How much is my brand worth in financial terms?  How much will my marketing grow its value?

Despite their seeming simplicity, these two questions have frustrated brand practitioners for decades.  It is well accepted that there is a link between brand building activities and corporate profits.  After all, the entire field of marketing is based upon this proposition.  Yet it is equally well accepted that there is no standardized approach that companies can rely on to quantify brand value in the dollar-and-cents terms applied to other assets.  This puts marketing at a severe disadvantage within boardroom discussions of resource allocations, as its expenditures are all too often seen as pure costs rather than investments in the business.  And this is despite a growing realization that intangibles account for up to eighty percent of overall corporate value with brands being at the top of the list.

But one industry group is actively working to change this.  The Marketing Accountability Standards Board (MASB) created the Brand Investment and Valuation (BIV) project to establish the quantitative linkages between marketing and financial metrics.   The solution they have proposed is as simple as the questions themselves:  Identify a “brand strength” metric which captures the impact of all branding activities, understand how this metric translates into financial returns (ultimately cash flow), and then use this to calculate a brand value and to project the return from future marketing investments.

Of course this begs the question, does such a “brand strength” metric exist?  And if so, is it practical enough to be used?  After an exhaustive search of research literature, MASB identified brand preference as the most likely candidate for the brand strength metric.  Brand preference (also known as brand choice) is defined within the common language in marketing dictionary as:

One of the indicators of the strength of a brand in the hearts and minds of customers, brand preference represents which brands are preferred under assumptions of equality in price and availability.

The ability of brand preference to isolate brand strength from other market factors (e.g., price and distribution) separates it from other marketing measures.  Furthermore, previous studies demonstrated that the behavioral brand preference approach pioneered by MSW•ARS met MASB’s predetermined ten criteria of an ideal metric:

1. Relevant:  It has been proven to capture the impact of all types of marketing and PR activities.  Over the last 45 years it has been used to measure the effectiveness of all forms of media (e.g. television, print, radio, out-of-home, digital), events (e.g. celebrity and event sponsorships), and brand news (e.g. product recalls, green initiatives).  It has also been shown to capture both conscious and unconscious customer motivations and so applies equally to rational, emotional, and mixed branding strategies.
2. Predictive:  Its ability to accurately forecast financial outcomes has been demonstrated in a number of studies.  This includes studies comparing preference to sales results calculated from store audits, in-store scanners, pharmaceutical prescription fulfillments and new car registrations.  When applied to advertising, changes in brand preference have been proven to predict changes in the above sales sources from control market tests, split media tests, pre-to-post share analysis and market mix modeling.  In fact, Quirk’s Magazine noted over a decade ago that “this measurement has been validated to actual business results more than any other advertising measurement in the business”.
3. Objective:  It is purely an empirical measure by nature.  No subjective interpretation is needed.
4. Calibrated:  It has been applied to the broad spectrum of brands and categories and its correlation to sales has proven consistent across geographies.  Furthermore, it self-adjusts to the marketplace where it is collected so it has the same interpretation without any need for historic benchmarks.

5. Reliable:  It has been shown to be as reliable as the laws of random sampling allow.  This is true both for brand preference gathered at a point in time and for changes over time caused by marketing activities.  The table below summarizes this consistency in measuring changes.  Changes in brand preference caused by 49 campaigns were each measured twice among independent groups of costumers.  Observed variation between the pairs was compared to what would be expected from random sampling.  The ‘not significant’ conclusion confirms that the measure is as reliable as the laws of random sampling allow.

6. Sensitive:  It is able to detect the impact of media even from one brand building exposure (e.g., a single television ad shown once).
7. Simple:  It is easily applied and understood.  It can be incorporated within any type of customer research including tracking, pre-testing, post-testing, segmentation, strategy, product concept.
8. Causal:  While it captures the effect of product experience, it is not driven by just product experience.  In fact, it has been proven predictive of trial for new products for which consumers have no experience.
9. Transparent:  It doesn’t rely on ‘block box’ models or norms.
10. Quality Assured:  Its reliability and predictability are subject to continuous review.

To verify its suitability as the brand strength metric, MASB included an aggressive trial of brand preference as part of its BIV project.  A cornerstone of this endeavor was a longitudinal tracking study sponsored by six blue chip corporations and conducted by MSW•ARS Research.  The two year study covers one hundred twenty brands across twelve categories with a variety of market conditions.  In part II of this article we will review several of the key findings from this project, which are already changing industry perceptions on measuring brand value and making brand building investments.

The MSW•ARS Brand Preference measure can be incorporated into a wide variety of research and can even become a standard key performance indicator in your reporting, particularly in your tracking data.  In future blog posts we will discuss this and how you can easily apply it.

If you don’t want to wait then please contact your MSW•ARS representative to learn more about our brand preference approach.

A continuing advertising campaign can bring instant recognition to a brand’s communications.  In an era in which consumers are drowning in commercial messaging and in which a thirty second advertisement is considered long, this could certainly be considered a benefit.  However, we are all familiar with the adage “familiarity breeds contempt”.  Can a continuing campaign wear out its welcome, with consumers quickly dismissing the communication and tuning out the message because they are tired of the messenger?

To investigate the utility of a continuing campaign at brand communication, we turned to the MSW●ARS historical database of television copy-testing results.  All advertisements in this database have been coded for a battery of content elements.  Of these, two clearly reflect elements of a continuing campaign for a brand, one audio and one visual:

Recognized Continuing Music Theme – Is the music clearly identified with the brand or company?

Recognized Continuing Character – Are one or more of the principal or minor characters in the commercial recognized as part of a continuing advertising campaign?  Is the character recognized as associated with the product by virtue of previous appearances in commercials for the product?

A continuing music theme can be a song or jingle, written specifically for the brand (for example, “I wish I were an Oscar Mayer Weiner” or McDonald’s “I’m Lovin It”) or a popular song licensed for use by the brand (such as Bob Seger’s “Like a Rock” for Chevrolet trucks), as long as it becomes quickly associated with the sponsoring brand.

A common technique brands use to incorporate a particular song or jingle into a continuing campaign is to make the song the main focus of initial ads and then cut back on the song’s prominence in subsequent spots.  For example, Mazda initially built this 2000 ad around the zoom-zoom song:

Then later ads featured the song to a lesser degree, as it became associated with the brand:

And the most recent ads have transitioned to using just the zoom-zoom audio cue without the music chords but reinforced with a visual cue:

Similarly, there is diversity in the types of continuing character employed by marketers.  A continuing character can be an actual person (for example, the Apple Mac and PC guys), an animation (such as Tony the Tiger) or even the personification of the product itself (the M&Ms “spokescandies”).  As the campaign becomes entrenched in the minds of consumers, these characters are able to instantly provide branding cues to viewers even before the brand name is explicitly mentioned.

The Geico Gecko first appeared in the firm’s advertising in 1999 and has become synonymous with the brand.  While viewers may enjoy his unusual exploits, you can be sure he will take the opportunity to remind them that they can “save 15 percent or more on car insurance.”

And among younger generations, it is likely that William Shatner is better known for his long running campaign for Priceline than for his iconic Star Trek character.  While clearly not as agile as a youthful Captain Kirk battling the Gorn, he still leverages his considerable charisma in reminding viewers they can get the best travel deals from Priceline.

For each of these two types of executional campaign elements, we delved into the MSW●ARS database for empirical evidence for whether, and to what degree, these recognized brand cues can affect the branded memorability of an advertisement.  It was found that each is associated with higher related recall levels, with a continuing character being particularly effective in this regard, boosting ad recall to 38 percent above norm, on average.

However, while these results show that these branding cues help to capture attention and link the ad to the brand in viewers’ minds, do they also have a tendency to either overpower the substance of the ad or trigger the dismissal of the communication that familiarity may beget?  To shed some light on this question we went a layer deeper in the database analysis, examining the different aspects of recall for the ads containing these two content elements.

As the following chart shows, for a continuing music theme, both references to executional content and sales messages are elevated to a similar degree as overall ad recall.  However for ads with continuing characters, consumer playback of executional content tends to outstrip overall sales message playback – but importantly, sales message recall is still 30 percent above norm, on average.  But the big news is that viewers tend to recall the ad’s key sales message at very strong levels for both types of brand cues.  It is possible that brands that utilize continuing executional elements are more likely to have consistency in their key proposition, hence easing its communication over time.  Or it may be that the instant branding effect of familiar executional elements facilitates communication overall.

Finally, we also took an in-depth look at the highly recognizable and ongoing campaign for a CPG brand for which MSW●ARS has tested the television advertising for many years – both before and throughout the current campaign.   This campaign uses recognizable continuing characters which have become instantly associated with the brand.

In the year before the campaign started, related recall levels for tested ads were roughly at norm.  However, they immediately jumped with the transition to the new campaign.  In fact, in the first three years related recall results averaged 55% higher than the norm level.  What’s more, levels continued to rise over the subsequent two three-year periods of the campaign.

Looking more specifically at what viewers recalled about the ads, we see that growth in playback related to executional elements, surely driven by references to the continuing characters, outstripped growth in overall related recall.  However, average playback of the key sales message, which was extremely high in the first three year period, dropped noticeably in the third three year period albeit to an average level still well above norm.

While there was consistency in the ads executionally over time, the brand at times shifted focus in its key selling message, often related to the sub-brand being promoted.  In the third three-year time period, a relatively large proportion of the ads were focused on two new key sales messages for which communication levels were relatively low.  This suggests that brands should use caution when changing messaging within a continuing executional framework, ensuring that the drama supports the intended communication.  It could be that use of branding cues, especially continuing characters, may need to be reduced in certain situations – still providing continuity and linkage to the brand but allowing space for sufficient communication and/or demonstration of the key selling message.

The bottom line is that use of brand cues such as a continuing music theme or, in particular, continuing characters can be an effective method to boost branding in an advertising campaign, ensuring that viewers link the advertising to the brand.  Indeed, in this context familiarity breeds not contempt, but rather enhanced communication.

Of course as always, results may vary.  But appropriate research can help brands ensure that their advertising campaigns achieve their objectives.  Please contact your MSW●ARS representative to find out how our products and research can help to optimize your brand’s communications.

Chances are you have heard of the Higgs Boson, an elusive elementary particle that physicists have spent the last fifty years and billions of dollars to find.  Reports of its potential discovery have captured headlines around the globe.  If verified, not only will it help cement our mathematical understanding of how the universe works, but will set the trajectory for future technological advances.

What has this got to do with the marketing discipline?  For the last fifty years we have been dealing with our own elusive particle, an accurate metric that quantifies the financial value a brand provides.  Without this the mathematics is incomplete for financial forecasting, planning, justifying marketing investment or improving marketing return.

But 2015 may be the year that this changes due to the work of the Marketing Accountability Standards Board (MASB).  This group of marketing and financial practitioners and academics has been pursuing aggressive “game changing” projects to not only create general principles and methodological standards for brand valuation, but to prove them out in brand “trials” that serve as practical examples of their application.  Based on prior research, MASB chose the MSW•ARS brand preference measurement approach as the cornerstone of its two-year long brand investment and valuation trials.  The first installment of this research was presented at the group’s summer summit in August and the initial results have been making waves in industry news.

Mathematics of Brand Preference

Just like physics equations hinted at the existence of the Higgs Boson, so did the equations of marketing hint at brand preference.  For years marketers have dissected sales data and realized that maintaining market share and price point were critical to maintaining revenue streams.

But this just pushes the question a level deeper to: What drives a brand’s unit market share?  Economic theory provides two of the key elements, price relative to competing products and distribution.  Simply put, on average the less costly in terms of time and money a product is to obtain, the higher the demand for it will be.  But people are not economic robots.  They will oftentimes choose a more costly option if they feel that it will provide them a decisive benefit, even if it is a purely emotional one.  Thus it is the breadth and strength of consumers’ preference which set the base level for a brand’s unit market share with distribution and relative price acting as modifiers to it.

So how effective is brand preference in explaining a brand’s unit market share?  In the initial MASB trial analysis, six months of brand preference, unit share, price premiums, and distribution were analyzed across twelve participant categories containing one hundred nineteen brands.  The categories examined included a diverse mix of product types; prices from thirty cents to thirty thousand dollars, impulse buys to deliberate purchases, consumables to durables.  Across these categories brand preference accounted for seventy-one percent of the differences between brands while effective distribution and price premium added another fourteen percent.

With this milestone achieved the next step is already underway, incorporating brand preference in financial and marketing forecast and planning applications.  More details on these endeavors will be forthcoming in future installments.

Please contact your MSW●ARS representative to learn more about how brand preference is embedded throughout all of our research solutions.