What do the world's most valuable brands have in common?

I've spent the better part of my career trying to crack the answer to one question. 

Not always directly, not always consciously, but it's been there, underneath every deck I’ve written, every agency I’ve built, and every impassioned argument I've ever made. And, if I’m honest, I’ve had a lot of impassioned arguments about this question; Does building culturally relevant brands drive commercial value? 

Vibes are how you choose a bar to drink in, not how you drive the bottom line of a business.

I've always believed it does. But vibes are how you choose a bar to drink in, not how you drive the bottom line of a business, and in a world where every marketing decision gets interrogated by a CFO armed with a spreadsheet, vibes don’t cut it (as I’ve found out all too many times).

Above: Energy drink Monster embedded itself in the culture of eSports and UFC to make itself culturally relevant. 

The number that changes the conversation

Finally, I have an answer to that question. Working with Wall Street analyst Doug Shapiro, CultureLab has produced the first large-scale, data-driven study linking cultural relevance to financial valuation using public market data. We analysed 75 brands across eight categories. The finding is unambiguous (and the methodology is transparent).

Culturally relevant brands are valued at nearly three times more than those that aren't. Not three times more engaged. Not three times more liked. Three times more valuable. In the metric that CEOs and shareholders care about most (total enterprise value relative to EBITDA), the gap between brands which are culturally relevant and those that aren't is 2.8x.

That number belongs in a boardroom.

But what about the other c-word?

Right now, brand investment in creators is accelerating at a pace that makes most media buyers nervous and most CFOs sceptical. The numbers going into creator deals are significant (check your man Fernando Fernandez at Unilever for proof). But while the numbers are significant, the rigour applied to those decisions often isn't.

Here's what this research reveals about that. There is a fundamental difference between hiring a creator for reach and working with a creator who is genuinely part of the culture your brand wants to participate in. One is rented attention at scale (like Beckham selling laptops at the Men’s World Cup), the other is something far more durable.

There is a fundamental difference between hiring a creator for reach and working with a creator who is genuinely part of the culture your brand wants to participate in.

Much more than being the biggest spenders when it comes to media, the brands commanding the highest valuations are, in fact, the ones that are building genuine, deep relationships with the cultures they operate in. Monster didn't become a 30x EBITDA business by buying influencer posts; it funded UFC partnerships for over a decade, backed eSports teams before eSports was mainstream, ran artist and festival partnerships tied to its brand values, and embedded itself so deeply in action sports culture that it became inseparable from it.

That's a cultural strategy. And, more importantly, that’s a business strategy.  And the valuation reflects it.

Above: Levi's collaboration with culturally relevant icons such as Beyoncé builds on the "aesthetics of the communities those artists carry with them".

Mirror, collaborate, own

The research identifies three distinct ways that brands build cultural relevance, and the highest-performing brands use all three simultaneously rather than treating them as sequential steps. ‘Mirror’ is where most brands start. Integrating the language, iconography and references of a culture into your marketing and partnerships. Lululemon does this well. So does Under Armour. It creates visibility and signals affiliation.

‘Collaborate’ is where it gets interesting. Working with genuine cultural icons, not just reach vehicles, to co-create content, moments and products that add something real to the community. Levi's collaborating with Beyoncé, A$AP Rocky and Zendaya is a cultural statement, built on a deep understanding of the values and aesthetics of the communities those artists carry with them. Starbucks does this differently but with the same instinct. Long-standing entertainment partnerships, hyper-local events built around its physical footprint, and deep product integration in local markets around the world.

These are examples of long-term, compounding investment in culture. David Beckham selling data deals for Verizon is not. (Sorry Becks.) 

‘Own’ is where the most valuable brands live. Nike builds genuine, long-lasting infrastructure for sport. Grassroots community courts, the global Running Club. Coca-Cola has spent decades building cultural moments that outlast any single campaign. These are examples of long-term, compounding investment in culture. David Beckham selling data deals for Verizon is not. (Sorry Becks.) The valuation data shows why it's worth the effort.