The ROI of Brand Strategy: What the Research Actually Shows.

Brand strategy is frequently treated as an act of faith. Harder to justify in a budget meeting than a paid media plan. Easier to cut than a campaign. This is not a perception problem. It is a measurement problem — and it has a measurable cost.

The research on the financial returns of brand investment is not thin or ambiguous. It is extensive, rigorously sourced, and consistent across decades. What it shows is that brand building is among the highest-return investments a company can make — and that most companies, for structural reasons, significantly underinvest in it.

What the IPA data shows

The most comprehensive long-run analysis of marketing effectiveness is the IPA Effectiveness Awards database, analysed by Les Binet and Peter Field. Their work, drawn from 996 advertising campaigns spanning 700 brands across 30 years, established a finding that has proved remarkably durable: the optimal budget allocation for long-term profit is 60% brand building to 40% short-term activation.

Brand-building campaigns — those focused on building emotional association and long-term memory structures rather than driving immediate response — deliver approximately double the long-term profit of activation-only strategies. Over-relying on performance marketing, Binet and Field found, can reduce long-term ROI by as much as 50%. This is not an argument against performance marketing. It is an argument for sequencing. Activation works best when built on a brand foundation. Without one, it extracts short-term value from a bucket that is not being refilled.

The market evidence

The stock market has been saying the same thing for twenty years. Kantar’s BrandZ analysis tracked the portfolio of the world’s strongest brands from 2006 to 2025. The result: a cumulative return of 435%, compared to 353% for the S&P 500 and 171% for the MSCI World Index. Strong brands did not just grow faster. They fell less during the 2008 financial crisis and the 2020 pandemic, recovered faster, and ended higher.

McKinsey’s Design Index, a five-year study tracking 300 public companies across 100,000 design decisions, found that companies in the top quartile of design and brand investment achieved 32 percentage points higher revenue growth and 56 percentage points higher total return to shareholders than their industry counterparts. These are not marginal differences. They are the kind of numbers that make the question “is brand worth investing in?” feel like the wrong question entirely.

The pricing power effect

One of the most direct returns on brand investment is pricing power. Kantar’s Meaningful Difference framework — built on studies of millions of consumer interactions — found that brands perceived as meaningfully different command a 13% price premium on average. Among consumers who actively favour the brand, that premium rises to 37%. These brands are also four times more likely to grow value share over the following 12 months.

The implications compound. A brand with genuine pricing power is not just extracting more value per transaction. It is reducing dependence on promotional mechanics, reducing customer acquisition costs, and building a customer base that is harder for competitors to address on price. The strategic value of that position is difficult to overstate.

Why most companies underinvest

If the evidence is this consistent, why do most organisations still underinvest in brand? Gartner’s 2024 CMO Spend Survey found that marketing budgets have fallen to 7.7% of company revenue — down from 9.1% the year before — and that 64% of CMOs say they lack the budget to execute their strategy. WARC’s 2024 analysis found that 68.8% of marketing budgets are allocated to short-term performance tactics, despite CMOs stating their ideal allocation as closer to 50:50.

The gap between what marketers believe is right and what they actually do is a structural problem, not a knowledge problem. Short-term performance marketing is easier to justify, faster to measure, and more legible in a quarterly review. Brand investment is slower, harder to isolate, and easier to cut. Understanding this dynamic — and making the case clearly to leadership — is one of the most important things a CMO can do. The research is there. What is often missing is the strategic clarity to use it.

The case for acting now

The brands that compound the advantages described above do not do so by accident. They make deliberate decisions to invest in positioning, narrative, and brand architecture before they invest in media and activation. They treat brand not as a creative expression to be managed separately from strategy, but as the strategic layer that makes every other investment more effective.

McKinsey’s research finds that companies with strong brands earn up to five percentage points higher total shareholder return than industry counterparts annually — and that brand innovators grow top-line revenue four percentage points faster than less innovative companies. The financial case for brand investment is, at this point, overwhelming. What remains is the decision about whether to act on it.