How to measure brand value

Increasingly manifold definitions of brands and branding may have made measuring value more difficult, but it is nonetheless essential and is now informed by social media

“As markets have matured, we have realised there are now a multitude of important components to brands and as a consequence there is some disagreement about what the term ‘brand’ actually means,” says James Cronin, lecturer in marketing at Lancaster University.

“While once upon a time experts could pin the term down to a signifier or an identifier of one producer from the next, and measuring results simply came down to awareness and sales, brands now have been defined according to more complex constructs like emotions, imagery, mental associations, symbolic meanings, tribal meanings, loyalty and accessibility.

“While this plethora of theory has deepened our understanding and appreciation of brands, the recognised complexity has made it extremely difficult to agree on how results should be measured. In short, our advanced knowledge has made it more difficult to swallow a ‘one-size-fits-all’ approach to measuring performance.”

Indeed, almost everything is becoming branded, from suppliers of commodities and materials to services, such as universities and hospitals, and even ideas and causes, political parties, cities and entire nations.

Then there’s social media. “Until social media came on the scene, brands enjoyed a heavily protected monologue with the world, guarded by fierce brand police,” says Jamie White, director of Overture London. “Then it all changed. Dialogue-driven brands suddenly looked like the way forward. Evolution and flexibility have now become as important as authenticity and consistency.”

Top UK brands

Helen Rowe, UK head of brand and communication at TNS, argues that digital has made measuring brand equity easier. “But with it comes a plethora of data that is often overwhelming and unwieldy. Good research is about going beyond analytics from monitoring to meaning, which in turn can drive action. Getting to this ‘meaning’ requires a lot of ground-work through both data cleaning and applying intelligent analysis,” Ms Rowe says.

Thanks to a whole range of new techniques, marketers are able to get closer to the truth of each brand moment. “Researchers now have both ‘the telescope’ and ‘the microscope’, which enables them to identify new, unexpected competitors, and also isolate precise opportunities for building brand equity and future predictions,” she says.

Cesar Lastra, managing director of Bash and Build, agrees that digital has been the real game-changer in measuring brand equity, particularly when it comes to the rise of mobile. “So while traditionally we would measure brand equity by their affirmation of brand variables in a questionnaire – ‘This brand makes me feel…’ and ‘This brand is for people like me’ – today people are telling brands what is important to them and how the brand should act or respond to them,” he says.

It’s also relevant that brands are now able to build brand equity faster than ever before, says Mr Lastra. “The traditional rules of brand-building have been disrupted by startups,” he explains. “By cutting out the middleman, disrupter brands such as Uber and Airbnb have become instantly relevant to consumers in a valuable way and, as a result, become part of our everyday lexicon,” he says.

It’s worth remembering that the traditional measure of value is quite simply price over experience

“Brands can now even get investors to part with their wallets long before they have been launched or consumed. Take, for example, Google’s $500-million investment in their augmented reality venture, Magic Leap. Here’s a brand that no one has ever seen and already it has generated what could be thought of as a disproportionate amount of brand value.

“The question then becomes how should we value these disruptor brands versus the tried-and-tested brands?  How much emphasis should be placed on the business model and the brand promise versus the value that the brand actually creates in consumers’ lives?”

Despite the changing landscape, it’s worth remembering that the traditional measure of value is quite simply price over experience, says Mr Lastra. “If you want to generate value, you need to create a compelling brand experience that people will be willing to pay for. That may sound old fashioned, but with the rise in complex, proprietary black-box algorithms for measuring brand value, it could be easy to forget that in the end it’s about people inviting the brand into their lives and having meaningful interactions.”

Customer service champions, such as Southwest Airlines and Disney, never lose sight of this, he says. They know that brand value is measured one brilliant customer experience at a time.  They also know that by wowing their customers they will get a ripple effect. And they are not shy about capturing feedback at every point along the way.

A brand’s strength and endurance in the marketplace does not equate with consumer recognition, sales and market share alone, Lancaster University’s Dr Cronin agrees. “We have known for quite some time that there needs to be some kind of partitioning of brand equity into a customer-based approach and a financial or cash flow-focused approach,” he says.

“This comes down to a recognition in marketing thought and practice that notions of short-term exchange and voluminous quick-fire sales have less to do with how a brand is perceived out there in the marketplace than principles like ongoing consumer loyalty and enduring relationships.”

Furthermore, in the information age, the performance of brands is increasingly being benchmarked by external stakeholders against their role and impact in society. “This is for individual or image-based reasons, such as what kind of consumer identity is attached to using a particular brand to more social obligations, such as their role in local communities and national economies,” says Dr Cronin.

“Thus a brand’s reputation as an employer, its treatment of workers and consumers, its upkeep as a good corporate citizen, and its capacity to maintain and develop positive relationships with its customers all become important factors in cementing a particular image and awareness in the psyche of the public.”

The notion of employer brand is particularly significant in the light of the huge role employees can play in performing and conveying a company’s brand identity to the outside world. The baristas at Starbucks and the floor staff of the genius bar at Apple reveal how employees are the emissaries of a brand and, for many organisations, literally bring brand images to life at the customer-contact point.

The fact that consumers no longer consider themselves solely as individuals, but more members of a wider brand community, is also relevant to brand equity, Dr Cronin adds. “In an increasingly connected world, there is recognition that consumers are seeking products, services and experiences not just for their use value or their sign value, but also for how they can help link us to one another,” he says.

Profitable Brands

Gaming is the prototypical example here. “The dominant brands in the home console gaming market, Sony’s PlayStation and Microsoft’s Xbox, have nurtured their own dedicated and loyal communities, committed not just to the brands themselves, but to the online social networks that cohere around multiplayer gaming, news and activities,” Dr Cronin says.

“For a lot of gamers, choosing a particular brand stakes out their allegiance to a particular social field and their opposition to another – you are either in the PlayStation camp or the Xbox camp. A competitiveness and dynamism is injected into the whole market when it feels as though it is not just companies who are competing, but also the communities of real people who use their brands.

“The importance of brand community members’ abilities to evangelise and act as ‘citizen marketers’ for the brand they are loyal to cannot be understated, particularly in the current age of social media, user-generated content, consumer reviews, vlogs and so on.”

Keith Glanfield, senior FME fellow and lecturer in the marketing group at Aston Business School, goes so far as to argue that these brand communities mean consumers are actually co-creating brands, taking it upon themselves to develop and shape the brands they care about with other likeminded people.

Reputation measurement, not brand measurement, should be the focus for companies

He also argues that the notions of brand communities and employer brand are becoming inextricably linked. “Consumer members of brand communities are starting to see members of the brand’s organisation not as employees but as fellow community members. This completely changes the way we measure the causation of brand equity,” says Dr Glanfield.

Regardless of how much you measure, for Kasper Ulf Nielsen, executive partner at the Reputation Institute, it will never be enough. Reputation measurement, not brand measurement, should be the focus for companies, he argues, with companies including Walt Disney, BMW and Google among the 15 per cent that have caught on to this.

“The brand strength can be measured up against the targets you have defined yourself. And that also questions the relevance and value. You might be able to show that people can repeat what you wanted to tell them. But if that does not translate into supportive actions, then what is the point?” he says.

Your reputation strength is something else. “This is the level of trust, admiration and respect your stakeholders have of you as a company. This emotion is based on a number of dimensions, such as your products, your people and the way you treat them, your leaders, your financial performance, and how you engage in society,” says Mr Ulf Nielsen.

“And a strong reputation drives support. We see that if you are able to improve your reputation by five points, the willingness definitely to recommend your company goes up by 5.7 per cent. That will have a direct impact on your financial performance and this link is why companies are focusing more and more on their reputation as a significant driver of value.”