Friday, May 30, 2008

Can Brand Value Really Measure Effectiveness?

One more comment on the ANA’s Integrated Marketing survey that I wrote about yesterday. I was struck that brand tracking studies ranked second among effectiveness measures, and brand equity measures ranked fourth. (Numbers are in yesterday’s post.) This is the more respect than brand measurement usually gets.

I suppose this reflects the nature of the survey respondents, who are mostly consumer marketers and (this being the Association of National Advertisers) are largely focused on conventional advertising. I suspect a survey of, say, Direct Marketing Association members would get very different results.

But it seems that brand value is also accepted as an effectiveness measure by people outside of marketing at the survey respondents’ companies. This suggests these people live in a very brand-oriented culture. Indeed, although a couple of speakers yesterday said they had trouble getting their company to believe ROI calculations based on marketing mix models, no one mentioned any problems gaining acceptance for brand metrics.

Lest you think the respondents are all packaged goods marketers, 20% of the survey responders worked in financial services and insurance. (One nice thing people used to good research is they publish all the details.) Computers and technology accounted for another 10%. The traditional brand-centric categories of consumer packaged goods were 11% and food, beverage and tobacco were 9% of the total.

One reason the high ranking of brand value measures caught my eye was that I had just compared brand valuations from two different sources: Millward Brown Optimor and Interbrand. Taking Google in 2007 as an example, Millward Brown gave it a value of $66.4 billion and Interbrand gave it a value $17.8 billion (Millward Brown’s 2008 figure for Google is $86.1 billion; Interbrand 2008 is not yet available.)

Any way you slice it, this is a very big difference. Rankings also diverged: Millward Brown placed Google first among all brands while Interbrand had it at number 20.

My point here is the financial values produced by brand valuation methodologies are very imprecise. It’s actually a bit frightening to think that advertisers would use them to measure effectiveness. The consumer attitudes captured in brand tracking studies are probably much more reliable, even though they cannot be directly converted into a financial measure.

Side note: I had no sooner finished this post than I received an email survey from ANA asking my opinion of the conference. These are definitely people who take their research seriously. Good for them.

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