How Marketing Builds Brand Value

Brand value rankings are more popular than ever, and are often seen as the equivalent of Marketing value rankings — but are they ?   Milward Brown recently published their annual Brand Z top 100 Most Valuable Brand rankings. Google topped the list, with Microsoft and many other well known brands following on their heels.  In fact, Eileen Campbell, CEO of Milward Brown, says: “It is a fantastic achievement to be one of the most valuable brands in the world… this ranking is a way for marketers to identify the value that their brand is creating for the business.”  But who’s really creating all the value ?

Milward Brown’s brand value calculations are relatively straightforward: Intangible Earnings x Brand Contribution x Brand Multiple. But what, if anything, is this really telling us about Marketing’s value to the organization ? I’d argue: not very much.

Top 10 Brand Values -- But What Did Marketing Contribute ?

Top 10 Brand Values -- But What Did Marketing Contribute ?

Let’s look at a few examples to understand why. American Express, inarguably a great brand, dropped in value -40%. Was Amex marketing last year that bad ? Citi fell -52%. Weak marketing ? Target was down -17%. The fall of “expect more, pay less ?” Interestingly, a recent Nielsen IAG survey showed that consumer brand confidence was higher among those consumers seeing financial services advertising versus those who did not. So, clearly, brand spending reductions during a downturn probably account for some of the decline in brand value.  But,  I don’t think these brand valuation declines are all about marketing effectiveness or even reductions in marketing spending. So, if not, what are they about ?

Brand Value Decliners -- How Much Due To Marketing ?

Brand Value Decliners -- How Much Due To Marketing ?

In the case of Amex, what was the role of poor risk management decisions ? Acceptance of TARP funds ? At Citi, Investment Bankers made mistakes in the sub-prime mortgage market. These mistakes generated write-downs, losses, and reduced consumer confidence and trust. The last time I checked, the people responsible for these activities in Amex and Citi weren’t in Marketing. In Targets case, consumer confidence eroded quickly as the recession deepened. Target’s value proposition became less relevant. Walmart’s became more so–it gained +19% in brand value. Is this bad marketing — or is the culprit poor merchandise mix and selection when consumers are suddenly much more value conscious ?

What the brand valuations tell us is this:  many things impact the brand:  many of which are outside of Marketing. Public relations fiasco’s, poor corporate earnings, mistakes in departments outside of Marketing, bad product experience, etc. — the list goes on and on. Yes, Marketing should “own” the brand and be it’s steward, ensuring that the organization is protecting and building the brand–both inside and outside Marketing.

Marketing needs to influence the entire enterprise and have everyone understand their impact on the brand. It’s Marketing’s mandate to define the brand, the key brand drivers, but most importantly, to then educate, motivate and inspire people throughout the enterprise to execute in ways that build brand value–not destroy it.

So, my take is this: the Milward Brown study is very important for Marketing, but not as a measure of Marketing value. Rather, it’s a clarion call for Marketing to have more influence and more impact on the brand by extending its reach beyond Marketing. After all, the easy part is the marketing communications. The harder, but arguably equally important part, is driving brand value throughout the entire enterprise.

3 Responses to How Marketing Builds Brand Value

  1. Jan Nyholm says:

    We are doing marketing a disfavour here. The goal for marketing is not to increase brand value. Think about it: What is brand value really? Is it not something invented by marketing people because we always struggle to prove our value add? I suggest we forget brand value as it is only marketing people who seems to take it serious. If we want to get marketing back in the drivers seat, where it should be, we need to chase the goals that Mr. Zyman from Coke set: ‘ The only objective of marketing is to sell more products to more people for more money more often. That is the only reason to spend a dime’. If we follow those goals we add not just brand value but real shareholder value and the board will start to see marketing being a real value contributor – and give us more responsibilities.

    • beardrs says:

      Jan–Thanks for your comment. I agree in principle with your comment. Marketing exists to create economic value. My point in the posting is that Marketing needs to think beyond the Marketing function because there are many other areas in the enterprise that directly impact the brand–both positively and negatively. I do agree there is too much emphasis with the brand valuations, and not enough on marketing contributing to the bottom line.

  2. […] But, a curious thing was happening. Brand equity measures, as measured by consumers, were falling.  Traditional measures such as awareness, trust, etc., were eroding based on surveys by Y&R Brand Asset Valuator (BAV). How could this be? How could market driven brand values be going up, while consumer driven brand equity scores were goi… […]

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