Why Your Brand Equity Is Dying And How To Get It Back

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Henric Larssen, Group CEO and Founder at Edisen, explains why your brand equity is dying and what you can do to turn the situation around.

Somewhere in the relentless focus on sales data, businesses have lost sight of the unique value of brand equity. With decades of data at our fingertips from a fragmenting range of channels, it’s little wonder that boardrooms concentrate on conversion. It seems far more measurable than the ‘customer love’ attributed to brands, not least because online marketing has unleashed a maelstrom of metrics that provide an obvious line of sight from expenditure to ROI.

Yet a financial view that values online sales above all else overlooks the power of building a brand that consumers place on a pedestal, creating long-term loyalty, and continuously adding to the bottom line.

As a concept, brand equity is its own worst enemy. It’s a nebulous term that’s difficult to define and equally challenging to measure. In contrast, brand value is tangible, so it’s perfectly understandable that the modern CEO – and many a senior marketer – prefers to peruse sales spreadsheets. But brand equity remains important, more so than ever in fact. If the bias of brand value was shifted even slightly in favour of brand equity, great things could happen for individual brands and for marketing as a whole.

How equity affects value

Superbrands – the ultimate arbiter of brand value – defines brand equity as: “…consumers’ awareness of brand features, making a brand memorable, recognisable and reliable. It’s about the consumer’s perception of a brand and the resulting value placed on the brand. It is created over a period of time.”

The last point is important because it shows us that long-term brand equity directly affects short-term brand value – something that shouldn’t be forgotten.

Sadly, it too easily is. The effect of an explosion in the number of available marketing channels is a narrow focus on which offer the best results. This problem isn’t just caused by perceived value for money – low CPM for social media ads, for instance – but also the amount of time a CMO and their team must spend to simply keep up with marketing technology innovation.

The result of this dilution of marketers’ attention is an erosion of brand equity – since there’s little budget, and even less time and headspace, to focus on brand innovation, and surprising and delighting the target market.

But all is not lost. We need to get back to the inclusion of some tried and tested techniques to understand what will drive brand equity, and how we can capture what effect it’s really having on customer engagement and sales.

Locating your brand equity

If you want to realise the benefits of strong brand equity look no further than some of the products that have been around for decades long before online clicks mattered so much, and still make ‘top 50 brand value’ tables: Apple, Coca-Cola, Mercedes-Benz; the list goes on.

So, what did these businesses do to maintain momentum for so long, and what can that teach us about brand equity’s place in modern marketing strategy?

One aspect that unites them is a ruthless focus on innovation, an understanding of the value of creative risk-taking. That is one essential element of driving brand equity: a spirit of endless creativity, producing more and progressively better work. It doesn’t just work for behemoth brands. Look at Dollar Shave Club’s witty YouTube ad that turned the air blue and went viral in 2012, sending sales skyrocketing with a clip based on minimal budget.

These days, creativity can be produced at speed using cost-effective, cutting-edge creative asset platforms. They also feature built-in measurement to rapidly glean what’s landing well with target audiences and what isn’t. It’s a quick and effective way to renew focus on – and build – brand equity.

Remember, too, that customer data is key to unlocking the best creative ideas – but should ideally be fed in at the start of the creative process. Focus groups may sound old hat but they’re still valid. Data alone may have told us we wanted nicer Nokias, not the all-powerful iPhone that now dominates our lives. 

Give your CMO equity metrics

A combination of the best minds and tools makes creativity a bottomless well. But it’s important to know that – contrary to popular belief – there are also a range of metrics you can use to measure brand equity. For example, the oft forgotten Net Promoter Score is a relatively simple but satisfactory measure to introduce that can track customer perception over time.

Giving the thumbs up to measurable KPIs for brand equity, alongside those for brand value, allows CMOs to record future value as it’s built. Brands’ CPM drops as they become more popular, delivering better ROI over time through a balanced approach between short- and long-term investment of marketing budgets.

And there you have it: creative innovation plus sensible metrics can breathe new life into brand equity. It’s no exaggeration to state that decades of brand-building can be quickly undermined by each second spent solely measuring clicks. We must reverse the trend before brand equity dies a death, which will be bad news not just for brands but also for consumers.

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