Is there really a point in measuring brand value?
Responding to last week's Mills on Monday column, Kantar's Dom Boyd argues that brand value measurement is in fact critically important for marketers, as he reveals an uncomfortable truth about UK brands
Measuring brands and their impact on the bottom line is important. Seems obvious doesn’t it?
For a start it equips marketers with a vital strategic tool: the ability to benchmark their brand activities against competitors and across a brand portfolio. That insight not only helps a business allocate and prioritise resources, but it also helps the City understand investment decisions – something that’s not always evident from the balance sheet alone.
So if you’re a CEO, that’s a reason to take this brand stuff seriously.
It also enables marketing teams to show up in the boardroom with a stronger share of voice, arming them with tangible evidence of the value they have made to a company’s greatest intangible asset – the brand – in a language the board values: cold hard numbers on a balance sheet.
The power of this cannot be underestimated. As Peter Drucker quipped, “what gets measured gets managed”. Put differently, it gets taken seriously. That means marketers can go toe-to-toe with the CFO and compete for scarce resources with confidence.
Not only can they show they are shifting the needle on business KPIs, but also show they are driving profitable business value creation – and by exactly how much.
That’s brand magic. Creating the supernatural ability to get people to want something more, pay a significant price premium for it, and advocate it while doing so. With brand value measurement, it’s something you can put a price on, that’s fundamental to ensuring marketing is hardwired into the business’ future growth strategy.
So the critical question isn’t ‘should we be measuring brand value?’, it’s ‘what brand value measures are most important?’.
This is where care is needed.
Brand rankings provide a great snapshot of who’s at the top of the charts. But like all snapshots, viewed in isolation they can miss the mark. Like the Top 40 music charts, who’s at number one this week doesn’t really help you understand the important stuff, like whether an artist feels like they are on the rise, relevant right now or unique (or, as we say at Kantar, whether they are ‘meaningfully different’).
While Crazy Frog road-blocked no. 1 (Axel F, 2005, spending four weeks at the top beating Coldplay’s Speed of Sound. You’re welcome!), it doesn’t really help us understand its potential as the future of music. Nor should we look to brand rankings alone to divine a brand’s future prospects.
In order to understand that, we need to be careful not to confuse the most ‘valuable’ brand with the brand with the ‘strongest equity’.
Take Vodafone, BrandZ’s most valuable UK brand in 2020. A quick glance beyond the ‘no. 1’ headline reveals that its brand value has halved since 2009. It trails sixth in brand power behind competitors like O2, Sky, Virgin and EE in the UK. Why? It lacks meaningful difference.
So, a valuable brand, absolutely, but a brand with strong future prospects – not so much. The lesson here is to look beyond the ego validation of boardroom $ valuations, and get down and dirty, understanding the dynamics that make consumers tick by asking them - something only BrandZ’s methodology does.
Sure, measuring financials is important, but measuring what real people think – and why – is arguably more important as a predictor of future success. This is where the deepest value of brand measurement lies, in looking at the dynamics fuelling the speed and scale of trajectory.
Looked through this lens, BrandZ’s Top 75 UK Brands report makes fascinating – and alarming – bedtime reading. Shooting up the rankings are Ocado (+63% value), Deliveroo (+40%) and Just Eat (+19%), along with newcomers like Boohoo and Revolut.
The reason for this? All were propelled by strong ‘difference’ scores. But that’s something that is increasingly rare.
In fact, the report reveals an uncomfortable truth. UK brands are suffering from a brand differentiation crisis, losing ground to global competitors and with meaningful difference in freefall. We have gone from having eight brands in the Top 100 to just three. In three years’ time, we predict there will be none.
This shows UK brands are losing their way. They have a weakening connection with customers, and therefore their ability to drive profitable growth. It’s a flashing red warning sign.
Thankfully, the great thing about measuring brand value dynamics is you are also able to identify the strongest growth drivers, and it's clear there are four qualities UK brands need more of. They need to communicate more creatively; innovate more meaningfully; take more responsible actions; and digitise more daringly.
These are the critical qualities that transform business value to ensure they play a role on the global stage in the future - qualities that provide marketers with a mission-critical role in the boardroom.
It’s a role that has never been more essential, made all the more urgent at a time when every budget is under scrutiny.
If ever there was a time for marketing to make the case for its commercial value in protecting, building and growing business it’s right now, and, in that light, putting a hard financial value on how brands build business has never been more important.
Dom Boyd is managing director, UK insights at Kantar