We read the annual investor reports from 5 well known consumer brands to see exactly what CEOs think about the importance of brand. Here's what we learned.
Marketers talk a lot about “brand,” but what does it really mean to the CxOs who sit in the boardroom – the ones who deal in cold, hard figures? Is it really that important?
We delved into the annual reports of five well-known, publically listed companies in 5 very different industries to see what their most senior leaders have to say about it.
Read on to discover wisdom on brand equity, brand strength, brand awareness, brand image and brand identity (you can also learn about the tactics they’re taking to increase them).
Feargal Mooney, CEO, HostelWorld Group
“Consumer trust in our brand is essential to ongoing revenue growth.”
Brand strength, according to the chairman of hostel booking platform HostelWorld Group, plays a key role in the ability to increase profits. As such, the company states it invested heavily during 2016 in increasing brand awareness among its target audience of young independent travellers.
Says Feargal Mooney, CEO of HostelWorld Group “If 2015 was the year of launching and testing the ‘Meet The World’ proposition targeting budget-conscious independent travellers, 2016 was the year of expanding this brand proposition globally across digital-only channels.”
The brand awareness campaign focused on being “ever-present” in social media, with increasing amounts of video content, and succeeded in increasing HostelWorld’s following by over 145% to 1.4 million fans.
“We increased our video output by almost 40% during the year, successfully enabling Hostelworld to showcase the modern hostelling experience in a compelling format. The pinnacle of this activity was the global launch of our second major brand campaign: In Da Hostel with 50 Cent.
“Parodying the cult-status MTV Cribs episodes, world famous rapper 50 Cent showcased the TOC Hostel in Barcelona to the world, breaking down outdated perceptions of hostels through a 2½ minute video that went viral across the globe with over 80 million views.”
Meanwhile, the company also aimed to increase PR coverage globally by combining a mix of market-leading data insight stories with more fun items of content (‘Human Beer Pong’ and ‘Skyping the parents whilst getting a Tattoo’). This activity resulted in increased blog traffic – over 1 million visits in December 2016 alone.
Through its endeavours to increase brand awareness, HostelWorld has made efficiencies in cost-per-click and cost-per-booking, with more people booking direct.
Feargal Mooney commented, “We are confident that our marketing and mobile led strategy, with the goal of diversifying online marketing channels and increasing Hostelworld brand awareness, will continue to drive efficiencies in our acquisition costs.”
Bookings from not-paid-for channels increased to 61% of overall group bookings, and marketing expenses as a percentage of net revenue decreased to 41%.
And while bookings were declining in the first half of 2016, by the end of the year they were 2% higher than the same period in 2015. “This was a reflection of the success of our strategic focus on growing the Hostelworld brand,” says Segal. He adds: “The investment in our technology and brand has placed the group in a strong position to capture future growth in the hostel sector.”
HostelWorld have also identified brand as an important investment to make in order to derisk changes in Google’s algorithm, potentially resulting in decreased search engine traffic. Great brand awareness leads to great levels of direct traffic, reducing reliance on Google.
However brand is itself a strategic risk: “Consumer trust in our brand is essential to ongoing revenue growth. Negative publicity around our products or services could negatively impact on traveller and accommodation provider confidence and result in loss of revenue.”
Peter Plumb, Chief Executive Officer, MoneySuperMarket Group (MoneySuperMarket, MoneySavingExpert & TravelSuperMarket)
“Our three leading brands give us significant strength, breadth and diversity, generating growth and increasing the predictability of the business.”
For the MoneySuperMarket Group, building trust in its brands is pivotal to all it does. That’s because its business model is reliant on consumers’ willingness to share personal and financial information online.
According to CEO Peter Plumb, what sets the company apart is its reputation: “Customers have the reassurance of using a family of well-known and trusted brands and of receiving customer support either online or offline through our customer service centre.”
Since reputation is so central to MoneySuperMarket Group’s brand equity, the company uses Net Promoter Score (NPS) as one measure of its success.
NPS puts a percentage score on consumers’ likeliness to recommend the brand and provides a good indicator of brand loyalty
In 2016, the group witnessed a decline in NPS following a change of focus for its TravelSupermarket brand. The drop in NPS was reflected in a 9% decrease in revenue for TravelSupermarket, demonstrating the symbiosis of reputation and profits.
“Our efforts to earn customer loyalty are reflected in our Net Promoter Score,” says Plumb. “In 2016 our Group Net Promoter Score fell 5%, reflecting the challenges we experienced with the TravelSupermarket.com website.
“We have learned that not all innovative services are as good as customers tell us through user testing. During the migration of TravelSupermarket to its new platform, with a focus on mobile customers, we lost sight of the true value TravelSupermarket brings through its services to customers: that of price comparison.
“However, after a year of relentless focus on getting back to our roots, the turnaround is well on track. The final quarter of 2016 was back into double digit revenue growth, with lessons learned.”
Such is the importance of brand strength, MoneySuperMarket Group recognises it as a principal risk to the business.
To mitigate this risk, there is significant “Investment in advertising across a range of media to maintain the Group’s brands in customers’ minds.”
Another way they mitigate risk to their brand is by focusing on developing innovative services which help customers save money – and keep them coming back for more.
“We have continued with our significant capital investment programme which commenced in 2014 to improve our technology, our data capabilities and our customer journeys.“
“These innovative tools encourage more customers to use our services and share their data with us, allowing us to increasingly personalise services and make it easier for customers to save money with us. More than 22 million customers now keep data in a MoneySuperMarket ‘MyProfile’ account.”
Brian Brick, CEO, Moss Bros
“Continuity of brand presentation and pricing across all our channels is paramount.”
A key challenge for retail brands is creating a clear brand identity that spans both physical and virtual real estate – in other words, a consistent and compelling omni-channel brand experience.
A brand that delivers a great in-store experience but is inconsistent online (or vice versa) will be unable to maximise its brand equity.
It’s a fact recognised by Moss Bros Chairman Debbie Hewitt, whose key objectives include delivering a consistently outstanding customer experience across all channels.
“Continuity of brand presentation and pricing across all our channels is paramount in ensuring excellent customer service and therefore customer experience,” says Brian Brick, the CEO.
Moss Bros aims to be seen as “the first choice for men’s tailoring” and has been investing heavily in brand identity since consumer research conducted by the company in 2013 revealed a lack of brand awareness.
“Some potential customers lacked awareness of our retailing credentials and product offer,” says the report, “we have therefore continued to develop the positioning of the brand.”
This has included re-launching a number of sub-brands under the master brand of Moss Bros and a store refit programme. The strategy has paid off, with a 20% increase in profits before tax for 2016/17.
Say Brian Brick, “Building brand equity in this way, alongside significant improvements in our multi-channel proposition, leaves us well placed to capitalise on the tailoring expertise which we possess in-store and online.”
And with customer loyalty a cornerstone of brand equity, Moss Bros reports it has completed a project to create a single customer database, including full customer transaction history.
“The leveraging of our customer database will enhance communication with the customer and perception of the brand,” says Brick.
Moss Bros Chairman, Debbie Hewitt, also highlights the central importance of maintaining a close eye on consumer trends and new market entrants:
“We remained focused on our multi-branded and segmented pricing architecture and traded our way through what was an unforgiving market, which saw a number of new branded entrants to the Menswear market and the exit or reduction in market share for a couple of long established brands, reinforcing the need for us to keep close to consumer trends and to modernise our offer accordingly.”
Just how important brand is to the company is underlined by looking at senior executive’s remuneration, where implementing brand tracking made up 15% of their bonus structure in 2014/15 and a further 5% in 2015/16.
FOOD & DRINK
James Watt, Founder, BrewDog
“Our key strengths: Our strong and distinctive brand.”
BrewDog is the number one craft brewery in the UK. It has been the fastest growing food and drinks company in the UK for the last five years and in 2016 the company grew its UK sales by a massive 97%. The secret to its success? Getting people to invest – both emotionally and financially – in its brand mission.
In 2009 BrewDog launched a crowdfunding campaign inviting people with a passion for craft beer to take a stake in the company. “Equity for Punks” attracted over 1,300 investors and the company’s anti-business business model was born.
The Scottish brewer is now about to launch its fifth crowdfunding round, aiming to raise a minimum of £10 million. Its last effort raised £19 million and broke records for being the biggest ever online equity crowdfund in history.
Says founder James Watt, “We have a community of just over 55,000 Equity Punk Investors. They are advocates, ambassadors, our best customers and the heart and soul of our business.”
Indeed, BrewDog says it only cares about two things; beer and people. It demonstrated its commitment to its fans in 2016 by releasing all its beer recipes for free.
“DIY Dog was an unprecedented move. The response was so massive, it broke our website, and has inspired countless replications and innovations based on our back catalogue since.”
As well as brewing beers like Punk IPA, BrewDog has 47 bars worldwide, which further help drive brand awareness. Watt says: “As well as accounting for 7.5% of the beer we brew they also provide a beacon for craft beer and really help us grow our brand and connect with our customers.”
The brand equity built by BrewDog translates into some serious figures – overall revenue in 2016 grew 61%, hitting nearly £73 million. Not bad for a company started by two 24-year-olds only 10 years ago.
“Our rapid growth has been underpinned by a solid profitability that has seen us generate strong profits, which we have continued to reinvest in the two things we care most about: our beer and our people. This all contributes to fuelling further growth.”
HEALTH & BEAUTY
Sheri McCoy, Chief Executive Officer, Avon
“To drive sustainable growth, we must invest in the Avon Brand.”
Avon may be an iconic brand, but proving its relevance to a younger audience is something the 130-year-old company is having to work on. In 2016, Avon embarked on the first year of a three year Transformation Plan, which aims to improve shareholder value.
“To drive sustainable growth, we must invest in the Avon Brand and improve the experience for our representatives by evolving and modernising our business as we compete in the ever evolving digital world,” says Avon CEO Sheri McCoy.
Strengthening the Avon brand is one of five key areas the company has identified to help achieve its ambitions. It wants to position Avon and its face-to-face social selling model as a means of empowerment for women through the self-employment opportunities it offers.
“During 2016, we successfully rolled out our Beauty for a Purpose positioning to all markets around the world – it speaks with one voice about our core social purpose of economically empowering women, underpinned by demonstrable product quality and value.”
Avon realises how important brand image is to future profitability: “Our ability to improve our financial and operational performance and implement the key initiatives of our global business strategy is dependent upon a number of factors, including our ability to reverse declines in our market share and strengthen our brand image.”
As McCoy adds, Avon has spent many years building a “well-known and well-loved global brand” and therefore must protect the brand equity it has accrued: “The market for our products depends to a significant extent upon the value associated with our product innovations and our brand equity.”
To do that, Avon is getting closer to its representatives and customers by investing in the platforms and channels that allow them to drive conversations. In 2016, this led to around 25% growth in Avon’s total global social media reach, with some 20 million Facebook fans, approximately 280 million YouTube views and a doubling of Instagram followers to nearly two million.
Says McCoy: “I’m optimistic that the steps we have taken in 2016 have laid the foundation for further progress in transforming our business. We have a strong set of building blocks for the future, with an iconic brand, leading market share positions in many countries, a strong innovation pipeline and an incredible representative base of around six million women who are ambassadors for the Avon brand.”
As we can see, brand equity is not just marketing-speak; it’s something these CEOs – and shareholders – take very seriously. It is something with real monetary value – and as a company asset, can also represent a strategic risk.
Looking ahead, all these big companies are focused on strengthening their brands, so if it’s not something you’re currently thinking about, you should be. And the only way to manage it, is to measure it, which is why we’ve launched our Brand Intelligence tools.
Brand equity is built through a combination of brand awareness and brand perceptions. Attest can help you measure both, enabling you to assess your current brand equity and providing the insight you need to develop a strategy for growth.