by: Scott Goodson
John Gerzma sent me this note today. He is author of The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid it. (thebrandbubble.com) He also heads up the strategy group of Y&R brands.
Scott and Chip wrote a great piece last week for ADWEEK on Beating the Recession. They offered a bunch of helpful ideas, but I want to tag on to this one:
“Marketers in this environment need a harder-working communications plan. By that we mean, a better approach to interacting with consumers throughout the brand experience”.
Across 2,500 brands I studied across 14 years of data from BrandAsset Valuator, the world's largest continuously updated study of brands, Main Street ‘experiences brands’ differently than Wall Street: While brand value increased 80% in three decades, brand awareness declined 20% -- brand quality eroded by 24% -- trust in brands declined by a staggering 50%. And 85% of brands were either stagnant or declining in brand differentiation.
But the good news is we found a small number of brands had greater pricing power, loyalty, preference and impact on stock price. What’s their secret? Consumers don’t just want a brand to be different; it has to keep being different. This new metric, Energized Differentiation is the consumer perception of motion, direction and creativity in the brand experience. It explains the brand’s ability to evolve and continuously innovate. We modeled a portfolio of the 50 top energy-gaining brands each quarter over a five-year period and they cumulatively beat the S & P 500 by almost 30%.
Brands with energy are creative across the entire experience. We found that clusters that define this measure include 1. Vision — thought leadership, company culture, brand’s ability to move culture; 2. Invention — tangible product and service experiences from innovation and exemplary customer attention; and 3. Dynamism -- marketplace conversations such as advertising, social media and the myriad of forms marketers use to communicate. Consumers are telling us they want experiences that are immersive, reinforcing and evolving. But most companies have a narrowly defined view of marketing.
So the reason why brand experience is so crucial is that CEO’s are leveraging their brands to make promises of future earnings to shareholders. Today almost one third of business value is brand value. The 21st century CEO must be the ‘Brand Manager in Chief’. The best CEO’s think like CMO’s and vice-versa. Together, they must protect bring marketing to the forefront of business strategy in order to access and integrate other functions of the business. Marketing isn’t a department, but a way of thinking across the company. Marketing is now everyone’s concern. Nothing short of this will stave off the inevitable decline in brand value.