The trouble with Brand Value

Brands create value.

Let me re-phrase : Strong brands create value.

Brands create value not only for consumers, but also companies. I see this as a cyclical process - brands first and foremost, create value for consumers, and this then translates into value for companies. You just can't be profitable without delivering genuine consumer value.

Great companies know this. They find ways to re-invent their brands to ensure that consumers love and resonate with them. They do this through imagery (Mercedes Benz), building relationships (Nike) or even by creating experiential value (Apple). The marketing discipline has come a long way. Very few today would argue that brands are the pillars of strong consumer relationships and loyalty.

But the trouble with brand value is that it starts getting blurrier as we move through the funnel.

Kevin Lane Keller, one of the great brand thinkers of our generation has summarised this funnel pretty succinctly.

This is all well and good. But the model fails to acknowledge the difficulty in justifying linkage.

Consider this:

The impact of brands on consumer value metrics (awareness, salience, attachment, loyalty) can be measured fairly easily through primary research. In fact, advances in marketing mix modeling have made the second level of linkage (sales, profitability, ROI) possible too. But how can the perennial 'shareholder value' be justified by marketers ? Today's economic climate makes it necessary for marketers to justify linkage not only with sales but also with long-term shareholder value.

If a marketer invests $100,000 in brand building, what is the long-term impact on shareholder value?

The difficulty arises due to the long lag effect of most marketing outcomes (sometimes even years), making accurate linkage extremely difficult. There is no doubt that brands do create shareholder value (look at the long-term stock market stability of some of the great brand-companies, for eg. Procter & Gamble, and this will be clearly evident). But the trouble is in linkage. 

This is unarguably the biggest challenge facing marketers today. Many probably don't even realise it.