still have brand equity, the approach just may be more sporadic and unpredictable over time.

Advertising drives sales while campaigns are active. It’s measurable and effective, but results are limited to when activity is being intentionally driven.

This is the value of advertising. This is advertising ROI.

The Value of Branding and Advertising Together

It’s possible to do one without the other, but ultimately a solid strategic marketing plan needs both aspects of brand and advertising to have long term sustainable results.

Without a definitive brand strategy, advertising will be a flash in the pan. Sales will always be a game of chasing results through paid efforts. Growing a loyal customer base will be stunted by sporadic engagement and inconsistent experiences.

Without advertising a brand may lose touch with its loyalists. In the event that a brand does not want to advertise for the quick sale, the other option is sponsorship of community events and programs that give back in a way that matches the brand’s values. This is still advertising, just a different form of it.

In summary, the value of branding ROI is long-term and takes a lot of detailed work up front to protect all work that follows in the future to foster the desired customer growth. Advertising ROI is easily determined through trackable results, but will show short-term gains that will need to be repeated to simply maintain plateaued results. Understand the role each plays and make sure both are included as part of a well designed marketing plan and budget.

If you’re interested in learning more about how we at Luminus approach this type of work with our clients, check out our brand strategy process and creative agency services pages.

For another angle on this topic, check out Episode 28 of the Building Brands Podcast with Tim “What is the ROI of Branding?”