Advertising and brand equity
How to evaluate brand equity - and how to identify those advertising campaigns most likely to generate brand equity in the short-term
THIS PAPER ADDRESSES two key questions which are taxing the minds
do we need to measure consumer equity? With sophisticated scanner
data, we should expect to be able to identify an immediate short-term
sales response to most fmcg advertising. The problem is that this
is likely to show that much advertising will not be justifiable
on the basis of its short-term payback. However, our own experience,
together with an analysis of IPA Advertising Effectiveness Award
winners and Nielsen's initial pilot analysis of 45 major UK brands
over the past three years (1) indicates that advertising does
have a role in long-term brand building.
There is, however, a
proviso; not all advertising and new innovations will be successful
- some strategies will be more powerful than others and some executions
more effective at delivering that strategy. What marketers need
is proof that today's advertising investment is going to be worthwhile
in the longer term.
This means we must look for changes in the
brand's underlying long-term core sales, and other measures of
sales equity. But because, by its nature, a long-term effect only
occurs over a one to five year window, we need to consider what
short-term measures are precursors to long-term brand building.
The role of consumer research is to identify which measures are
the leading indicators of advertising's effect on the brand, and
to identify with confidence the strategies and executions that
are moving the brand in the right direction, at an early stage.
Survey research only measures one part of
a brand's equity, but it is an important part. The ideas, associations
and images that people have of a brand determine the demand side
of the brand equity equation. They define the brand's worth to
the consumer - what makes a user willing to pay the price asked
for it and a non-user willing to consider the brand for purchase.
If the brand's standing is strong enough in consumers' minds to
warrant them paying the price asked of it, then the brand will
have realised its consumer equity and turned it into sales equity.
This consumer brand equity can be summarised via five elements:
presence, relevance, product performance, advantage, and bonding
The brands in a marketplace will sit
on a spectrum ranging from no awareness, through passive name
recognition, to brands which consumers have some familiarity
with, to the brands which they know well through actual experience
or marketing activity, and finally to those brands which are felt
to be dynamic or growing in popularity.
Using standard research
measures of prompted awareness, saliency, familiarity and brand
dynamism it is possible to place the brands on a grid showing
the level of awareness and the extent to which this is active
or passive. Brands in the top right quadrant are those with active
brand presence . The concept and importance of brand
presence becomes clearer when we look at examples of this dynamic.
For a new brand, advertising has a key role in putting
the brand on the map, and success in creating awareness is one
of the first steps towards a successful launch.
the level of prompted awareness for 51 fmcg product launches.
All the figures are taken from six months after launch. Across
the bottom is the level of TV Ratings during the first six months.
There is a wide variation in awareness, but a generally positive
trend. After 400 TVRs we would typically expect about 40 per cent
brand awareness, after 600 TVRs about 50 per cent and after 1,000
TVRs 60 per cent or more.
For a new product, brand presence can
be seen as the gateway to the brand for consumers - they are unlikely
to buy a brand they know nothing about - except in the lowest
of risk categories. An analysis of launch awareness against trial
within product field shows a strong correlation. Awareness does
not guarantee trial, but it is an important factor.
Creating a 'buzz' or sense of excitement about a brand is
one of the ways of generating an increase in the underlying sales
trend of the brand. The Peperami example demonstrates this point
excellently. However, it is only one of a number of truly great
campaigns which were effective in raising the brand's presence
to new levels. Other examples include the campaigns for Wonderbra
Peperami, prior to the award winning advertising campaign
in 1992, already had prompted awareness of 90 per cent, but sales
had plateaued after rising in the late 80s. The introduction of
the highly impactful 'bit of an animal' campaign had the effect
of raising advertising awareness from 11 per cent to 67 per cent,
placing the brand above major confectionery brands like Mars,
with one of the smallest budgets in the snacks sector. It also
doubled the brand's perceived popularity among children and young
In other words, the brand moved from having a passive presence
to a highly active presence in the snacks marketplace. The resulting
impact on sales was a 35 per cent average increase.
brands, increased brand presence is a genuine leading indicator
of sales growth - sustained increases in brand saliency or a sense
that the brand is growing in popularity often precede changes
in the brand's core sales.
The new launch data showed a generally positive pattern with increased weight.
But some launches, despite investing heavily in above-the-line
media, failed to put the product on the map. This can be due to
a number of factors, the most important being lack of distribution.
However, the effectiveness of the execution to cut through and
leave a branded advertising message is also a key factor. The
amount of variance explained just by the TVR weight increases
by over a third when the TVRs are factored by the Awareness Index,
to create a measure of 'effective weight'. (The Awareness Index
is Millward Brown's advertising efficiency index calculated by
relating the rise in advertising awareness to increased media
In the case of established brands, it is also no surprise
that the dramatic changes in brand presence have resulted from
advertising which generates Awareness Indices in the top few per
cent of all ads tracked. One of the earliest indicators that a
campaign has the potential to generate an increase in consumer
equity, is an increase in the level of advertising awareness among
the target group.
Thus brand presence can be created by all styles
of advertising, from the simplest announcement of a new product
and its USP, to the highly creative. However, the branded visibility
of the advertising is a key component in its success.
the brand's presence is the gatekeeper for the consumer, then
the relevance of the brand's promise to the consumer's needs and
aspirations will then determine the potential size of the market
available to the brand.
For example, in the toothpaste market,
a niche brand like Sensodyne can have a very clear positioning.
It is seen as the most effective brand for sensitive teeth by
three-quarters of the market, but because the relevance of this
to most consumers is limited, its market share is only four per
cent (by volume).
Nigel Hollis (2) has shown
that the degree to which advertising is immediately motivating
is driven by a combination of new content, relevance, enjoyment
and branding, with relevance on its own accounting for nearly
half the variance in the persuasion scores. This is particularly
true of lapsed users and non-trialists.
Most new innovations will
be immediately motivating for some people, but advertising has
the power to widen this. For example, was there a need for round
tea bags before Tetley launched them? Would Toilet Duck have been
so successful without the simple creative device of the woman
turning upside down? Would Radion have generated sales at launch
without advertising to make smell removal an issue? I doubt it.
is even more clear cut when it applies to an established brand.
Advertising can be used to leverage existing advantages by making
them relevant to a new need or group of consumers. A famous example
of this is Lucozade's switch from a drink for convalescents to
a fashionable sports drink.
In such cases the evaluation and proof
of the advertising's effectiveness is not just to measure the
increases in trial and repeat, but also to consider if the opportunity
has been maximised. Did the advertising deliver the message effectively
to the target group, was it clear, and was it as credible and
relevant as it should have been?
performance is a highly subjective measure but ultimately, if
the product fails to deliver, or fails to keep up with the competition,
then in the long term its sales will decline. As Paul Feldwick
(3) says, 'if you look at brands that are really in trouble today,
you will often find products that have lost their competitive
advantage through devaluation or just failure to innovate, and
yet still expect to command an ever widening price gap against
In other words, advertising can have a profound
effect on the perceptions of product performance, but it cannot
make a weak product strong. However, it can give a product at
parity performance a perceived edge. Having a clear understanding
of what the product is actually delivering is an important strand
in understanding the brand's consumer equity and its ability to
warrant a premium.
A brand's advantage
can be a direct extension of some unique aspect of the product
delivery. However, in the crowded markets of the '90s, many brands
have little genuine product differentiation. The most successful
brands have managed to take some aspect of their product performance
and make it a perceived advantage, or develop a distinctive brand
personality and positioning which gives the brand a perceived
consumer advantage in the market. The results of this are that
they can command a price premium not justified purely on the basis
of the 'ingredients'.
There are two elements to the way that advertising
is likely to influence perceived product performance. First, by
guiding the expectations about the product experience - a process
we call product enhancement - and second, by creating a halo of
superiority around the brand via a mechanic we have termed 'interest-status'.
The Red Mountain case study (IPA Awards commended paper,
1988) is an excellent example of the enhancement process at work.
The advertising successfully set up the taste expectations as
the coffee with the 'ground coffee taste without the grind'. Previously,
consumers had been inclined to interpret the slightly bitter taste
of the coffee as a negative, due in part to advertising imagery
showing cowboys drinking Red Mountain round a camp fire. However,
in the light of the new advertising, this was interpreted positively
as the ground coffee taste. This change was apparent in an increase
in conversion from trial to repeat. However, the full effects
of this advertising were not apparent until re-trial had been
encouraged via a low priced trial-sized jar. The advertising in
itself was not sufficiently motivating to generate re-trial, but
the message was capable of influencing perceptions at trial.
An experiment conducted by Millward Brown in
1993 (4) confirmed the magnitude of the enhancement effect and
showed that advertising increased the conversion from trial to
definite purchase intent from 19 per cent to 30 per cent. However,
in real market conditions, proof that advertising is having a
positive enhancement effect is not straightforward, because much
of the influence works at the point of trial, rather than when
the ad was viewed.
For example, the effectiveness of a sampling
exercise following advertising with an enhancing element is likely
to be much greater - but could be ascribed to the below-the-line
activity, and not the multiplier effect of the advertising working
with the trial-building activity. If there is no specific trial-building
activity, then the enhancement effect of advertising on the product
perceptions may only gradually become apparent over time.
pattern is shown clearly in . The campaign generated
considerable advertising presence, but the effect on product perceptions
and underlying sales only became apparent over several years.
the advertising is working effectively with the product, over
time we would expect to see increases in the extent to which the
brand is associated with specific product advantages, as in Exhibit
4 . However, because of the interaction with the product experience,
we need to have a clear understanding of the strength of the product
in order to be able to evaluate this fully.
Because of the effect of product and enhancement
on the perceived product delivery, it is an important aid to marketing
decision making to consider how the perceived and actual product
performance match .
Brands in the top right quadrant
where both perceived and actual performance are strong are able
to command a premium. Brands in the bottom right quadrant are
vulnerable, branding is providing insulation for the brand but
ultimately this cannot be sustained in the long-term. The brand
is not able to justify its premium in the long-term. Brands in
the top left quadrant have potential and are worthy of support,
in particular using a combination of advertising focusing on the
product strengths and trial-building below-the-line activity.
The viability of brands in the bottom left quadrant must be in
doubt. Unless considerable resources are devoted to product improvement,
followed by sustained above and below-the-line investment, the
brand will die.
Because the enhancement effect
is delayed until product experience, we need to be able to anticipate
whether advertising has the potential to work via this mechanic
in the short-term. There are two key advertising-related factors.
First, the advertising needs to be remembered - important because
its main influence is at the point of trial, and second, the message
should relate in some way to the experience of 'using' the product
- for instance, does it create any expectations of what the product
would 'feel like to eat', and are they in line with what the product
can actually deliver? There is therefore a strong argument for
undertaking product testing alongside the advertising development
work to understand how the synergies between the two can be maximised.
The role of advertising in this context is to take an aspect of
the product's performance and to channel the consumer towards
The role of advertising
to create emotional pulls for the brand is discussed more fully
in the next section. However, it is clear that successful 'brand'
advertising can create a halo of product advantage. Perhaps the
best documented is the example of PG Tips. The data showed that
when tested blind in 1983 there was very little to distinguish
between the brands, including the Tesco and Sainsbury brands.
However in branded tests, PG enjoyed the greatest preference.
In other words, the brand was able to create a level of perceived
product advantage not wholly supported by the actual product offering.
If this places PG Tips in a long-term vulnerable position, it
would be doubly true for any brand which failed to maintain its
perceived brand advantage.
PG Tips continued to be supported by
the much-loved Chimps campaign, and this offered some insulation
against the threat from own-label, but this was not true of the
market as a whole. At the time of the blind taste test, own-label's
share of the market was about 20 per cent. It is now approaching
40 per cent. While the strength of retailer brands in general
has increased over the past twenty years, the lack of genuine
product differentiation in this market is likely to have made
the process more rapid.
Within the tea market as a whole, the lack
of differentiation is such that for two of the three main consumer
segments - the repertoire buyers and the non-discriminators -
the retailer own brands are felt to meet the consumer's needs
equally with the manufacturer brands.
can also lose its market advantage through the launch of competitive
products. shows the effect that the launch of a new
competitor had on a us analgesic brand. Absolute endorsements
on the key effectiveness measure did not decline, but the extent
to which this was a unique property dropped considerably, followed
by market share.
Brands can have perceived
advantages which are unrelated to the physical or sensual aspects
of the product delivery, and relate more with the emotional appeal
of the brand and the sense of belonging which comes from being
a buyer of that brand. In many respects this is an extension of
the brand presence dynamic, except that that presence is converted
into a relevant advantage only if it fits with the consumer's
emotional needs. Levi's would simply be another well-made pair
of jeans without the Americana images from the advertising that
give it stature and identity. It is this which provides Levi's
wearers with the additional value which makes the brand worthy
of its price tag.
Swindells and Branthwaite
(5) argue that advertising creates a halo in the viewer's mind
of excitement, uniqueness and supremacy - such advertising creates
interest in and status for the brand. However, a key point is
that it is not the brand that is interesting but the consumable
advertising. If this is the case, and I think there is a strong
evidence that it is, then to anticipate the effects of such campaigns
we should be looking to the target group for the level of involvement
with the creativity.
For example, 16-34 year-olds found the Tango
campaign actively involving to a much greater extent than most
Swindells & Branthwaite also argue that this type
of advertising is not actively processed at the time of viewing,
but rather stored as an audio-visual memory. This is then assimilated
onto the brand by association and repetition. Hence, it is imperative
that advertising working in this way is uniquely associated with
the brand creatively, because there is no unique product feature
or benefit to provide the link. This was also true for the Tango
campaign, with 95 per cent of 16-34 year-olds saying that they
could not fail to realise it was an ad for Tango.
It is no surprise
that advertising which is effective via this mechanic almost always
has an above average ability to cut through and generate both
the short and long-term branded advertising associations. An analysis
of IPA 'longer and broader effects' winners reveals that all of
those where Millward Brown had advertising awareness data, achieved
above-average advertising awareness levels.
There may be a direct
link between the two processes, with advertising associations
acting as the vehicle for storing and encoding the message. However,
the link does not have to be a direct one. The correlation may
result because the factors which generate a high level of advertising
memorability and cut-through are the same as those which ensure
that the advertising is capable of creating a halo of excitement,
uniqueness and supremacy about the brand in the viewer's mind;
namely, that the advertising is actively involving, distinctive,
often enjoyable (but not exclusively - advertising may be effective
by being highly challenging) and linked to the brand.
proof that the advertising is creating emotional brand advantages
will, in the long term, be increases in brand appeal or affinity,
and measures of high brand opinion such as quality, trust and
worth, coupled with a growth in long-term brand associations.
However, in the short term we can anticipate the effects of such
advertising by understanding the relationship between the target
group and the advertising. Measures of advertising such as the
Awareness Index can act as a barometer for the advertising's creative
power and hence potential long-term effectiveness.
the trust and affinity derived from the brand's advantages can
result in some consumers becoming bonded to the brand to such
an extent that they do not actively consider any other brands
for purchase. This latter state does not preclude the consumer
trying new products for a change but is likely to provide some
insulation from the activity of others.
For example, an analysis
of the brand leaders in the tea, coffee, toothpaste and yellow
fats markets, demonstrates that, on average, 36 per cent of those
who would consider it for purchase would only consider that brand.
For the second brand in the market the figure falls to 22 per
cent and for other brands it falls to 17 per cent.
the Dirichlet model would argue that this is purely a function
of brand size. While we would not disagree that big brands will
have more 'bonded' or loyal consumers, this ignores the fact that
many consumers do have genuine emotional bonds with the brand
they buy. These more loyal or bonded consumers represent the future
profit stream for the brand. Work in the us by the Coalition for
Brand Equity (6) has demonstrated that, in some cases, all of
a brand's profits are derived from just the 10 per cent of consumers
who are most loyal - hence less likely to switch on the basis
of price promotion.
As a measure of the effectiveness of the advertising,
we should look to see trends in brand affinity and consumer commitment
- the degree to which the brand has attained the status in the consumer's
repertoire where no other brand is being actively considered for purchase.
However, in mature markets these movements are likely to be slow trends rather
than rapid uplifts, and as likely to follow the creation of brand presence and advantages
- or the introduction of a unique product innovation.
This article has attempted to set out a
framework within which we can evaluate the likely short and long-term
effects of advertising which is capable of long-term brand building.
While such a framework is not definitive, it is the case that
increases or declines on dimensions relating to the brand presence,
its relevance to the market place, its perceived product and emotional
advantages and ultimately brand preference, status and commitment,
will be indicative of a brand's strength or weakness.
because by its nature a long-term effect only occurs over a one
to five year window, we need to consider what short-term measures
are precursors to long-term brand building. These fall into two
categories. First, the effects on a brand due to the immediate
challenge effect of innovation, which should produce immediate
changes in awareness, trial or consideration and sales, or definite
purchase intent on longer purchase cycle markets. Second, for
advertising which is working via the mechanics of product enhancement
or interest/status, an understanding of the response to the advertising
In the case of enhancement it is important that the advertising
is accurate about what the brand/ product can deliver, and that
the images, messages and claims from advertising are remembered
and linked with the brand.In the case of interest and status brand
advertising, because the effect is driven by the consumable advertising
we should be looking to the target group for the level of involvement
with the creativity, and because the advertising is the element
creating brand differentiation, it is imperative that it is uniquely
linked to the brand.
In both of these two dynamics, the role for
involving advertising creativity is key for long-term effects.
However, this needs to be harnessed to the brand in order to be
(1) Justin Sargent. Building brands in the UK. , January 1995.
(2) Nigel Hollis. Persuasion: The Millward Brown Perspective, February 1995. Available on request from Millward Brown.
(3) Paul Feldwick & Francoise Bonnal. Reports of the death of brands have been greatly exaggerated. ESOMAR Seminar, Prague, November 1993.
(5) Alan Swindells and Alan Branthwaite. Capturing the complexity of advertising perceptions. ESOMAR Seminar, Amsterdam, December 1995.
(6) Larry Light & Richard Morgan. Brand loyalty marketing. Coalition for Brand Equity, November 1994.