Why your CFO should give a damn about ‘brand value’; the Volkswagen lesson

Being at DMX Dublin was both useful and informative – and not least for the firm reminder that marketing, as a discipline, is still under siege in the boardroom.

Never mind delivering return on marketing investment, marketing leaders continue to be frustrated at how difficult it is to secure that investment in the first place.  We’re all familiar with the ‘men are from Mars, women are from Venus’ concept.  Without doubt, something similar could be said for those of us working in Marketing and Communications and our friends and colleagues in Finance.  All too often we don’t speak the same language, or share the same worldview.

If there was ever a case for serious investment in brand value, however, it was the release of Volkswagen’s results on Tuesday morning.  You’d be forgiven for having low expectations.   The company has been mired in scandal, having been caught designing software to cheat emissions tests and conducting so-called ‘fume tests’ on monkeys.

Against the odds, then, Volkswagen Group sold more, made more and paid more in 2017 than ever before.  Operating profit nearly doubled to €13.8bn while group sales revenue was up 6.2% to a record of almost €231bn.  They sold more cars (nearly 4% more than 2016), there were pay increases across the board and CEO, Matthias Müller got a 40% hike.

Delivering results (and rewards) like these, in the face of media, consumer and regulator antipathy, ain’t easy.  But Volkswagen AG is a long-term investor in brand equity.  Who can’t quote Audi’s strapline ‘Vorsprung durch Technik’, even if they don’t know what it means (‘advancement through technology’ for the uninitiated). Who doesn’t, in their heart, believe that a Volkswagen is a safe, reliable, high quality piece of German engineering that most people would be proud to own? 

Since 2015 there’s been talk about how consumer perception of the Group’s products (Audi, VW, Seat, Skoda) had changed and how all the key metrics were heading south faster than a greasy child down a slide in a waterpark.

At the end of the day, however, their investment in their brands paid off.  There was enough equity there, built up over the long term, to allow the company to weather the storm and deliver the results we saw this week.

Marketers need to change the conversation.  They need to speak in a language that the FD  - and rest of the board - understands.  Don’t talk about ‘brand’ - talk about ‘reputation’. Talk about ‘margin protection’, and impact on the bottom line.

Above all, arm yourselves with data, ensure there is a shared view of the current ‘state of the nation’ and of the priorities to be addressed.  None of us want to sign cheques to invest in what we don’t understand.

Marketing is often seen as a black art.  At Pt78 we like to help Marketers close that perceived gap between art and science.  We’d love to chat to you.  To find out more, call us on (01) 556 36 78 or email us at hello@Pt78.ie and we’ll get right back to you.

Vivien McKechnie