Another day, another request (relayed via an agency) for a brand valuation. As best I can tell, the client’s interest in brand valuation is purely a function of the desire to prove that marketing is important. Like many others, this client appears to believe that the business case for marketing and the demands for marketing accountability will all be met by a brand valuation.
Regular readers of this blog will know why I consider this belief to be misguided. Others with the desire to find out can review the posts and articles in the brand valuation section of the topics tab of this website.
If brand valuation is not the answer, then what is? Well, the answer is a function of the question. In my experience, there are four big questions as regards the measurement of marketing performance. The first step towards demonstrating marketing accountability is working out which of the four questions you are really being asked.
The four questions populate the four quadrants of a 2×2 matrix. On one axis is the focus – customer perspective vs. financial perspective. On the other axis is the time frame – short term (next 12 months) or long term. All important questions to do with marketing accountability and measurement fall into one of these four quadrants.
The four questions can be articulated as follows:
- How do our customers behave? (customer perspective/short term)
- What is the impact of marketing on current sales and profit? (financial perspective/short term)
- How strong is our franchise with customers? (customer perspective/long term)
- What is the impact of marketing on our business value? (financial perspective/long term)
All four questions are worthy of study – and there are specific measurement techniques appropriate to each. Brand valuation is a partial answer to one of them (the financial perspective/long term one).
