I was the guest lecturer this week at Tasha Space’s elective course “The Value of Brand: Making the Business Case” (part of the Masters in Strategic Communications program at Columbia University).

It was a great group of students – lots of real world experience and a hunger to be strategic about how they thought about their craft and its relevance to business performance.  A quick poll at the outset of the session established tbat they were struggling with three main issues:

• How to argue the case for brand as a strategic asset (especially given the inability to recognize it as such under current accounting conventions)
• The most compelling frameworks and language to use with senior management when explaining the relationship between branding and value creation
• How and when to value a brand

I based the subsequent presentation and discussion around three main points:

1. Motive: most business managers are not being disingenuous when they ask about the ROI on marketing. They genuinely cannot see why, if customers are rational, there is a need for marketing
2. Mandate: once business managers appreciate that customers derive value from a wider set of sources than just functional performance, they are receptive to the notion that the strategic mandate for marketing involves establishing the target customers (segmentation) and developing a compelling offer to them (value proposition)
3. Measurement: once the mandate for marketing is understood to involve a focus on both customer value and financial value in both the short-term and long-term, then business managers appreciate that marketing ROI involves measuring performance on all four of these dimensions

It was a stimulating discussion – and I hope I was able to provide as much value to the students as they did to me through their insightful questions.

Please drop me an email if would like a copy of the handout from my talk

Attendance at any marketing conference always provokes conflicting emotions for me:

• A sense of wonder at the creativity that marketers demonstrate in finding ways to improve the lives of their target customers in a myriad of small and big ways
• A sense of despair about how marketers are often their own worst enemies in terms of how they perceive and present the value of their business contribution

Yesterday’s conference at NYU Stern was no different.  It contained some uplifting examples of inventiveness in business models, communications, even research design.  And it revealed a frustrating lack of consensus about what the mandate for marketing is, so relatively trivial (but nonetheless fascinating) aspects of social media were discussed with the same enthusiasm as more substantive marketing contributions to business transformation.

My observation is that marketers will not gain the respect they deserve (or secure the budgets they want) until they develop compelling answers to three questions:

1. In what ways is marketing critical to the success of this business?
2. How do we decide how much to invest in marketing, and how to allocate this investment?
3. What are the business metrics on which we expect to observe the beneficial impact of our marketing?

Marketers forget that the business case for marketing is not intuitively obvious to a management audience that believes that customers are purely rational economic agents, and that marketing is just about communications.  To appeal to this brand skeptical audience, marketers need to frame their mandate in terms of defining and delivering distinctive value to customers at an attractive economic margin to the business.  Only once the business audience recognizes that marketing is about customer value (not just advertising) and about enhanced business performance (not just creativity), are they likely to appreciate the scale of the contribution that marketing can make.

I attended the “Measuring & Managing Brands in a Digital World” conference put on by the Center for Measurable Marketing at NYU’s Stern School of Business today.

It felt like a “new world” agenda being discussed by a roster of largely “old world” practitioners, agencies and academics. There were very few true digital natives in the room, and fewer still at the podium. As a result, the quality of the presentations was highly variable. There were some moments of brilliance but there were also too many examples of “shiny metal syndrome” (infatuation with the possibilities of digital measurement, independent of the significance of digital to overall business value) which contrasted with the rearguard action being fought by providers of existing methodologies who were keen to prove their ongoing relevance. And then there were the tedious presenters who abused the podium to promote their own company/book/profile.

As a result, the list of what I learned about how to improve the measurement and management of brands in the new digital environment is disappointingly short. So, sadly (because I had high expectations for the conference), I am hard pressed to give the event more than a C+.

How might it have been better? Here are a few suggestions:

• Include a “big picture” keynote that outlines a point of view about why and how the advent of digital is changing the possibilities and practices of brand management and measurement
• Create a conference agenda with a strong narrative structure that explores different aspects of the conference theme – such as topics along the lines of “how digital is changing the way that consumers behave” or “how digital is changing the possibilities for brand measurement” or “how to structure a marketing organization that marries the best of traditional and digital”
• Enforce the “do not abuse the podium for self promotion” rule

I have spent a little more time looking at the brand valuation league tables provided by Brand Finance, Interbrand, and Millward Brown for the past two years.

My question was “even if we disregard the absolute differences in the valuation ascribed to the individual brands by these three agencies, is there at least directional consistency between them on which brands are getting more valuable, and which ones are declining?”

There are 32 brands that are common to the last two years’ league tables from these three providers. Sadly, the answer to my question above is “not really” – for 16 of these 32 brands (fully 50% of the total), the three agencies have differing opinions about whether the brand increased or decreased in value since the previous survey by that same agency.

In only 50% of the cases was there consensus that the brand had either increased in value (14 brands – Amazon, American Express, Apple, Coca-Cola, eBay, GE, Google, IKEA, Mercedes, Nissan, Samsung, SAP, Toyota, VW) or decreased in value (2 brands – HP, Microsoft). For the other 16, there was a range of opinions with at least one agency showing an increase in brand value for a brand that one of the other two agencies was showing a decline in brand value.

I have just completed one of my periodic reviews of the latest brand valuation league tables from Millward Brown (published last week) and Brand Finance (published in early March).

Here are the basic statistics for the comparison of the most recent league tables published by Millward Brown (May 2013), Brand Finance (March 2013), Interbrand (October 2012) and Eurobrand (September 2012):

• The four top 100 lists include a total of 211 brands, but only 28 are common to all four lists and 108 appear on just one of the four lists
• The four top 30 lists include a total of 62 brands, but only 11 are common to all four top 30 lists and 35 appear on just one of the four top 30 lists

Restricting the analysis to the three more established providers (Interbrand has published annually since 1999, Millward Brown since 2006, and Brand Finance since 2007):

• The three top 100 lists include a total of 179 brands, but only 34 are common to all three lists and 92 appear on just one of the three lists
• The three top 30 lists include a total of 53 brands, but only 12 are common to all three top 30 lists and 26 appear on just one of the three top 30 lists

This diversity of opinion is mirrored in the valuations of the 34 brands common to all three lists:

• The aggregate value of these same 34 brands ranges from $1.57 trillion (Millward Brown) to $935 billion (Brand Finance)
• The valuations for 19 of the 34 brands differ by a factor of 2 or more, with the most pronounced discrepancy being in the value ascribed to the Shell brand ($4.8 billion according to Interbrand’s valuation but $29.8 billion according to Brand Finance – a difference of 6.2x), but with factors of 3 or more being observed between the valuations for Banco Santander, IBM, McDonald’s, Nissan, SAP and UPS

These inconsistencies reveal just how subjective the art of brand valuation remains.  Each of the providers uses a perfectly credible “economic use” approach so the differences in the resulting valuations is a reflection of the assumptions they put into their respective models.

This is disappointing for marketers who are hoping that brand valuation can serve as some form of “silver bullet” that definitively and unarguably proves the contribution of marketing to business value.  We are a long way from being there yet.

The brand valuation league tables provide support for the assertion that “brands are important economic assets” – but even at this aggregate level, the degree of difference between the opinions of the three main providers reveals worrying large (based on the 12 brands common to the three top 30 lists, the proportion that brand value represents of the overall enterprise value of their respective parent companies is 18% according to Brand Finance, 22% according to Interbrand, and 30% according to Millward Brown).

I was a guest speaker at Dawn Lesh’s MBA class at NYU Stern last night on the topic of brand measurement and valuation.

It was probably the best group of students that I have shared this material with.  They were smart, ready to pitch in, keen to derive practical insight from the discussion.  All in all, a thoroughly enjoyable and intellectually challenging session.

I came away from the session with new clarity about the nature of the challenge that marketers face in identifying the metrics that are most appropriate for them to measure.  The challenge derives from the fact that there are multiple goals that marketers need to achieve:

• They need metrics that illustrate to the CEO and other senior leaders the role that marketing plays in informing and driving the strategy of the business (metrics that demonstrate the customer- and solution-centric aspect of the company’s business model)
• They need metrics that illustrate to the CFO the form and scale of the return that the company derives from an investment in marketing (metrics that quantify the uplift that marketing activity delivers to the short- and long-term performance of the business)
• They need metrics that measure the efficiency of marketing activity (metrics that inform the optimal allocation of marketing resources)

The academic literature is helpful in suggesting a taxonomy of metrics:

• Customer mindset metrics (such as levels of engagement)
• Product market outcomes (such as market share or price premium)
• Financial outcomes (such as increased revenues and earnings)

Using this taxonomy creates a natural narrative sequence that supports a “brand value chain” type of argument based on how marketing activity promotes the awareness and interest in a company’s products and services relative to a base case, and how this increased awareness and interest translates into improved performance in a competitive marketplace, and how this leads to higher revenues and earnings.

The weakness of this approach is that it tends to focus on the role of marketing communications rather than the broader range of activities that together create the basis for a differentiated customer experience.

I suggested an alternative construct that focuses attention on whether the metrics were designed to measure the impact of marketing (not just communications) as viewed from (1) the customer perspective or (2) the company’s perspective; and whether the impact was being viewed with (a) a short term perspective or (b) a long-term perspective.

This construct results in a much greater level of specificity in the response to the “what is the ROI on marketing?” – it clarifies whether the question is one about the financial efficiency of a specific campaign; or a more strategic question about the advantages of a customer- or solution-centric business strategy vs an innovation- or production-specific business strategy.

The January 2013 edition of Harvard Business Review carries a short piece that I co-authored with Rich Ettenson of Thunderbird and Eduardo Conrado of Motorola Solutions on how the 4Ps framework can be adapted to make it relevant to the B2B context:

https://archive.harvardbusiness.org/cla/web/pl/product.seam?c=23637&i=23639&cs=7cfe933bd3f1b5f6bcaa09f0de5b4aa6

Over the past 3 1/2 years, I have posted 250 times on the topic of marketing finance, and have made a relatively crude distinction between the “create value” and “measure value” dimensions of the topic.

I am happy to report that I have recently completed two exercises that enable me to be more sophisticated in identifying the major topic clusters that fall under the banner of marketing finance.

The first exercise was to have four separate researchers (including myself) conduct a review of the 250 posts, and develop their own classification of the major themes.  The second exercise was to commission Radian6 to do a topic cluster analysis of online dialogue over the past 6 months using 20+ key search terms related to marketing finance.

I will spare you the gory details of the various iterations in the analysis performed during each exercise.  The punchline is that both exercises concluded that the “meta topic” of marketing finance can be sub-divided into four major topic areas:

1. Business strategy and the role of marketing
2. How customers perceive value
3. Measuring the resource base of companies
4. Marketing performance measurement

In 2013 I will use these 4 topics as the organizing framework for my research and writing.

I am delighted to report that the January edition of HBR will include a piece on how the 4Ps of marketing need to be adapted for the B2B context.

Co-authored with Rich Ettenson and Eduardo Conrado, the CMO of Motorola Solutions, we analyze how the 4Ps lead to an excessive focus on product-centric strategies that are at odds with what B2B clients want.  Where previous authors have either proposed expanding the number of Ps or dispensing with the framework altogether, we came to appreciate the wisdom in the 4Ps framework and recommend a broader interpretation of each P to match the reality of enterprise selling.

I will post the text once the article is officially published.

I have just put the final touches to the summary report on the interview program that T2 commissioned this summer into key trends in asset management.  We used Impact Consulting from the Rotman School of Business at the University of Toronto to identify and interview 19 asset managers on four main topics:

1. The reality (or otherwise) of “barbell investing”
2. Their major strategic challenges
3. The key sources of competitive advantage for an asset amanger
4. Which investment management activities can/should be outsourced

The interviews were ably conducted by Greg Stewart whose prior experience in the insurance industry made him a well-informed and insightful interviewer.

Coincidentally, T2 was commissioned in September to conduct an interview program for one of the top 10 global asset managers into their value proposition.  Together, the two pieces of research have provided us with a very detailed understanding of the current climate in investment management, and into the ways in which asset managers can create and capture value.

Let me know if you would like to receive a copy of the summary of the first research assignment.