"What's the ROI on branding?"
Every founder who's proposed brand investment has faced this question — from co-founders, from boards, from themselves. It's a fair question. When you're burning runway and racing to product-market fit, spending money on "brand stuff" feels irresponsible. Features ship. Branding doesn't.
The skepticism is understandable. Brand feels soft. Subjective. Hard to measure. Easy to dismiss as marketing fluff.
But the skepticism is wrong.
The data on brand ROI is unambiguous. McKinsey, Interbrand, academic researchers — serious people with serious methodologies have studied this extensively. Their conclusion: brand investment delivers measurable, substantial returns.
This guide makes the case with hard numbers:
Let's talk numbers.
McKinsey & Company — not exactly a firm known for fluffy thinking — has studied brand impact extensively.
Their research on B2B industrial brands found a stark performance gap:
B2B companies with strong brands outperform weak-branded competitors by 20%.
That's not a marginal difference. In competitive markets where companies fight for single-digit percentage gains, a 20% performance advantage is the difference between category leadership and also-ran status.
This isn't just consumer brands with Super Bowl budgets. McKinsey's findings apply specifically to B2B contexts — the exact environment where most tech startups operate. Enterprise SaaS, fintech infrastructure, developer tools — these categories show the same pattern.
McKinsey's research on performance branding found that data-driven brand investment delivers remarkable returns:
Companies report marketing efficiency gains of up to 30% and incremental top-line growth of up to 10% without increasing the marketing budget.
Read that again. 30% efficiency gains. 10% revenue growth. Same budget.
For a startup spending $100K/month on marketing, that's the equivalent of finding an extra $30K — without writing a bigger check. For a company doing $10M ARR, that's $1M in additional revenue from existing spend.
How does this work? Strong brands reduce friction at every stage of the funnel:
Weak brands have to brute-force every conversion. Strong brands benefit from accumulated trust that makes each marketing dollar work harder.
Interbrand's Best Global Brands 2024 report quantifies the cost of brand underinvestment:
Brands have missed out on $3.5 trillion of unrealized value due to short-term thinking and underinvestment in brand.
$3.5 trillion. That's not a typo. Interbrand's analysis of the world's most valuable brands — companies like Apple, Google, Amazon, and Microsoft — shows that even sophisticated organizations systematically underinvest in brand building.
The top 100 global brands are now valued at $3.4 trillion collectively, representing 3.4x growth since 2000. But Interbrand's modeling suggests this number could be nearly double if companies had invested appropriately in brand over the past two decades.
For that year alone, underinvestment translated to $200 billion in lost revenue.
Interbrand explains the mechanism:
"Strong brands influence customer choice and create loyalty; attract, retain, and motivate talent; and lower the cost of financing."
Each of these effects compounds. Customer choice means higher win rates. Loyalty means lower churn and higher lifetime value. Attracting talent means better execution. Lower financing costs mean more runway. Strong brands don't just perform better — they create virtuous cycles that accelerate over time.
Millward Brown (now part of Kantar) research found that strong brands command a 13% price premium over weak brands.
In SaaS terms, that's the difference between $99/month and $112/month. At scale, it's millions in additional annual revenue from the exact same product.
This pricing power comes from perceived value, not features. Two products can be functionally identical, but the one with stronger brand commands higher prices because customers believe it's worth more. That belief is the brand at work.
Consider Stripe vs. generic payment processors. Notion vs. other note-taking apps. Figma vs. other design tools. In each case, the category leader charges premium prices not because their product is dramatically superior, but because their brand carries weight.
Siegel+Gale, the brand strategy consultancy, found a related effect:
63% of customers are willing to pay more for simpler experiences.
Brand clarity — knowing exactly what a company stands for and what to expect — is itself a form of value that customers will pay for. Simplicity reduces cognitive load. Customers don't have to work to understand you. That ease has monetary value.
In a world of overwhelming choice and information overload, brands that communicate clearly earn premium positioning.
Beyond consulting firm research, academic studies confirm brand's financial impact.
A rigorous study published in ScienceDirect examined the stock performance of Interbrand's most valuable brands from 2000 to 2018, using the Fama-French model — the gold standard for academic finance research.
A portfolio of strong brands significantly outperformed the market over 18 years. The outperformance was much larger during bear markets than normal periods.
This last point deserves emphasis. Strong brands don't just perform well when times are good — they provide downside protection when times are bad. During recessions, market downturns, and crises, customers retreat to brands they trust. Companies with weak brands see demand evaporate; companies with strong brands maintain their position.
McKinsey's data confirms this: strong brands generate 31% more shareholder returns than the MSCI World average.
For founders thinking about eventual exits — whether through IPO, acquisition, or long-term ownership — brand equity directly affects valuation.
Interbrand's research shows that brands account for more than 30% of the stock market value of S&P 500 companies.
For startups aspiring to that scale, brand isn't a nice-to-have. It's nearly a third of the eventual enterprise value.
Let's translate research into specific business metrics that founders track.
Brand directly affects how much you spend to acquire customers.
How brand reduces CAC:
Recognition lowers click costs. Ads from recognized brands get higher click-through rates. Higher CTR means lower cost-per-click in auction-based ad platforms.
Trust shortens sales cycles. Prospects who already trust your brand require fewer touchpoints before converting. Fewer touchpoints = lower acquisition cost.
Referrals come easier. Strong brands are easier to recommend. Word-of-mouth is effectively zero-cost acquisition.
Content performs better. Brand-backed content ranks better and converts better than content from unknown sources.
Estimated impact: Companies with strong brands typically see 15-30% lower CAC than category averages.
Brand affects conversion at every stage of the funnel.
How brand improves conversion:
First impressions convert. When prospects arrive at your site, brand creates immediate impression. Professional, trustworthy brands convert; amateur-looking brands bounce.
Trust overcomes objections. Brand credibility helps prospects get past hesitation points. "Can I trust this company?" is a conversion barrier that brand addresses.
Perceived value justifies price. Strong brand perception makes pricing feel justified. Weak brands trigger price shopping.
Estimated impact: Strong brand execution can improve conversion rates by 20-50% depending on category and starting point.
For B2B companies, sales cycle length directly affects revenue and cash flow.
How brand shortens cycles:
Less education required. If prospects already know what you do (brand awareness), sales conversations start further along.
Credibility is pre-established. Brand provides credibility before sales engagement. Less time proving legitimacy.
Internal champions have tools. Strong brand gives champions materials to sell internally. Easier to get stakeholder buy-in.
Perceived risk is lower. Buying from a strong brand feels safer. Less deliberation, faster decisions.
Estimated impact: Companies with strong brands typically see 10-25% shorter sales cycles than weak-branded competitors.
Brand affects what prices you can charge.
How brand enables pricing:
Perceived value exceeds cost. Strong brands create perceived value that justifies premium pricing.
Switching feels risky. Customers invested in strong brands feel risk in switching to alternatives, even cheaper ones.
Comparisons favor you. When compared against competitors, strong brand tips perceived value in your favor.
Estimated impact: Millward Brown's 13% premium is a reasonable benchmark. Some categories see higher.
Brand affects how long customers stay and how much they spend.
How brand improves LTV:
Lower churn. Customers emotionally connected to brands churn less than transactional customers.
Higher expansion. Customers who trust your brand are more likely to buy additional products.
Forgiveness during problems. Strong brand relationships survive service issues that would end weak relationships.
Estimated impact: Companies with strong brands typically see 15-25% higher LTV than category averages.
Brand affects your ability to hire and retain talent.
How brand improves hiring:
Attracts candidates. Strong brands attract more applicants. Larger pool = better selection.
Commands acceptance. Candidates are more likely to accept offers from strong brands. Lower offer-to-acceptance drop-off.
Reduces costs. Employer brand reduces reliance on expensive recruiters. Lower cost-per-hire.
Retains talent. Employees at strong brands feel pride and purpose. Lower turnover.
Estimated impact: Companies with strong employer brands see up to 50% reduction in cost-per-hire and 28% lower turnover.
Brand affects how investors perceive you.
How brand affects fundraising:
First impressions matter. Investors see hundreds of decks. Professional brand signals competence and seriousness.
Story is clearer. Strong positioning makes your investment thesis clear. Easier for investors to understand and get excited.
Due diligence goes smoother. Brand consistency across touchpoints builds confidence during evaluation.
Valuation reflects brand. Acquirers and public markets value brands. Brand equity translates to enterprise value.
Estimated impact: Hard to quantify, but founders consistently report that brand investment improved fundraising conversations and outcomes.
Let's build a framework for calculating brand ROI for your specific situation.
Brand ROI = (Value Created by Brand - Brand Investment) / Brand Investment
The challenge is quantifying "Value Created by Brand." Here's how to approach it.
Before brand investment, document current state:
These become your comparison points.
Based on research and your category, estimate conservative improvements:
CAC improvement: 15-30%
Conversion improvement: 20-50%
Sales cycle reduction: 10-25%
Pricing improvement: 5-15%
Churn reduction: 10-20%
Hiring cost reduction: 20-40%
Use conservative end of ranges for credible projections.
Translate improvements to annual dollar value.
Example: Series A SaaS Company
Current state:
Conservative brand impact estimates:
Total estimated annual value: ~$440,000
If brand investment is $100,000:
Year 1 ROI: ($440,000 - $100,000) / $100,000 = 340%
And this compounds. Brand investment is largely one-time (or periodic), while benefits accrue annually. Year 2 ROI on the same investment is even higher.
This is a framework, not a calculator. Adjust based on:
Your category: Some categories are more brand-sensitive than others.
Your current brand strength: If brand is already strong, marginal improvement is smaller. If brand is weak, improvement potential is larger.
Your growth rate: Faster-growing companies see brand impact on more customers faster.
Your business model: Transaction-based vs. subscription, self-serve vs. sales-led — different models see brand impact differently.
Measurement capability: Can you actually track these metrics to validate?
When presenting brand ROI internally, structure the case clearly.
Start with what's broken:
"We're spending $X on marketing but CAC keeps rising.""Prospects say we 'look like everyone else' and can't articulate why we're different.""Sales cycles are 30% longer than category benchmark.""We're losing deals to competitors with weaker products.""Our best candidates are choosing other offers."
Quantify the problem where possible.
Present what brand investment could deliver:
"Based on McKinsey research, companies with strong brands see 20% performance advantage over weak-branded competitors. Applied to our current trajectory, that represents $X in additional value over Y years."
"Millward Brown data shows strong brands command 13% price premium. On our current volume, that's $X additional annual revenue."
"If we could reduce CAC by 20% (conservative estimate for brand impact), we'd save $X annually — more than covering brand investment in Y months."
Be specific about what you're proposing:
"We're proposing a $X investment in brand over Y months, including:
Quantify expected returns:
"Based on conservative impact estimates, this investment would generate:
Address concerns:
"This is a significant investment. We'll mitigate risk by:
What happens if you don't invest?
"If we don't invest in brand, we expect:
Brand investment isn't equally valuable at every moment. Certain situations create disproportionate returns.
Brand investment immediately before fundraising has multiplied impact:
The fundraising multiple means brand investment affects not just customer acquisition, but capital acquisition — potentially at 10x+ valuations.
Launch is a first impression at scale:
When you've found product-market fit and are ready to scale:
When competitors are raising prices or launching similar products:
When moving upmarket:
When strategy has changed:
Brand is a long-term asset. Measure it appropriately.
Metrics that predict future brand value:
Brand awareness:
Brand perception:
Brand consistency:
Metrics that show brand impact:
Acquisition metrics:
Retention metrics:
Financial metrics:
Quarterly:
Semi-annually:
Annually:
Be honest about measurement limitations:
Brand lift is hard to isolate. Many factors affect business metrics. Brand is one of many variables.
Time lag exists. Brand investments take time to show results. Don't expect immediate impact.
Correlation vs. causation. Strong brands correlate with strong businesses, but causation runs both directions.
Best practice: Establish clear baselines before brand investment. Track metrics consistently. Look for trend changes. Accept that attribution won't be perfect.
The ROI question usually focuses on "what do we get if we invest?" But the equally important question is "what do we lose if we don't?"
Brand underinvestment compounds:
Year 1: Slightly higher CAC, slightly lower conversion, slightly less pricing power. Marginal.
Year 2: Competitors with stronger brands pull ahead. Gap widens.
Year 3: Market perceives you as second-tier. Increasingly difficult to compete on brand.
Year 4+: Brand debt is substantial. Fixing it requires major investment and time.
The longer you wait, the more expensive it becomes.
Every month without strong brand is a month of foregone value:
You can't get that back.
Weak brands are fragile. When problems happen — and they will — weak brands break:
Strong brands survive crises. Weak brands may not.
Can you afford not to? Every month of higher CAC, lower conversion, and weaker positioning costs money. Brand investment often has positive ROI within 6-12 months.
If budget is genuinely constrained, start smaller. Positioning work alone can improve metrics. Visual refresh can happen later.
Product and brand aren't either/or. Strong brands help strong products succeed faster. Weak brands hide strong products.
Stripe has great product AND great brand. Notion has great product AND great brand. They're complementary, not competing.
The McKinsey data disagrees. The Interbrand data disagrees. The academic research disagrees. Brand investment delivers measurable returns across multiple business metrics.
If previous brand work felt like "fluff," the problem was probably execution, not the concept of brand.
Interbrand's $3.5 trillion in unrealized value represents decades of "we'll do it later" thinking. Brand compounds. Early investment generates returns for years.
You can do more brand later. But start now.
Products don't speak. Brands do. Your product exists in context of customer expectations, competitive alternatives, and market noise. Brand shapes how product is perceived.
The best products — Apple, Tesla, Dyson — also have the strongest brands. That's not coincidence.
It can be measured, just not perfectly. CAC, conversion, pricing, churn, hiring costs — all measurable. Brand affects all of them. Establish baselines, make investment, track changes.
Perfect attribution isn't possible. But directional measurement is.
Brand is one of the few investments that compounds over time.
Year 1: Investment in positioning, identity, messaging. Immediate improvements in conversion and perception.
Year 2: Brand recognition builds. CAC decreases. Referrals increase. Talent acquisition improves.
Year 3: Brand becomes competitive advantage. Pricing power solidifies. Market position strengthens.
Year 4+: Brand equity is substantial asset. Contributes meaningfully to enterprise value.
The question isn't whether brand investment has ROI. The research is clear: it does. The question is whether you'll capture that ROI or leave it on the table for competitors.
Measure brand ROI through its impact on business metrics you already track. CAC: does customer acquisition cost decrease as brand strengthens? Conversion rates: do website and funnel conversion improve? Sales cycle: does time-to-close shorten? Pricing: can you command higher prices or resist discounting? Churn: does customer retention improve? Hiring: does cost-per-hire decrease and offer acceptance increase? Establish baselines before brand investment, track trends after, and attribute directionally (perfect attribution isn't possible). A portfolio approach — measuring multiple metrics — gives clearer picture than any single measure.
The research is unambiguous: brand investment delivers substantial returns. McKinsey: B2B companies with strong brands outperform weak-branded competitors by 20%. McKinsey: data-driven brand investment delivers up to 30% marketing efficiency gains. Millward Brown: strong brands command 13% price premium. Interbrand: brands account for 30%+ of S&P 500 market value; underinvestment has cost $3.5 trillion in unrealized value. Academic research: strong brand portfolios outperform market benchmarks, especially during downturns. This isn't marketing opinion — it's rigorous research from serious institutions.
Brand investment has outsized returns at specific moments: before fundraising (brand affects investor perception and valuation), before major launch (first impressions at scale), at growth inflection points (when you're ready to scale and efficiency matters), during competitive pressure (when differentiation on features is hard), and before enterprise push (when credibility for premium pricing matters). Brand investment during these moments has multiplied impact. Conversely, brand investment when fundamentals are broken (product doesn't work, no product-market fit) is premature — fix fundamentals first.
If you're ready to make the brand investment — or need help building the business case — we can help.
Metabrand works with tech startups to develop brands that deliver measurable returns. We understand the ROI imperative and build brands designed to improve the metrics that matter.
Or continue with the guide:
Part of the Startup Branding Guide by Metabrand.
