Tip: Don't Count on Branding to Drive Profits - Modern Distribution Management

Log In

Tip: Don’t Count on Branding to Drive Profits

The importance of branding varies greatly between companies.

Many B2B corporations, and distributors in particular, get into trouble when they hire the wrong branding agency, according to MDM President & COO Ian Heller in When Good Companies Do Bad Branding.

One of the biggest misconceptions around hiring a branding agency is the expectation that rebranding will result in soaring profits.

Branding agencies they will sometimes show a line chart highlighting the impressive stock performance of a handful of public companies. Closely correlated will be a line showing those companies’ aggregate investments in branding. The lesson? Spending on branding will drive up your stock price (or whatever valuation is important to you).

"I’ve yet to see compelling data demonstrating causality between branding and stock price," said Heller. "Although the charts the branding agencies show you may reflect the data accurately – I’m sure there are companies whose branding investments and stock prices go up together – that’s not persuasive."

According to Heller, there are no doubt other companies that spent more on branding while their stock prices declined.

"It’s most likely that the brand investments and stock prices are dependent variables driven by something else entirely. For example, a company may be enjoying strong sales growth from new products and services that drove lots of cash – and they decide to spend some of it on branding."

Learn more about branding agencies in When Good Companies Do Bad Branding.

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.