“A manufacturer whose plant is estimated to be worth about two million dollars recently remarked : "If I were forced to choose between sacrificing my plant and the good-will which this company has established thru continuous advertising for the last twenty years, I should willingly say, ' Burn down the plant . I can obtain capital to rebuild it tomorrow, because our advertising has created a demand which has a bankable value and will bring new capital . '”
This is a passage from a textbook called ‘Advertising Campaigns’ written by Mac Martin in 1917.
It is hard to imagine a mid-sized B2B SaaS CEO today reaching a similar conclusion.
I have no idea if the manufacturer’s brand was worth more than the plant, but I do know the concept that a brand has actual value is rarely expressed by SaaS CEOs today. Having worked with many different B2B SaaS companies I have never had a CEO assign value to their brand. A few CEOs might say we need to improve our brand or increase brand awareness, but they wouldn’t have an answer if asked what their brand was worth.
Yet in 1917, the manufacturer was very aware of the value of his brand.
Why does it matter if a CEO knows that their brand has value?
It matters because if they don't see the value, it will affect investment decisions. While a CEO will never have to choose between burning down a factory or maintaining the brand, the same decision is made writ small with every budgeting decision. Do we add or take money from brand? Without understanding value, it is easier not to invest in brand because the impact seems illusory.
Two examples that highlight that a brand has real value:
1. Warren Buffet invested in Coca-Cola in 1988 because he saw its brand value as a moat
2. Research shows that large and growing brands continue to grow for a time after stopping advertising
Three takeaways:
- Your brand has value: It is important to realize that your brand is more than how your company is perceived, it has an actual value. Imagine there were two SaaS companies in a category that were similar in almost every way, but every prospect in the category was familiar with one of the companies, but very few were familiar with the other. Which company is worth more?
- Think about brand Investment: When making investment decisions it is important to understand the value of brand is more than the measurable impact it has on current sales or perceptions. An investment in brand is also an investment in future growth.
- Brand is bigger than advertising - Investment decisions on brand are about more than just whether you should increase or decrease your advertising spend. It is important to think about brand impact in other areas as well.
Over 100 years ago it was understood that brand had a value and that is still understood among many consumer good companies today, but it seems like the lesson has never been learned for many in B2B SaaS.