One of the key things that investors typically look for in any investment is a low level of risk (given the predicted return). A new study from the University of Iowa shows that firms that have a stronger brand (usually because of better marketing) have a lower risk, which is appealing to investors.
"Strong brands are associated with stronger cash flows that are more reliable and predictable in the future,"Rego said. "That means debt and equity holders have an easier time predicting the firm's future cash flows and that makes them less risky investments, increasing their long-term financial stability."
For an average company in their sample -- which had $10 billion in long-term debt with a BBB+ credit rating -- Billet said a two-category improvement would save the company almost $40 million in annual debt service alone. (quote from pres release)
This is an interesting finding that shows the value of maintaining a strong brand and the benefits a strong brand can bring to a large business.
"Most corporate executives see marketing as a cost center, not as an investment, but this study should remove all doubt that brands are assets and should be managed as such," Rego said.
No argument here!
Want to see a study that focuses on marketing at small businesses? Everything that I have seen at HubSpot from our 1,400 small businesses using our marketing software shows me that if a small business implements a well run inbound marketing program, they will get a huge marketing ROI (follow that link to see 2 of our studies).