It’s clear some senior marketers find it challenging to demonstrate how their brand contributes to business growth.
Indeed, this results in problems for marketing teams, such as underinvestment in brand positioning and an inability to target customers with precision. However, an ineffective measurement approach to brand value isn’t confined to one department: it creates a ripple effect throughout the business.
If marketers are unable to quantify how their brand translates into profit, then it can lead to headaches for sales teams, who crave the security that comes from making decisions on issues like pricing safe in the knowledge it won’t cause business damage. When a brand’s value isn’t clear, the executive team lose out too, because they’re unable to make informed decisions about where budgets should be allocated to drive long-term success.
So, in a world where marketing departments are under more pressure than ever to deliver return on investment (ROI), chief marketing officers (CMOs) must address the gaps in their own know-how and measure the impact of their brand on sales.
A recent study from GfK offers some insight into the information gap faced by marketers when it comes to measuring brand performance.
In the current landscape, four in ten CMOs across the Asia-Pacific region say brand positioning is a priority. However, a shocking 72 percent aren’t tracking brand performance. In the digital transformation era, one in two brands are measuring all their marketing activities, but they’re using basic metrics such as last-click attribution (58 percent) and media reach and frequency (57 percent). Last click has several limitations, including a bias towards direct website visits, which can limit marketers’ certainty about just how much their branding and awareness efforts are impacting campaigns.
Likewise, the allocation of marketing budgets is undeniably a key concern post-pandemic, but a significant 83 percent of CMOs do not use any form of data-based marketing metrics to drive business growth from brand.
Volkswagen’s Kuo-Hi Lee, who oversees the car marque's marketing function as part of its Brand Powerhouse team in China, says although data has long been heralded as the new “oil” among marketers, she’s yet to see a successful one-size-fits-all model that helps marketers monetize it effectively.
“Having the right blend of different data sources can help marketers understand where people’s painpoints or excitement lie,” she adds. “However, [there is a challenge in] reading between the lines and being able to identify the right insights that will help you as a CMO translate data into more valuable products, services or experiences for people.”
For Gianpiero Morbello, Head of Brand and Internet of Things at home appliance giant Haier, which spans hundreds of products and appliances across markets, brand value is measured according to each appliance individually. The business currently has several indexes in place, which measure intention to buy among other factors, but data has been key to unlocking the success of different products and retuning strategy appropriately.
“Because we sell through distributors, it can take a long time to find out what's going on unless we have the right data,” he explains. “Data is one of the most important assets and when we launch new products, I [need to be able to see] if I move a price and [a competitor] responds by moving theirs.
“There is a need to be proactive, not reactive, and understand immediately whether what you're doing is right or wrong.”
Morbello firmly believes this responsibility shouldn’t fall on the CMO’s shoulders alone, though. Every department in the business needs to buy into it, which requires a cultural mindset shift.
“You need the competencies within an organization on one [the same] side, which means you need the right tools and skills,” he says.
The effective measurement of revenue premium could be the key brand performance indicator marketers have been waiting for. This is more than a metric as it’s an entirely new currency that not only demystifies the abstract nature of brand value, but also helps marketers make the case for long-term brand-building.
Echoing Lee’s sentiment, GfK’s Product Lead on Brand Innovation Debbie Cunningham says: “Knowing which elements of your brand to activate, understanding which attributes resonate with consumers and which touchpoints will stimulate growth is essential if you are to win in this challenging landscape.”
Her advice is to use a combination of data to assess how brand perceptions link to market reality and drive growth.
Cunningham refers to GfK’s brand framework as a kick-off point for marketers and their peers in the journey to connect the dots between the financial impact of a brand on sales.
The system uses point-of-sale data to map a brand’s position in the market. It’s based on a quadrant hinged on brand premium and brand volume.
Brands then fall into one of four categories: small (low revenue premium, small volume of sales, mainstream (low revenue premium, large volume of sales, exclusive (high revenue premium, low sales volume, power (high revenue premium, high sales volume); the last is the smallest segment, but most profitable.
“By leveraging your brand’s positioning and managing consumer perceptions you can drive brand success within a competitive environment,” says Cunningham, including across the sales department and executive level.
Brand success looks different for everyone, however. Recent GfK data examining the top TV brands in Germany shows that power brands generate around €158 million in revenue premium, while exclusive brands tally up €66 million. Falling in the middle, mainstream brands generate €78 million.
In the long term, power brands are also more likely to maintain their position in the market. GfK data from Black Friday 2020 shows this group to have performed the strongest in terms of steadily increasing market share across the vital shopping period, with 40 percent doing so across a three-year timeframe. Some 30 percent of mainstream brands achieved this, followed by 20 percent of exclusive brands and 10 percent of small brands.
For brands operating in the fast-moving consumer goods (FMCG) or automotive space, these parameters may differ wildly, though, with Cunningham acknowledging that what drives volume and premium will vary “hugely” between various brands, sectors and markets.
Tech brands, for instance, need more agility baked into their measurement tools compared to other industries. Neil Trinidad, Country CMO at Lazada Philippines, concedes that for other industries, the prevalent mindset is to “minimize risk”, with a desire to perfect the marketing mix before a campaign is launched.
“In tech, we do not aim to be perfect, we aim to get things done fast,” he says. “Our focus is to launch things on time, and optimize to tweak and improve it along the way.”
“Our approach to rapid experimentation has allowed us to understand what is working in real time and adjust our approach with agility. We rely more on the patterns that we see from our data, together with our own marketing intuition to make decisions fast, execute fast and scale up fast.”
Lazada relies on data-based metrics and consumer insight to help drive better decisions. “The most helpful tip that I can share to other CMOs is to be brave to test and learn,” says Trinidad. “Try to shift from minimizing risk and move instead to real-time optimization.”
Despite the variables, what all businesses should have is a solid understanding of where their brand sits within the brand quadrant. This will allow marketers to make changes that will give them a tangible performance indicator of their brand. It will also show the board where marketing investment is paying off and allow sales teams to plan promotions and logistics with ease.
“These levers will help marketers at all levels work more effectively with sales teams to make sure decisions about distribution, discounts, retail partners and more,” says Cunningham.
“It’s not just about producing key performance indicators, marketers need to be able to simulate and scenario-plan, which will allow them to focus and invest with increased confidence.”
For Corrine Moy, Global Vice President of Marketing Science at GfK, investing in tools that measure sales-based equity is key in ensuring revenue premium can be measured with accuracy.
CMOs, she says, must measure their brand performance using hard data from retailers and resellers. This will help them understand which products are performing well in the market and those that are not. If marketers know what is selling, where, when and the price point, this knowledge gives them control to respond with creative, tactical and strategic decisions. These will drive commercial growth and increase ROI, as well as boosting the confidence of sales and executive peers.
“Investing in point-of-sale tracking enables marketers to measure both their market share and brand performance, and benchmark it against their competition,” says Moy.
“Measuring revenue premium is about calculating the actual monetary value that can be brought to the brand and using sales equity, combined with GfK’s framework, gives marketers much more control over their final destination in hard monetary terms.”
She says brand marketers often struggle for budgets, compared to their sales colleagues, but the effective use of real-world sales data can help close this gap.
“Brand-building is often seen as a softer, long-term ambition. Sales-building is immediate; marketers can actually see the dollars coming into play, so it’s easier to get budget resource for short-term sales-driven marketing over long-term brand-marketing.”
It’s not just about sales data though. A final way brands can draw a clear line between brand contribution and sales is by evaluating how consumers perceive their brand in comparison to competitors.
Lee says Volkswagen uses regular strategic research to get a firm grip on consumer perceptions about its brand, pointing to social media listening as a key weapon in any modern marketer’s arsenal.
“User-generated comments across different social media platforms are highly relevant to us when it comes to measuring brand performance. These conversations happen in real time and indicate how relevant the brand is to consumers at a particular moment. We can see where [we’re] being discussed positively or negatively, but the worst-case scenario is a complete lack of conversion,” she says.
Listening to these open conversations enables the automaker to re-evaluate its brand perception and understand consumer expectations, which in turn inform strategy, Lee adds.
Moy, meanwhile, highlights GfK’s unique survey-based approach, which goes beyond traditional brand perception surveys, as another solution to help CMOs get a better hold of how their brand is viewed.
“We emulate buying situations and show consumers a range of similar products from key brands within the market,” she says, adding that the tool uses a “brand-price trade-off approach”, which sees the prices of products varied as respondents view them in real time. GfK then measures how often consumers choose a particular brand at price differentials against the market.
Moy continues: “We’re trying to emulate the situation a consumer has when they go into the market to buy something.”
From this, complex modeling is done in the background to measure the strength of a brand and its ultimate contribution towards consumers’ decisions. GfK can not only quantify the brand’s contribution to potential sales, but it can also then diagnose the key levers of this brand value and the elements that will increase it, helping marketers act accordingly to drive future sales.
Cunningham says: “We want to offer clients data and insights that allow them to make decisions with increased confidence, through evidence and data scenario-planning. This can’t be done through a single metric; it requires layers of real-world insights.”
In short, only through considering a combination of factors will CMOs be provided with a true assessment of how brand brings profit to life.
Once armed with the correct tools to measure it, marketers must bring the whole business along on the journey with them if they are to truly unleash the power of their brand.