Research
Measuring the most valuable brands (the easy way)
May 3rd
Last week Millward Brown released the results of their BrandZ top 100 most valuable global brands list. The brand research geek in me is truly fascinated by brand equity research and ever since Millward Brown started releasing this data I’ve been following along. I have to commend them on all of the work they put into the research, it sure sounds like a pretty cool model but there’s this part of me wonders if this is too complicated. To test my theory I figured I’d try and replicate the top line results in my own biased way.
The commonly held belief is that the difference in assets and market cap is what’s accounted for by the brand. Understandably this is overstating things considerably since there are complicating factors. The one, and probably most important complicating factor is that it doesn’t take consumer opinion into consideration. One may argue that consumer opinion is built into the market cap through consumer transactions translating to revenue, but I feel that there are brands out there that are seen as bell weathers whether you buy the product or not. So for my model I included consumer opinion. In fact my experience has been that when you ask consumers a direct question you can be pretty confident that they’ll give you a straight answer. So with that in mind I assumed that if I just asked consumers what brands are the best they’ll give me the right answers. My goal with this project was to keep things simple, that means I wanted to see if I could replicate the topline results that Millward Brown had gotten from their BrandZ study but with a lot less work. I was looking to end up with the following ranking : Google, Microsoft, Coca Cola, IBM, McDonalds, Apple, ChinaMobile, GE, Vodafone, Marlboro.
Aggregate score calculation
As you can see from the example above Google comes up with an aggregate score of 7.5. Think of this as a weighted result that suggests that 7.5 of the 10 people thought Google was a valuable brand. Completing this exercise across all of the brands I had my consumer opinion data which I called aggregate consumer opinion. Looking at the ranking of aggregate consumer opinion scores for each of the brands I realized that my consumer survey was okay. The reality is the folks I talked to had no idea how to rate Vodafone or ChinaMobile. Not that I blame them, both companies branding efforts are directed overseas and not to the US. For the purposes of this analysis I decided to drop them from the results and try to replicate to ranking without those two brands. Now a second look at the US only ranking and viola! success.
US Ranking
In retrospect I should have just asked the question unaided, that may have made a better experiment, but alas this blog is a hobby and no one’s paying me to do this so my effort ends there. Regardless of the veracity of my results I think the point I was trying to make still stands: despite the fact that us researchers like to get all complicated with methodology we often don’t give the population much credit. They have an opinion and often it reflects the same thing our fancy model will tell us, we just need to ask. The thing is researchers are doing what they do because they get a kick out of data, and trying out new approaches to analyzing data is mana from heaven. It’s really the same in many jobs out there, ask a surgeon and he’ll tell you he loves doing new procedures way more than the same boring stuff over and over again.
The reality is that the BrandZ study goes way beyond ranking of brands and provides a pretty cool scoring system for quantifying brand value (something I ignored). I can imagine it also serves as an excellent normative database for benchmarking brand value for clients. I guess what I’m saying it I think the research is pretty cool, but as is the case with all research that’s been summed up to a data nugget, I find it none too exciting to see a ranking of the top 10 global brands. As it turns out if I wanted that ranking I could have asked my friends.
Measurement Options: Wooing brand advertisers…
Apr 30th
Photo: Laineys Repertoire http://www.flickr.com/photos/76283671@N00
Measurement is a chicken and egg argument. Some will argue that unmeasured media has no value (usually the media company) others will argue measurement should follow innovation (the measurement companies). I’ve spoken about this subject before and I still believe what I said to be true: measurement companies are a rightfully risk adverse crowd, and companies looking to open new doors need to create their own measures of success. That means for publishers to move more brand dollars online they not only need to revise creative formats, focus on brand buying solutions, but they also need to develop new measures of success.
As an industry everyone’s wanted more brand marketer dollars even as far back as 1999 when the IAB did a press release titled “Abolish Clickthrough Now!” thinking that the metric didn’t help the cause with brand marketers. The idea of clickthrough as “the” metric for measuring performance took off early and to this day remains an accepted form of ad measurement. As you would expect brand advertisers didn’t see any value in clickthrough – why would P&G care if someone clicked on a Pantene ad? On the other hand direct marketers, those looking for the immediate satisfaction of a click loved it. As such we see the top categories advertising online (according to Nielsen) being the more conversion oriented folks in financial services (think credit card applications), retail, travel, and telecom. Right at the bottom of the list are the consumer packaged goods advertisers, automakers, and pharmaceutical companies – practically the inverse of spend on TV.
Okay, I’ll admit we’ve seen an evolution in the click-through metric to encompass: actions, performance, conversions and view-through, but come on people, it’s all an evolution of the same direct marketing measure. What the industry needs are brand metrics. Hard direct marketing style numbers than can be used to gauge brand success. Well that could be tough. As I pointed in the last post, the data that you’d want to base those metrics on are not available online. So what have we done to measure the effectiveness of online media for brand marketers? Well we’ve defaulted to what they already know, brand awareness studies. Now in full disclosure, brand awareness studies are my heritage. I got my start in Internet research in 1997 at Millward Brown where we tested the first Java ad, the first Flash ad, the first sponsorship, Unicast, etc. We were the only game in town and had plenty of demand for proof that brand marketing works online. We delivered stacks of reports that proved people see and are aware (at least subconsciously) of online brand advertising. We used strict experimental design methodologies, and had extremely convincing data. Everyone was happy. Or were they? It’s been over ten year since I left Millward Brown and we’ve see the online brand awareness research market grow considerably and the number of studies probably now amount to over 10,000. Yet here I sit at my computer eying the dollar spend of brand marketers online and wondering where are the big numbers? They obviously didn’t believe the studies or we would have seen more than the slow trickle of growth from brand advertisers, there should have been an inflection point in the growth rate of brand dollars – but it doesn’t exist.
It’s hard to pin all of the blame on ad formats, and buying options, those are simply impediments. Most if not all brand marketers have dabbled online, but none have come back with their checkbook. It appears they weren’t thrilled with what they saw, and that’s the rub. One could argue that the blame falls on the research companies and there may be some truth to that. Brand awareness research has a reputation of always returning great results, of course they have typically been underwritten by publishers or agencies who are not necessarily the most unbiased bunch. Let’s not forget to mention the way researchers presented the data made the numbers look entirely suspect. Results like “1239% increase in purchase intent” just don’t seem believable and are a pure manipulation of the data for better optics. But even if those negatives adversely impacted a clients view of the data it’s hard to argue with the aggregate data that shows brand marketing works online, right? Wrong. I mean yes of course the aggregate results looked good but the reality was even though the studies were designed to breed a level of familiarity to TV brand awareness studies, the methodologies were incompatible. As a result marketers had an out with online advertising: I don’t trust the publisher who funded the study, I think the numbers as portrayed are unrealistic and I have no idea how this compares to TV. If there’s one lesson to be learned from this exercise it’s not to give marketers measurement that claims to be the same as what they use in other media but is fundamentally different. Had online publishers opted for a more familiar measurement standard, say continuous tracking, then maybe they would have seen the benefit, then again I’m not sure online advertising would have looked all that good next to TV. The other option to take, and the more attractive option in my opinion, is to offer the measurement that was the promise of the internet. To provide a clickthrough type measurement for brand marketers.
There has been some success along those lines. Perhaps the best example comes from Yahoo! and their Consumer Direct product. Designed in conjunction with Nielsen, it allows consumer packaged goods advertisers to buy their specific target within the Yahoo! audience (e.g. diet cola drinkers) and measure the sales lift by using Nielsen data to monitor product purchases in grocery stores. It’s some of the coolest measurement I’ve seen but suffers from a couple challenges: it’s expensive and so it only works for large campaigns (no one wants to spend half their media budget on measurement), it relies on panels (small campaigns are hard to measure), and it’s doesn’t scale well (lots of manual labor). This is the closest we’ve come to offering compelling, data rich measurement of online ad performance. If only the measurement were automated, available for multiple industries, and as ubiquitous as the clickthrough, well, then we’re talking business.
The key takeaway here is that the measurement innovation came not from research companies but from the publisher looking to woo brand marketers. It’s the reality of how the market operates and more collaborations between sellers and researchers could lead to more online brand advertising. I also feel strongly that replicating offline measures online was an exercise designed to fail. It’s downright near impossible to control for all the differences between how media is consumed and brand marketers (like consumers) expect more from the internet. It’s now up to us to deliver.
Why Measurement Holds Back Innovation
Dec 17th
There is an unfortunate consequence of 3rd party measurement in that it has a tendency to hold back the innovation that new markets need. This has been proven time and time again and it is these inefficiencies that many entrepreneurial companies fail to see. First let me give you a public policy example of what I’m talking about using the example of Net Neutrality.
Net Neutrality is simply defined as giving preferential performance to parties that pay the most. On the other hand Measurement could be redefined as providing preferential treatment to media vehicles that are measured. The two are not that different. It’s all about providing preferential treatment. It’s the idea that the more someone is willing to pay the more viable their business becomes. In some people’s books they may consider the concept to be extortion but to many it’s just the price of doing business.
Businesses that spend money without the ability to measure the return on investment end up with inefficient measurement which places the burden of measurement on the client a sure disaster waiting to happen. Performance measurement is the keystone to proving your worth, why would you give that responsibility over wholly to your client especially if they have no idea how to measure what you do? That’s exactly why online search has been a very successful business model, it has built in measurement, the business proves itself.
Some industries want to use financial measurement strategies (sales), but often in this model there are unmeasurable components. Think about video on demand (VOD), Nielsen doesn’t effectively measure the VOD model and therefore there is little demand from advertisers to buy it.
Truly innovative companies provide measurement with the solution. Google, DoubleClick, and other ad technologies have measurement built right in. Those that focus on the platform to the detriment of measurement that find themselves stagnating. Cue the reality… many web based businesses fit this model. Facebook = great social platform, no business model, little measurement of performance. Twitter = cool new communication platform, no built in measurement, they’ve ceded that business model to other companies that access their APIs, and the list goes on.
Of course it’s hard to think of what to measure when you haven’t quite figured out how you’re planning on making money, but regardless I think companies are starting to see the light, especially in the online ad space. Most companies I speak to in online advertising are considering building in measurement to their tools, a strategy that not only proves their model, but keeps the control over the measurement squarely where they need it – in their hands. All too soon we’ll be swimming in performance data and fighting over reporting standards. I’m looking forward to it…