Monday, 5 January 2009

The role of branding in the UK economy

Last month the British Brands Group announced that it had commissioned Westminster Business School to undertake a study into the economic contribution of branding to the UK, to help build understanding of the wealth it generates and to quantify the contribution it makes to the economic health of the country. This work is seen as an essential precursor to assessing whether this contribution is being maximised. Its key findings are as follows: 
• An estimated 1 million people are employed in the UK in the creation and management of brands, equivalent to 4% of all those employed;

• The value of branding to companies is well understood. The most valuable brand domiciled in the UK is HSBC ($33,742 million), followed by Vodafone ($26,688);

• Brands are simply not being counted in the UK’s measures of economic activity. The knowledge economy is not being valued, and branding is an important element of this;

• While brands are recognised as a driver of economic growth, there remain significant gaps in the evidence base;

• Approximatetly £32.55 billion is spent on building brand equity annually, or 2.3% of GDP;

• This represents some £15.8 billion investment in the UK annually. This represents around 12% of all intangible investment and 6% of all investment in the UK;

• The creation and management of brands is becoming an increasingly important component of the UK’s overseas earnings;

• The investment in building a strong trust relationship between firm and consumer yields a number of returns to the wider economy:
- providing a surety that new products, ventures or markets are “safe” for consumers;
- the quicker adoption of new technologies and ways of living and working;
- aligning business with society, allowing firms to offset side effects of consumption;
- a means of regulating large global firms with extensive influence;
- a spur to innovation as companies strive to maintain their reputational asset;
- enhancing the reputation of British products and services abroad, supporting exports.
The BBG comments that it surprising how little work has been done so far to assess the contribution of branding to the wider UK economy, which is reflected by the significant gaps that exist in the evidence base. With branding’s potential to add value, deliver competitive  advantage, commercialise innovation, protect consumers, contribute to GDP, enhance export performance and align business to societal needs, this seems at best an anomaly and at worst a significant oversight.

A full copy of this 51-page report can be downloaded here.

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