Brand preference is the secret weapon for growth

In challenging times business leaders should turn to brand preference to gain provide an edge over the competition, according to DDB’s Rupert Price.

“Half the money I spend on advertising is wasted, the trouble is I don’t know which half” is the common quote, attributed to either retail magnate John Wanamaker or industrialist Lord Leverhulme.

Irrespective of who said it first, the point is well made. Isolating the impact of creativity on commercial outcomes is hard to prove.

Wanamaker died in 1922 and Leverhulme just three years later in 1925 and yet here we are a hundred years later and still the answer is no clearer today than it was then.

Despite endless reams of data accessible at our fingertips and a century’s worth of case studies to look back on, most people working in modern marketing today would struggle to come up with a comprehensive and compelling answer to what or how their advertising contributes to the performance of their business.

This is fine in a world where business growth is easy to come by and marketing budgets continue to expand.

Yet in financially constrained times, where every brand is looking for growth and there isn’t much growth to be found, brands can no longer get away with it.

A company needs to make confronting and challenging investment choices, and this is when advertising quickly finds itself to be the last dog at the bowl; hoping to grab the “budget leftovers” without a compelling case for what that budget will return.

Ultimately it comes down to speaking different languages.

The world of creativity has always struggled to speak the language of the boardroom.

Conversely, the boardroom has struggled to understand the language of creativity. However, there is one bilingual marker that can convincingly bridge the gap between the two.

A metric that can convince the most cynical and hard-nosed CFO of the commercial power of marketing. But one that can also land meaningfully with the marketing and creative community as a “determinate variable” to translate creative efforts into business impact.

And it’s hiding in plain sight.

It’s called Brand Preference. A customer’s inclination to consistently choose your product above all others.

Brand preference is the most overlooked and under-utilised metric in modern marketing. It often languishes lost among a long list of brand attribution statements on research tracking studies that have no impact or bearing on how a brand goes to market.

Yet brand preference has the power to turn around the fortunes of a company. By focusing on and prioritising brand preference, a company can grow market share, strengthen pricing power, expand into market adjacencies, and ultimately increase shareholder returns.A recent study by the Marketing Accountability Standards Board in the US looked at the relationship between the sales data and brand measures of 120 companies across 12 different categories.

It concluded there is an almost a 90 per cent correlation between brand preference and unit sales, showing an almost linear relationship between the two, irrespective of business type or category. More so than any of the other 70 brand metrics studied, brand preference is the alchemy metric, the one that can turn marketing lead into business gold.

The same study concluded that brand preference is the most important link in the marketing value chain. Get brand preference right and all other metrics will positively follow. This is supported by other commercial and academic studies. They show those companies that focus on growing brand preference outperform those that choose to be led by complex brand and business performance dashboards, i.e. companies that use data selectively and dilute their efforts by pursuing too many variables at once.

Of course, brand preference is driven by different things, but is an overall halo metric that is made up of both hard measures (spontaneous awareness, relative pricing, product/service relevance) and soft measures (perceived size, perceived popularity and equity/values).

However, by focusing on brand preference as the lead metric, businesses can quickly learn what makes it go up and what makes it go down. It is a metric driven by whole of business performance and therefore should be the focus of every CEO, and CFO as well as marketing leaders and brand owners.

So in these highly competitive and challenging times, where every business is looking to get an edge, look to the one metric to rule them all, brand preference. By doing so, not only will you provide focus and clarity for your business but that clarity will soon turn into improved business performance.

And the best thing is, if you look at your latest brand tracking study, that metric is probably just hiding away there in plain sight, just waiting for you to unlock the power of your brand. So to Mr. Wanamaker or Lord Leverhulme, my invitation would be don’t waste either half of your advertising budget. Just make sure you put it to good use by driving tangible and measurable preference for your brand.

Rupert Price is chief strategy officer at DDB Group Sydney.