Next Level Branding

Brit Ryle

Posted August 14, 2023

By the time I graduated high school in 1983(!), I’d been playing punk rock shows for nearly two years. My band — Graven Image — played on the same bill with some of the best punk bands, like Minor Threat, Dave Grohl’s DC punk band Scream and Bad Brains.

Amazingly enough, there’s even video (me on bass), though I gotta warn you, it’s not exactly easy listening. 

So, and this may not come as a surprise, but, I am not a Swifty. I couldn’t name a single song of hers. But holy moly — I am absolutely blown away by the phenomenon that is Taylor Swift. 

I’ll be the first to admit I’m sometimes a little slow to come around on the latest pop culture icon. For the record, I blame my children. If they’d been born 10 years later, I might be able to sing along to a Taylor Swift song or two — not that anybody would be happy about that.

I’m even a little embarrassed to admit that it’s the ridiculous revenue numbers that Taylor Swift is putting up that actually grabbed my attention. I mean, can’t I just enjoy something for the sake of it? Because it’s fun and all?

Apparently not. 

Taylor Swift just finished 6 sold out shows in Los Angeles — over 3 hours each, which you know if you’ve been to a concert, is amazing. 

But those 6 days of Taylor Swift will reportedly add $320 million to the Los Angeles GDP for this fiscal year. For comparison, L.A.’s GDP in 2021 was $1.1 trillion. In just 6 days, Swfit can add 3% to the cities total output…

Talk about swinging a big stick…

How long before cities start offering up tax breaks and subsidies to attract the Taylor Swift Economic Machine to play a show in their town…

Brand Power

I don’t mean to sound cynical about Taylor Swift. Fact is, I am 100% in awe of any personality, brand or product that can capture the devotion of a huge swath of the population. 

The founder of Fidelity Investments, Peter Lynch is famous for saying invest in what you know. It’s one of the simplest and most powerful pieces of advice I’ve ever come across. 

One one level, it serves as a warning about buying the stock of companies that you don’t really understand. Like, I’m not a doctor, I’ve never played one on TV, I don’t have the expertise to properly evaluate whether a biotech company has a viable drug in development, so don’t invest in them. 

At its most basic level, Lynch’s “buy what you know” means the products and serv ices you interact with on a regular basis. 

Because the fact is, a great brand is something any of us can identify — we know it when we see it. There’s no magic formula that gives Wall Street an edge when it comes to evaluating a successful product. 

Great brands have a mystique, an exclusivity – some quality that resonates with consumers, but moreso, a quality that the buyer identifies with. Maybe it’s an uncomfortable truth, but we are in part defined by the products we buy. 

It is that identity aspect that turns a consumer discretionary product into a staple. We like Coke, not Pepsi. We like Duke’s, not Hellmans. We drive Fords and believe Calvin pees on Chevys. We wear Crocs, well, I don’t know why we wear those ugly-ass shoes, but you get my point. 

On the other hand, a restaurant can have great food and still fail. MySpace was the first social media site, it failed and Facebook thrived. Why does a Ferrari and Lamborghini-beating Corvette E-Ray sell for a fraction of a euro super car? 

Speaking of Ferrari, did you know that roughly 50% of its revenue doesn’t come from supercar sales, but from branded apparel? 

Luxury brands like Ferrari are aspirational. Because a cool prancing horse jacket will do until you can afford the real thing. (Editor’s Note: Personally, I’m restoring a 1976 Corvette Sting-Ray. As cool a design as there ever was. But Chevy made nearly 500,000 of them in 1976. It’s taken two years and I’ve got mine running great, and I haven’t even started on the interior. Not sure what that says about my aspirations, but it’s probably not good…)

The kingpin of luxury brands – Louis-Vuitton Moët Hennessy (LVMH) – is a friggin $450 billion dollar company, fercryinoutloud…

I’ve talked about the power of good branding before. But frankly I should talk about it more. Because one of the most powerful metrics for any business is the lifetime value of a customer. Proctor & Gamble (NYSE: PG) has a pretty good idea how many sticks of deodorant you’ll buy in your lifetime…

Next Level Branding

Of course Taylor Swift doesn’t just sell concert tickets. She’s got branded jewelry, perfume, nail polish, phone cases, fanny packs – on and on. Celebrity brands are everywhere these days. 

Kim Kardashian launched a private equity fund last year. Mark Wahlberg owns a burger chain. Ryan Reynolds sold his gin brand to Diageo for $610 million. Nike Air Jordan sales made Michael Jordan a billionaire…

Now, with the passage of the Name, Image and Likeness (NIL) rules for college athletes, we have a new generation of celebrity brands coming… 

I was particularly impressed with JP Morgan’s (NYSE: JPM) decision to partner with UCLA quarterback Chase Griffin for a podcast series on Wealth Management. This is a genius move. Griffin parlayed his college athletic fame into a pretty decent payday so far – his value as a brand ambassador is estimated at $90,000. 

But for JP Morgan, the payoff could be even better. 

NIL deals are already getting pretty big. There’s a high school basketball player worth $3.3 million and an LSU gymnast worth $3.4 million. No doubt JP Morgan would love to get long-term wealth management relationship going…

And given where pro athlete salaries are going, trying to catch the next generation of superstar while they’re still in college seems like a pretty good idea. 

H&R Block signed Iowa’s women’s basketball star Caitlin Clark to be the face of its “A Fair Shot” campaign to help female athletes earn more from their NIL deals. Oh, and she’s done ads for Goldman Sachs, too…

That’s it for me today, take care and I’ll talk to you on Wednesday…

Briton Ryle
Chief Investment Strategist
Pro Trader Today