“If you think good design is expensive, you should look at the cost of bad design”
- -Dr Ralf Speth. CEO Jaguar
To explore hard evidence of the financial benefit of good brand design, I have laid out the findings of a report conducted over 10 years by the UK Design Council. They looked into FTSY 100 investment in design in relation to stock market value. They also looked at the amounts invested and the resulting trends as a direct result of that investment. It is important to remember that this is across all of the FTSY 100 companies as an average. The results speak for themselves.
The financial benefit of good brand design:
For every £1 invested in design, businesses can expect over £20 in increased revenues
For every £1 invested in design, businesses can expect over £4 increase in net operating profit
For every £1 invested in design, businesses can expect a return of over £5 in increased exports
Almost half (47%) of the UK’s rapidly growing businesses see design as crucial to business success.
While this is not a cast iron prediction of potential revenue increases, pound for pound it is by far the best return on an investment as the results are long lasting. It’s not merely a £1 in £20 out scenario, this scenario is a £1 in and £20 out and £20 out and £20 and so on. Strong brands such as Cadbury, Virgin or Nike who have invested strongly in their brand design 30+ years ago continue to benefit from it financially today. It’s true there may be slight alterations and campaign deviation but essentially these brands are as familiar as they have always been, and centre their core message around existing iconography.
There is a relation between the size of the business and the value given to design as a success factor. Only 5% of businesses with a turnover of under £250,000 rank design first, in contrast to 23% of businesses with a turnover of over £2 million. Almost all (93%) of UK businesses agree with the principle that it’s important to have a reputation for design and innovation.
The Design Council has created what they called Design Index (see left) an index of 61 design-led businesses. This report shows that businesses who value design and invest in it had outperformed the FTSE 100 by more than 200% over a ten-year period (1995–2004). This demonstrates the long term benefit that design has on businesses and it’s clear evidence of a relationship between design investment, business performance and long-term stock market value.
This then clearly shows that the financial benefit of good brand design is 200% over a 10 year period. But as mentioned previously this is compounded by the ongoing brand recognition. So a well designed brand will continue to outperform one which puts design low on its list of priorities indefinitely. Put simply the sooner you make the decision to elevate design within your company’s operations the better.
In the 90’s Apple were almost bankrupt selling beige boxes. What saved them was Jonathan Ive’s radical redesign of the personal computer. Ever since, Apple have put design first and foremost with everything they do; from shopfronts to app icons. Their promotional materials are beautifully finished and presented in print, online and anywhere else you may see them with a minimal beauty and a devotion for elegant design. People love this approach to such an extent that they are willing to pay much more for an apple product than a comparable one from someone else. As time has moved on other players such as Google have followed suit with a very similar visual style, but Apple are still well ahead in terms of market share. This is because they got there first. They are established as the ‘Stylish One’. I will admit that I am not a fan of Apple, however you cannot dismiss their contribution to design not only in electronics, but in business marketing as a whole. And they illustrate the point perfectly that great business follows great design.
There are also parallels to be drawn with Coca-Cola and Pepsi’s long standing feud. Pepsi is (nearly always) considered second. A poor choice compared to Coke who outsell them hugley, however in repeated blind taste testing Pepsi more often than not, triumphs. This disparity is further puzzling as Pepsi is significantly cheaper wholesale and to a lesser extent retail. So how can we explain that a cheaper product that tastes better, is selling a lot less than a more expensive, poorer tasting product? They invested in its brand design late. It was not until 1962 (65 years after Coca-Cola) that they established what we would recognize today as a Pepsi logo and brand design. This delay allowed Coca-Cola to establish an audience of fans which in turn generated more money to invest in marketing and brand design and so the cycle continues. From early on they have had more money and brand recognition as a result of good brand design, and there competition has had to try and catch up. This is the financial benefit of good brand design in action.
“The Design Index proves that companies which make effective use of design outperform their peers,
and it confirms design to be an integral part of good management. ”
-Sir George Cox, Chairman, Design Council
With the dominance of social media over more traditional forms of communication, the financial benefit of good brand design is greater than ever before. Companies who engage with their customers directly are under greater pressure to keep there content and image fresh and engaging. As competition within sectors is growing, you could argue therefore that business needs great design more than ever.
It is that balance of existing iconography belonging to a brand and the freshness of a campaign to promote a service or product that businesses find difficult. How do you create fresh content which reinforces your core values and identity within the market place whilst appearing fresh and engaging. This is the challenge of advertising in the age of social media and it’s one that great brand design can solve.
All statistics in this article are sourced from the UK Design Council