A new study reveals that financial analysts now recognize the importance of marketing in driving business growth. The study, conducted by the Institute of Practitioners in Advertising (IPA) and Brand Finance, interviewed over 200 UK and US financial analysts who review companies’ financial results and associate that value with investment strategy. Surprisingly, the research found that financial analysts consider brand and marketing strength to be the most crucial factor in their appraisals, even more so than leadership quality, technological innovation, and reported profit. This shift in perception suggests that investors are placing increased interest and importance on investment in brands. However, while CEOs and CFOs trust marketing and brands, they don’t trust marketers and brand builders. This article explores the implications of the study and provides insights for marketers to earn the trust of financial analysts.
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New Study Reveals Surprising Findings
A new study conducted by the Institute of Practitioners in Advertising (IPA) and Brand Finance has unveiled some unexpected findings regarding the trust that investors place in marketing versus marketers. The research, which gathered the opinions of over 200 financial analysts in the UK and US, highlights the increasing acknowledgment among analysts that marketing plays a crucial role in driving business growth.
Financial Analysts Prioritize Brand and Marketing Strength
The study’s main revelation is that financial analysts consider the strength of a company’s brand and marketing efforts to be the most important factor in their appraisals. This finding is particularly striking given that brand and marketing strength were ranked higher than other traditionally valued factors such as leadership quality, technological innovation, reported profit, sustainability, and employee experience. This prioritization by analysts underscores the growing recognition of the significant impact that brand and marketing have on a company’s overall success.
Importance of Brand Investment
An interesting implication of this study is the heightened interest and importance investors now place on brands. According to the IPA, there is a clear upward trend in investors prioritizing brand investment. Surprisingly, over half (52%) of the respondents stated that they would view a company cutting its marketing spend as a positive cost-saving measure. However, 36% of analysts regarded such cost-cutting measures as a short-term fix that could have negative long-term consequences. This highlights the delicate balance that marketers must navigate in justifying their spend to CEOs and CFOs who trust marketing and brands but may not necessarily trust marketers and brand builders.
Investors’ Views on Marketing Spend
It is worth noting that 80% of investment analysts incorporate advertising and marketing promotional spend into their company valuations. Moreover, nearly half (46%) of those who assess marketing and promotional spending believe that it drives organic growth. Additionally, 54% of analysts recognize the potential impact of brand and advertising communication on pricing. While some may be skeptical of these figures, as they may seem too optimistic, it is important to remember that top brands like Apple, Adobe, Samsung, and high-fashion brands have all thrived by leveraging effective marketing strategies.
The Impact of Brand Power on Pricing
One fascinating insight regarding the relationship between brand power and pricing is that many financial analysts struggle to fully grasp the concept. The study reveals that the reason for this hesitation is not due to a lack of understanding but rather the difficulty in recognizing and quantifying brand power until its impact becomes undeniable. Investors tend to trust established brands, but it is often challenging for them to put faith in marketers as they work towards building a brand’s reputation. Over time, once a brand becomes a prominent and trusted industry leader, financial analysts begin to pay closer attention.
Building Trust as a Marketer
For marketers striving to earn trust and credibility from investors, the key is to consistently deliver exceptional marketing programs and publish high-quality content. By establishing a strong brand presence and consistently demonstrating the effectiveness of marketing efforts, marketers can eventually secure the trust and attention of financial analysts and investors. This may take time and perseverance, but the rewards will be worth the investment.
Tips for Marketers
To build trust and credibility as a marketer, there are several strategies to consider:
- Focus on data-driven decision making: Utilize data and analytics to inform your marketing strategies and demonstrate the impact of your efforts on business growth.
- Consistently deliver high-quality content: Publish valuable and relevant content that establishes your brand as a thought leader in the industry.
- Establish strong relationships with internal stakeholders: Collaborate with colleagues from different departments to ensure alignment and support for marketing initiatives.
- Stay up-to-date with industry trends and best practices: Continuously learn and adapt to new marketing techniques to stay ahead of the competition.
- Showcase measurable results: Regularly report on key performance indicators and demonstrate the ROI of your marketing activities.
By implementing these tips, marketers can build trust and credibility with investors and position themselves as valuable contributors to a company’s success.
In conclusion, the study’s findings highlight the increasing recognition of the importance of brand and marketing strength among financial analysts. Investors now place a significant emphasis on brand investment and view marketing spend as a key driver of business growth. As marketers work on building trust and credibility, they must focus on consistently delivering exceptional marketing programs, establishing strong brand presence, and showcasing tangible results. Through these efforts, marketers can ultimately gain the trust and attention of investors and solidify their role as strategic contributors to a company’s success.