I think that many brands feel artificial and unnecessary. Who would actually miss another boastful gambling brand, another creamy variety of yoghurt or for that matter another the-most-climate-friendly-power-company-in-the-world on a day-to-day basis? Probably no one.
The communication of these often superfluous products is usually ingratiatingly annoying and beyond pointless. Look how fantastic I am, they shout in canon using their finest Ad agency lingo. The visual metaphors have hit rock bottom and a singer-songwriter strokes their pained listeners in a supposedly intimate sound scape. I also feel that a lot of the brand literature and research in the area feels bland and uninteresting, at least the hundreds of articles that I have read during the past 25 years. No names named, or forgotten, for that matter. Is it me? Am I wrong? Or is something new needed?
The purpose of a brand
A good brand should, according to research, communicate the values of the sender. It should be done in an engaging way that makes the target group act or think differently. Preferably the brand should also relate to the values that are important for our times. Sure, there are many other things that are important where brands are concerned, such as distinguishing the brand and acting as a barrier toward the competitors as well as other things. But all these things are givens and I shall therefore abandon these definitions before I risk becoming a mere echo of the brand literature I find so spiritually anemic. When brands wish to become relevant in our times it is often about becoming sustainable. Climate friendly and compassionate, which of course is an honorable endeavor. The climate crisis is undeniably one of the most “wicked” problems of our time and perhaps the owners of many of our publicly traded companies need to think more long term than stock dividends.
The question is what these organisations and Ad agencies want to achieve with their aspirations? To get at the cause of these aspirations I performed a simple study of the causal connections between the image of sustainability and a company´s stock market performance. The analysis, among other things, examined the relationship between the image of the sustainable efforts of a publicly traded company “Sustainability”, and their growth on the stock market over the last year. I added a Likeability-variable in the presentation to provide further nuance to the results.[1] In total a little over 300 companies were part of the analysis. Below you will find a few examples in the diagram. After that I chose a few of the best performing big companies and a few that had performed worse than average.
Surprising results?
So what did the results show? Well, the results showed that there is no causal link between the level of positivity of a company´s image of sustainability and how that company performs on the stock market. This means that a higher Sustainability-marker doesn’t necessarily mean that the company has gone on to perform better in the stock market. Tesla and Spotify have grown by several hundred per cent despite having a below average Sustainability. Holmen can be found in a cluster of forest industry companies with Stora Enso and BillerudKorsnäs, all displaying very high levels of Sustainability but with a stock market growth that is below or on par with index (OMX30). The current campaigning of the forest industry with regards to sustainability and climate work seems to have been recognized by the market place but has not impacted the performance of these companies on the stock market.
Is this a reasonable result? That growth and sustainability might not be compatible. Or is it that a serious effort in sustainability is something that we take for granted in a “good” brand nowadays? Something that keeps the regulators away and keeps the customers around. Sustainability efforts become something akin to risk minimizers. These results line up with other studies where attempts have been made to link a company´s results with ESG-variables (Environmental, Social and Corporate Governance). There are, however, actual driving forces that appear to have a strong link to a company´s growth on the stock market. The fact is that a company´s image account for approximately 60 per cent of the variance in stock market growth. The remaining 40 per cent probably come down to the company´s fundamentals and the current general trends in the trade the company is active in. And, of course, some error, or unexplained variance.
The strong brand of the future
What can an organisation in our times do to strengthen their brand? Measures can be summarized in three short, and rather basic points:
- Identify what drives success for the company. Regardless of how you define success. Analyze carefully. Today it is possible to perform retrospective analyses using clever AI and Big data-tools. Convert results to values, offers and ideas and maintain a dialogue with management and the customers you wish to reach.
- Transform these insights into meaningful communicative metaphors, this is in part a strategic and analytical process that requires an ample threshold of originality within creative expressions. Act. Show that you are serious, not just communicatively, but through the actions of the entire organisation.
- As I see it brands will become increasingly important and a more multi-dimensional tool in the handling of “wicked” problems, while providing the parties involved with a means of growing their market. It will require greater insight and more courage as the brand of the future will no longer be able to sing its own praise. It will require true knowledge of what is really effective. What can change behaviors and benefit both the organisation and society at large is what will be driving the developments in branding going forward. Can we – advisors, communicators, creators and brand owners – pull together to get there? Until then we will still have to endure brands that promise the moon.
Peter Majanen, CEO
[1] In total more than 100 different attitude variables were studied. All of these are not shown here.