Marketing Investment and Brand Value
- Content: White Paper
- Date: 20 November 2020
BERA is solving an old problem with a new approach
One of the most pervasive problems in marketing is determining the likely impact of advertising and promotional investments on the value of a brand. The source of the problem is twofold: First, in most companies there is not a clear understanding of the economic drivers of brand value and how marketing investment interacts with these drivers. Second, there hasn’t, until now, been a reliable way to measure and monitor the interactions between marketing investment, drivers of brand value and the ultimate impact on the value of the brand.
Over the past 30 years or so, professionals in the marketing mix modeling business have attempted to solve the problem by building ever more complex models that mine historical data to forecast how consumers are likely to respond to marketing investments. While the quality of these models varies significantly across providers, some are quite good although the models all focus almost entirely on estimating the near-term lift in volume and profit contribution produced by marketing investments.
The Achilles heel of these models is their inability to estimate how marketing investments change consumer perceptions of the brand and how the change in perceptions impacts brand value. Without this crucial component, mix models tend to be biased toward short-term results often at the expense of long-term brand health.
For a large brand, 10% more Brand Loyals and 10% fewer Deal Switchers can easily be worth tens if not hundreds of millions in brand value over time.
All marketing professionals know that investments in advertising or promotion, whether stand-alone or accompanied by improvements in the product/service attributes or features, are likely to have an impact on how consumers perceive the brand.
In essence, one of the more important roles of advertising is to attempt to enhance consumer perceptions of the brand. And a common concern is that relying too much on promotions or other price-based communication can cheapen the brand in the eyes of consumers and lead to commoditization.