The Secret - Pharmaceutical Executive


The Secret
You have to advertise if you want people to know your brand

Pharmaceutical Executive

Hey, Big Spender

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Based on extensive analysis, pharmaceutical companies that spent $10 million or more per year on corporate advertising, and increased their ad spending over the last three years, were almost always able to break through the communications clutter and see improvements to their company reputation.

Of the 46 companies in the study, 13 companies met that spending criteria, while 33 did not. (See "Head to Head: Brand Equity,".) For the 13 companies that spent $10 million or more a year on corporate advertising and increased spending since 2003, there was a significant improvement in brand power. In particular, of these companies:

  • 46 percent improved in brand power
  • 38 percent increased in familiarity
  • 92 percent increased in favorability
  • 10 percent of their total market capitalization, on average, can be directly attributed to their corporate brand.

On the other hand, 33 companies in this study spent less than $10 million a year on corporate advertising and/or decreased spending since 2003. Of those:
  • 18 percent have improved in brand power
  • 12 percent increased in familiarity
  • 27 percent increased in favorability
  • 3 percent of their total market capitalization, on average, can be directly attributed to their corporate brand.

From above and below the the $10 million threshold, these numbers amount to stark differences between high and low spenders—like more than a tripling of the contribution of the brand name to market capitalization.

Reputation rewards Johnson & Johnson is the best example of how corporate brand building can impact the bottom line. No matter where it does business, or what products it sells, consumers see Johnson & Johnson as a company consumers trust—and J&J invests substantially to safeguard its reputation. With corporate ad campaigns that focus on recruiting nurses, for example, J&J projects a point of view that says it cares about more than just profits. And the company invests to make sure its message is heard. J&J has increased corporate advertising spend by 36 percent from $66 million in 2003 to $90 million in 2005.

As a result, the company's brand power has grown 7 percent since 2003. The corporate name also carries outstanding brand equity. Currently, the J&J corporate brand contributes nearly 20 percent to the company's overall market cap, which translates into a brand-equity dollar value of $36.42 billion—the highest in the study. This is an indication that the Johnson & Johnson brand is working harder than all of their studied peers to create value for the company. (See "What's Your Name Worth?".)

Communicate change Some companies use corporate advertising to communicate the evolution of a company. In this study, the most striking example of this was Humana. Since 2003, the company has increased media spending by over 200 percent—a successful investment given Humana is now the fastest-growing corporate brand in terms of brand power. Much of the driving force behind the improved reputation can be attributed to the corporate campaign "Guidance when you need it the most," which communicated a clear repositioning of the organization.


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