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I now wish to share with you a case study about the development of a brand,
where marketing and finance people work very closely together to invest,
to create a brand for the future.
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The Orange brand was launched back in 1994 in the face of very tough competition.
It was the fourth player into the market,
and it did not have such a good network as some of its competitors.
First of all, the management devised the strategy which was
based on selling seconds of time rather than minutes of time.
It then began advertising extremely aggressively,
and spent 45 million on advertising in its first two years alone.
It represented approximately five percent turnover.
At a time when it was making huge losses and negative cash flows,
that was an extremely brave thing to do.
And Graham Howe, who was then the Orange CFO,
but later became the Orange CEO.
said, "I've naturally had a very important opportunity to make an input into strategy.
This is the role that is expected of you;
Finance is all about adding value."
And in this particular context,
it was all about adding brand value by getting
an understanding of how an investment in
the brand could actually drive forward that value.
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And the way that Graham Howe actually understood what value the brand was adding,
was by analyzing it in great detail.
So, he engaged econometricians to look
at the way that the 45 million of brand building over a two year period,
led to net subscriber growth,
to increased subscriber revenues,
to increased subscriber lifetime,
brand extension, and licensing revenues into other products.
Numbers were put on all those,
so that it is possible to see how the brand was leading to
earnings growth, security, and diversification.
And it was calculated that just in a very short space of time,
the shareholder payback on the brand building of 45 was 277 million.
