As a veteran of the branding world, I’ve spent countless hours poring over data, analyzing trends, and crafting strategies to help companies build valuable, enduring brands. From my years at Interbrand, contributing to their annual “Most Valuable Brands” report, to my work with countless clients across industries, I’ve seen firsthand the incredible power of a strong brand.

But recently, I’ve been fascinated by a new dimension of brand value that I believe has been overlooked for too long. It’s a dimension that goes beyond the traditional measures of preference, loyalty, and future earnings potential. It’s a dimension that taps into the very core of human psychology and perception.

I’m talking about the Brand Placebo Effect.

You see, the placebo effect has long been a curiosity in the medical world. We’ve all heard stories of patients who were given sugar pills or saline injections and somehow experienced real improvements in their symptoms. But what if I told you that the same phenomenon applies to the world of brands?

What if I told you that the mere perception of a brand as high-quality, expensive, or reputable can actually enhance the performance and effectiveness of its products or services? Burgers may taste better… cars may seem to handle better… a mattress may seem more comfortable.

It may sound far-fetched, but the science is clear. Recent research has uncovered compelling evidence that the placebo effect is not just a medical anomaly, but a powerful psychological force that brands can harness to create value in ways we never imagined.

As psychologist Christian Jarrett explains, “Depending on the condition being treated, pills of certain colors and descriptions are more effective than others. For example, blue placebo pills make better sedatives than pink ones, and branded placebo pills are more effective than those without any labelling.”

This insight is just the tip of the iceberg. A 2015 study on Parkinson’s patients found that a supposedly expensive injectable treatment led to greater improvements in motor function than a cheaper version, despite both being saline placebos. And the effect extends beyond medicine – studies have shown that Nike-branded sports equipment leads to objectively better performance than unbranded gear, and that earplugs perceived to be from a reputable brand like 3M are more effective at blocking distractions than generic alternatives.

The implications for brands are profound. It suggests that investing in building a strong brand is not just about driving preference and protecting future earnings. It’s about creating a powerful placebo effect that enhances the actual performance and perceived value of a brand’s products or services.

As medicinal chemist Derek Lowe notes, “People probably feel more effect from higher-priced homeopathic preparations, too, although they’re the same distilled water as all the rest of them.”

The recipe for becoming a strong brand is to be a brand-led organization. The actions are to ensure that your brand provides clarity of purpose positioning and proposition, commitment to delivering on a promise, has strong governance, is responsive, is authentic, is differentiated, consistent, and has strong presence. The value of this appears intrinsic, but it’s more than that. It actually creates a perceptual reality to the consumer and pays dividends we didn’t realize.

In other words, the value created by strong brands is more multifaceted than traditional models recognize. By shaping perceptions and expectations, brands can tap into the powerful placebo effect to enhance the effectiveness and value of their offerings.

But it’s not just about perception. Even more surprising is the fact that placebos can be effective even when the recipient is aware they are receiving a placebo. As Ted Kaptchuk, director of the Program for Placebo Studies at Harvard Medical School, points out, this “turns our understanding of the placebo effect on its head. The placebo effect is not necessarily elicited by patients’ conscious expectation that they are getting an active medicine, as long thought.”

So what does this mean for CMOs, brand managers, and marketers? It means that the investments we make in branding can have a direct impact on product performance and customer satisfaction, beyond just driving choice. It means that crafting a brand image that evokes quality, reliability, and value is not just about shaping perceptions, but about shaping reality itself.

Of course, this is not to say that brands can forgo delivering on their promises or innovating in their offerings. As Kaptchuk emphasizes, “You’re never going to shrink a tumor or unclog an artery with placebo intervention. It’s not a cure-all, but it makes people feel better, for sure.”

But it does suggest that the power of branding is even greater than we realized. By understanding and leveraging the Brand Placebo Effect, we can create value in ways that go beyond traditional measures, shaping not just perceptions, but the very experience and effectiveness of our products and services.

As we continue to unravel the mysteries of the placebo effect and its implications for branding, one thing is clear: the value of strong brands is more tangible than we ever realized. And for those of us in the branding world, that’s an insight that’s as exciting as it is transformative.

Bill Chidley is the Co-Founder and Executive Director of Strategy at ChangeUp