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Why Investors Trust Marketing, But Not Marketers [New Study]

We came across shocking news this week.

According to a new study, financial analysts are more aware than ever that marketing can play an instrumental role in driving business growth.

The Institute of Practitioners in Advertising (IPA) and Brand Finance, a London-based brand valuation and strategy consultancy, debuted the research at this week’s IPA’s EffWorks Global conference. The study reflects the views of more than 200 UK and US financial analysts who review companies’ financial results and associate that value with an investment strategy.

Watch CMI’s chief strategy advisor Robert Rose explain, or keep reading for the highlights:

The main headline from the research: Financial analysts consider the strength of brand and marketing as the most important factor in their appraisals.

They cite brand and marketing strength over leadership quality, technological innovation, reported profit, sustainability (environmental, social, and governance), and employee experience.

Brand and #marketing strength matters more to financial analysts than leadership quality, tech innovation, profit, etc., according to a new @The_IPA study @BrandFinance study via @Robert_Rose @CMIContent. Share on X

Importance of brand investment rises

The conclusion, according to the IPA, is that investors now place increasing interest and importance on investment in brands. Interestingly, 52% say they would view a company cutting its marketing spend as a “positive cost-saving measure,” while 36% view those cost-cutting measures as a short-term fix with long-term negative consequences.

Robert says these numbers reflect what most marketing leaders contend with when they try to justify their spend and save it from getting hacked. CEOs and CFOs trust marketing and brands, but they don’t trust marketers and brand builders. “Investors think saving money is a smart business decision, but spending money is only smart when it works,” he says.

The study also finds eight out of 10 investment analysts assess advertising and marketing promotional spend in their company valuations. But of those who do, 46% believe marketing and promotional spending drives organic growth. And 54% say brand and advertising communication can benefit price. (Apple, Adobe, Samsung, and just about every high-fashion brand would like a word with those financial analysts.)

Investors think saving money is a smart business decision, but spending money is only smart when it works, says @Robert_Rose via @CMIContent. Share on X

“The reason financial analysts still struggle with the concept that brand power impacts pricing is not because they don’t understand it. It’s because brand power is so hard to see until its impact is undeniable,” Robert says. “It’s easy to trust brands once they become a brand. But it’s hard to trust marketers as they build the brand.”

What’s a marketer to do? Keep working. Keep publishing great content, implementing fantastic marketing programs, and competing in the arena. At a point, your brand will become THE brand. That’s when the financial folks will pay attention.

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Cover image by Joseph Kalinowski/Content Marketing Institute