New Study Finds That Media Prominence Predicts Brand Value Better than Ad Spend for High Involvement Brands

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Of all things that could potentially contribute to the financial value of a company’s brand, including product quality, customer service, and R&D, public relations has been one of the least well studied and understood. We recently conducted a study to take a closer look at the role that public relations plays in building brand value by assessing the statistical relationship between media prominence (a measure of prominence of mentions in unpaid media) and brand value for the 100 companies in Interbrand’s 2008 Best Global Brands report.

What we found was that media prominence is in fact linked to brand value, especially for certain product categories, underscoring the importance of PR’s role in maintaining and building a brand. In the current environment where budgets are under pressure and corporate reputations are quickly undone, companies should pay close attention to how the media can impact the financial value of their brand.

Here are some of the key findings:

• Overall, we found that how often a company appeared in the press accounted for over a quarter of the brand value among Interbrand’s 100 most valuable brands.

• The relationship between media prominence and brand value depends on “product involvement” – i.e., the degree to which customers research a given product or solution prior to purchase. Media prominence was more associated with brand value for “high involvement” products compared to “low involvement” products. Media prominence was a particularly important component of brand value for computer-related industries, such as software and hardware manufacturers, as well as computer and Internet service companies, accounting for 48 percent of differences between companies’ brand values.
• Advertising expenditures, however, predicted brand value only for “low involvement” products, and accounted for very little brand value among “high involvement” products.
• These results suggest that the more complex a product is to a buyer, the more likely they are to research the product category and to look for information that they can trust. Much has been said of the increasing power of word-of-mouth and distrust in advertising in the past few years. If unpaid media placement, as opposed to paid media (or advertising), is more credible to buyers, then it too should play a key role in building brand value for high involvement brands.

Perhaps the most important take away message from this study is that, regardless of the direction of causation, a sizable amount of brand value, particularly for high involvement industries, is tied into media coverage.  So, even if one interprets this study as showing that high brand value leads to more media coverage, it is still important for media coverage to be carefully managed since it is the window through which others will see your brand.

To see the report, click here

-Seth Duncan and Nils Mork-Ulnes