This week sees the release of the 2007 BRANDZ™ Top 100 Most Powerful Brands ranking, which shows Google as the world’s most valuable brand. The BRANDZ™ Top 100 ranking is unique in that it uses measures of brand strength from consumer research data to refine its calculations of brand value. By contrast to the digital parvenue, another brand which achieved a significant increase in value was the venerable British retailer Marks & Spencer, which jumped into the global ranking at number 68  after not making the top 100 in 2006.

Marks & Spencer, also commonly referred to as M&S or “Marks & Sparks,” has been part of British culture for many years, where it has been best known for its quality clothes and prepared foods. Believe it or not, when ex-pats stock up on goods from home, underwear from M&S joins British branded icons such as Marmite, Branston Pickle and McVities Homewheat biscuits on their shopping lists.

However, a couple of years ago, the popularity of M&S was in decline, as its reputation for quality slipped and shoppers deserted it for trendier stores. The poor business performance of the British icon was heavily featured in the national press, and as the headlines grew ever more negative, the share price slipped to an all-time low.

So what took the company from these dire straights to a rising brand value and share price? One part of the answer is great marketing. By lucky coincidence, the recently released IPA Communication Awards contain some important insights into the contribution of marketing to the recent success of M&S.

On May 31, 2004, Stuart Rose was appointed as the new chief executive of M&S. While fighting off the hostile takeover from billionaire investor Philip Green, Rose and his new management team quickly identified three activities critical to the recovery of M&S: improve the stores, improve product quality and design, and improve marketing. As they set into motion plans to improve the store environment and clothing lines, the management team recognized that they could address the marketing component immediately. As Rose said, what M&S needed to do was “delight the girls” – the women who buy 80% of goods at the store – and do it with confidence.

As reported at the asi Ad Effectiveness Symposium in Paris last week, a key component to the campaign was its unambiguous focus on the product. In reviewing the M&S case study, which won the IPA Grand Prix Communications Award, David Golding, planning director at RKCR/Y&R described the approach to the campaign this way: “we stopped thinking so hard about it.” Rather than call on elaborate metaphors, special effects or hyperbole, the agency focused their attention on the product lines that M&S still did well - women’s clothing, lingerie and food.

Critically, the new campaign featured the products in a way that revitalized perceptions of the M&S brand. The ads celebrated what M&S was best known for and did so in a way which truly resonated with the target audience.

From the inception of the womenswear advertising, which featured 1960’s supermodel Twiggy, the nature of the publicity and attendant word of mouth shifted from mostly negative to mostly positive. The women’s lingerie ads were designed around the idea of the “lingerie sweetshop” and, as David suggested, “track rather well.”

But it is the campaign for food that sticks in people’s minds the best. Designed to counter advertising by another British retailer, Waitrose, which appealed to people who love to cook, M&S set out to appeal to people who love to eat. The ads are food beauty shots par excellence, accompanied by seductive voiceover detailing the ingredients and provenance in loving and mouth-watering detail. (Click here for one example.)

Testifying to the power of these ads was the fact that one of them, a particularly compelling ad for a chocolate-filled sponge desert, was featured by two other presenters at the conference as an example of truly engaging advertising.

Not that there is any doubt that the campaign was successful. In spite of the fact that it could only draw on published data, David’s case was undeniable. The number of customer visits in the first year of the campaign rose by 19 million compared to the previous year, and food and general merchandise sales rose by 10 percent. Overall, the campaign was estimated to have produced a minimum payback of £2.61 for every £1 spent. The share price rose over £3, justifying the confidence of ordinary investors who refused to sell their shares and confounding the experts who had predicted it would never rise again.

But that is just the short-term payback. The BrandZ Top 100 Most Powerful Brands ranking gives us an insight into benefits M&S may reap over the longer-term.

Developed by Millward Brown Optimor, Millward Brown’s brand finance and ROI arm, the BRANDZ™ Top 100 ranking is the first ranking to combine publicly available financials with solid measures of consumer sentiment derived from WPP’s BRANDZ™ database. Included with the rankings are three metrics for each brand in the Top 100: Brand Value, Brand Contribution, and Brand Momentum. Brand Value is defined as the sum of all earnings that a brand is expected to generate. The Brand Contribution score describes a brand’s effectiveness in driving current business earnings, and the Brand Momentum score indicates the brand’s likely contribution to future revenue growth.

Based on these calculations, the brand value of M&S almost doubled from 2006 to 2007. This improvement, the result of the company’s best financial performance in almost a decade combined with a significant strengthening of consumer sentiment, allowed the brand to jump into the Top 100 for the first time, to the 68th position on the list. Out of the 15 retail brands in the Top 100, M&S now ranks seventh, behind global giants like Wal-Mart, Tesco and Carrefour, but ahead of others like IKEA, Amazon and ALDI. Its Brand Contribution ranks alongside Tesco and Carrefour, and its Brand Momentum is above average for the sector. All of this promises well for M&S in the years to come, provided the company can keep its renewed business focus and campaign quality.

So what lessons can we draw from all this?

First, that great marketing can help save struggling businesses. Like many other IPA Award winners, M&S was on the ropes. The threat of acquisition provided the new management with the impetus to look again at what the business was all about and reconnect with customers. Marketing communication played a key role in that turnaround, helping to lift sales, share price and brand value.

But behind that success was another driver: confidence. M&S needed to display confidence, both to the marketplace and to its customers. The new management team was confident that they could right M&S, and that marketing could play an important role in the turnaround. The agency had the confidence to focus squarely on M&S products. Manifested in a dramatic increase in ad spending behind great creative, this confidence has paid off for Marks & Spencer, both in the short- and long-term.

Tags: Nigel Hollis, Millward Brown, BRANDZ, Marks & Spencer, M&S, IPA Awards

This entry was posted on Monday, April 23rd, 2007 at 1:53 pm and is filed under Brands, Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Print this Page