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The bottom-line impact of corporate
brand investment: An analytical
perspective on the drivers of ROI of
corporate brand communications
Received (in revised form): 26th February, 2001

JAMES R. GREGORY
is founder and CEO of Corporate Branding, a global strategy and communications firm that specialises in helping companies measure, understand, craft, express and leverage their corporate brands. He has authored two books on the subject of corporate branding, ‘Marketing Corporate Image’ and ‘Leveraging the Corporate Brand’, and is currently working on a third, ‘Branding Across Borders’.

Abstract
Corporations and other organisations have come to realise the importance of a strong image. Many corporate studies have shown an association between image, purchase intent and sales revenue. Image has been shown to affect not only sales volume but also the price that customers will pay for the products and services offered. With respect to stock selection, successful investors such as Warren Buffett have long recognised the value of strong brand names and buy stocks partly on the basis of image.

Until recently, however, companies have been unable to put any reliable measure on the payback from these investments. Recent work by researchers at Corporate Branding has changed this. Over the past eight years the company has studied the relationships between corporate advertising, corporate brand image, sales growth, stock market multiples (such as price/earnings ratio), stock price and shareholder value. These relationships have been quantified, and can be used to help establish the likely return on communications investment in terms of increased shareholder value.

CORPORATE BRAND INVESTMENT

James Gregory
Corporate Branding LLC, 470
West Avenue, Stamford, CT,
USA
Tel: 1 203 327 6333;
Fax: 1 203 353 8180;
E-mail: gregory@corebrand.com

Corporations around the world spend
large amounts of money on corporate
communications each year in an attempt to improve the image of their company. These companies recognise
that being held in high regard by
their customers, employees, stockholders and the public at large is important to their long-term success.
A model of the link between corporate communications and
shareholder value is shown in Figure 1.
The model hypothesises that
corporate communications directly
impacts on corporate image. In

addition
to
providing
general
information about product and service
features,
availability,
price,
etc,
advertising helps to build brand
recognition and image which, in turn,
help develop preference and sales.
Advertising can also help to build
familiarity with and favourability
towards the company providing these
products and services, which, in turn,
can help in its future marketing
activities.
Corporate image can be viewed as
the combination of how familiar the
target audience is with the company
and — among those sufficiently

HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 8, NO. 6, 405–416 JULY 2001

405

GREGORY

Source: Corporate Branding
Figure 1

Linkages between corporate communications and shareholder value

familiar — how favourable these
people are towards the company. Three
favourability measures are used: overall
reputation, perception of management
and investment potential. The author’s
company conducts an annual telephone
survey of 8,000 business decision
makers and financial influencers in the
top 20 per cent of US companies
(based on revenue) to measure
familiarity and favourability levels. This
audience is most appropriate for
determining how corporate image
impacts on stock performance and is
usually appropriate for business-tobusiness buying situations. Once the data are gathered, familiarity and
favourability ratings are combined for
each company to produce a proprietary
measure of corporate image called
CoreBrand Power.
Improving a company’s familiarity
and favourability can improve its stock...
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