The Multiplier Playbook: your guide to better marketing

[Music] Hello and welcome to the work podcast. I'm Ann Marie Curwin, America's editor. For two long marketers have struggled to prove the contribution of brand building to leadership. And today we are diving deep into how to measure brand's impact. This is the first in a series of podcasts where I'll be talking to works partners on last year's report, the Multiplayer Effect, and the just published follow-up report, the Multiplayer Playbook. Joining me is Michael Ray from Barra AI to discuss how to accurately track, quantify, and measure the total contribution of brand building, and how to evaluate true incrementality and clearly demonstrate to your CFO how top-of-final investments to directly fuel bottom line revenue. Barra is an online platform tracking brand equity and tying it to business growth and they are a key partner in developing the strategies that we present in the Multiplayer Playbook. If you're listening to the work podcast, you're already tuned into what's defining the future of marketing. And there's never been a better time to land your own thought leadership and partnership with Lions Advisory. Lions Advisory worked with your brand to craft evidence-led narratives, the capture the attention of the industry. All built on decades of expertise you can trust. From walk, contagious, effe, and can lines, whether you're looking to launch your own walk report, own the moment at can lines, or cut through with podcasts or webinars, Lions Advisory can help you shape the conversation. Get started now at Lions.co/thought-leadership Michael, welcome to the show. Hi Anne, thanks for having me. Yeah, it's great to see you. So let's dive right in. The CEO and CFO, as we know, are in charge of growing the company, and they need to show their results in financial terms. But what that often means for brand equity is that it can be framed as a nice to have rather than an investment. So how can we help marketers get past this blocker? Yeah, great question. So marketers are excellent and really trained at positioning their brands and their products, the consumers. But we're finding is that they're not so great at positioning the role of brand internally to the C suite. So brand really should be positioned in the minds of CEOs and CFOs as a financial asset and not in expense. And I'm fairly confident that most of these top executives gone to some excellent business schools, learn this lesson as part of their education. But I think once they get into the real world, the sort of practical nature of their business and the lack of evidence or proof of really what brand's contribution is to their business and to the company value, I think it kind of takes a back seat in its easy to default back to that mindset of brand as an expense and not an asset. So, you know, our point of view really is that, you know, companies really have to a marketer specifically really have to move beyond sort of just the idea of what consumers believe about their brands and taking those perceptions and translating them into the business impact. So that CEOs and CFOs can weigh the impact and the return of an investment in that asset versus the many other choices that they have across distribution partners, talent, retail partners, etc. All that R&D, all the different areas where they can actually invest, they need to see what the return and brand might be versus some of those areas. And that's again a way to kind of put it on level playing field. So, Barra over the past decade, we really spent a lot of our energies trying to prove this linkage, both generally as well for our customers and identifying and helping to build that case for how brand equity translates into both incremental revenue, pricing power, but overall company value. And through our sort of initial work with work and the partners on the multiplier effect, I think that really resonated with marketers, you know, taking this idea of brand and bringing it into the conversation around how does this actually influence something like the return on advertising spend. And that report really dove into how the presence of the stronger brand as well as the presence of brand advertising actually benefited the performance of performance advertising improved the overall return on the end spent. And there was a particular case in there that, you know, I think really stood out where we looked at how for a financial brand targeting and messaging against those with stronger brand equity generated over two and a half times higher return on their ads spend and targeting those with lower brand equity. So just a powerful case in really what the role of brand is in influencing something like even the how performance works and how well and efficient that is for the business. Yeah, that's such a powerful argument for making sure you're tracking brand equity. So when we we know when a CMO walks into a CFO's office, the CFO usually wants to see how brand investments impact baseline revenue and Berra has identified a gap we've called the missing 15% in the multiplier playbook. Can you explain what that is? Yeah, absolutely. So a lot of companies engage in market mix modeling to identify what is the incremental impact of their marketing and ads spend on sales. It's an excellent analysis. It's a really good way of getting at the incremental effect of different media, particularly compared to some of the sort of silo attribution dashboards that don't really account for a full mix. But these analysis often kind of again focus specifically on what is the short term impact of that ad spend on sales. Everything else, you know, once I sort of say, okay, we've identified that is sort of lump together into what's typically called the base sales right the sales that would have been there in the absence of that spend in that period. Now some firms that it conduct this type of analysis, they tried to use a bunch of different variables to explain the base of that sales things like distribution pricing, economic effects. Others just son is simply control for it and account for trends or seasonality. But in either case, a key component of that base of sales again, consumers don't see advertising is that there's a portion of them that are buying because of how they feel about the brand and the brand perceptions. So, Barrow, when we've worked with different marketing mix partners who have integrated our brand equity data into the models, right, and tried to take something that is implicit, right, and kind of lumped into and sitting in that base and make it explicit to say, okay, really how much of that is due to perceptions of the brand. So, we found on average that 15% of the total sales can be explained by brand equity. So, that missing 15 that you said is, you know, being able to be uncovered. And we've seen that range from anywhere from, you know, 8 to 10% on the low end, all the way up to 30%. This has really helped build a case for CFOs to say, investments in brand are a key component of the base of our sales and failure to invest, support and grow that will ultimately lead to some of the erosion of that base. Yeah, so how should marketers really be evaluating that incrementality? What are the metrics they should be looking at when they're trying to capture this? Yeah, so we have a pretty strong point of view at bear on what are the brand metrics that matter, how we define brand equity in terms of certain perceptions of consumers, how attached they are to the brand really is a function of their degree of familiarity with the brand, not just awareness, but the depth of that. Their level of regard, how much they like and respect the brand, how meaningful and relevant they find the brand and and also importantly, how competitively unique the brand is. So we've been able to take these perceptions and not just connect them to business outcomes again as an independent driver of sales, how do these perceptions ladder up and generating incremental sales and account for part of that base, as well as how does marketing investment drive these perceptions. So besides for the impacts that say a marketing mix model can identify on, if I spend X amount of dollars on meta social ads or linear TV or other channels, how is that driving my incremental sales. We really are also focused on how is that building brand equity and then how is that brand equity translating into a greater base of sales beyond just even the short term impact and that that lag or that delay is something that we see it's very common in terms of the payoff of building brand equity today does it necessarily fully materialized into an increase in base sales today. There's a payoff or a pattern to that that occurs over the course of 12 months and that is very sort of branded industry specific as to whether that's a more of a short term effect or for some brands that are very expensive or have long. purchase cycles may be a longer term of fact. So the timing of that as well as the impact are things that we're helping marketers understand to really paint the whole picture of incrementality and not just focus on the incrementality of the short term sales effects. That's actually something we hear a lot that like that long term view is hard to have the patience for, right? To like understand, but if I guess if you can show that if we look back over time how you've done how it's compounded it makes it easier to believe that it's still going to be there later. Like have you done experiments where you've turned off brand advertising and then see what happens and has that helped convince people of the actual effect? Yeah, some of our clients part of this analysis is that they've been stuck in the Doom Loop as we called it from the multiplier effect part one where they've been dialing down brand advertising over time, dialing up performance. They've seen the erosion of their brand equity and you know through some some modeling work that we do we can actually account for exactly what's happening you know what is the incremental impact of the media on brand equity? How much of that brand equity decline is the result of sort of turning off brand advertising and then what type of ramp up period would be required to sort of build that back up as they kind of claw their way out of the Doom Loop. So these effects are complicated which is I think why organizations they haven't had the data or the right approach to it. It's easy to dismiss and just again focus more on the short term performance tactics of you know my my job is to meet my quarterly target and if I spend this amount on these tactics I know I can deliver this amount in terms of sales but you know the commitment to really fully understanding brand advertising brand equity and how all these components work together is what's going to yield the best term best long term strategy for brands and you know helping sure a sustainable growth period and continue to build a resilient base and not just sort of we can buy sales in the short term with with just these performance type. Yeah and I think especially given the economic challenges we're facing right now that it's so tempting for people to say we'll save money it will just pull back for a little bit it won't hurt us without realizing that they may be able to put themselves in a bit of a hole that's harder to climb out of. So giving marketers that confidence to be able to say the long term is worth it and here's why it's worth it is very important but another important aspect if you're sitting in the C Suite is profitability right everyone wants to be able to grow and we actually did a work ANA survey that's running going to run alongside the multiplayer playbook survey of US marketers and unsurprisingly 71% said profitability is a top priority for their company so how can we translate those brand metrics into a conversation about profitability for the C suite. Yeah so we talked a lot so far about the impact that brand equity can have as a driver of the top line right and actually influencing consumer choice to buy your brand or your product or service that's just one financial benefit of building brand equity. The real other benefit that we'll talk about now which is that brand equity in particular a couple of those associations I mentioned that we have as part of our court framework specifically the uniqueness and meaningfulness aspects of the brand really that differentiation component is really paramount to establishing pricing power in the market. Consumers that have much stronger associations of that uniqueness and meaningfulness component for your brand are much more willing to pay a premium price so you have strong pricing power which makes them much less price sensitive. That provides some insulation for your brand and less need to discount the greater your brand equity the less need to discount the more insulated you are from competitive effects and as you just mentioned Emory even even economic effects inflation is a hot topic right now and consumer purchasing power is really being diminished by the level of inflation that we're seeing so the best action that marketers can take is to continue to invest in their brand right to whole pricing power in the face of sort of declining purchasing power and not experience sharper declines. We recently did a study for a QSR category where you know it's a category where majority of the messaging is sort of value focus price focus promotion focus so very discount heavy industry that's using that as tactics to kind of continue to to you know prop up and generate revenue but you know there are some brands there whose equity is much weaker right and these are brands that are much more subject to having to continue to play that discount key where some of the stronger brands can be a bit more strategic about when they take price and how they take price and you know we also look at different consumer segments in their sensitivity kind of given their brand perceptions so there's a lot of implications here for involving brand equity and strategic pricing but I think organizations have a choice and particularly the conversation for CFO should be around you know should we take price or should we invest in brand and and not sort of be a slave to the conditions of the marketplace or the economy but take some of the power back and build the right associations and pricing power among their base of target consumers. So pricing power very important and very desired but we also hear a lot about enterprise value for public companies especially being the ultimate metrics so how does brand building move the needle on stock prices. Yes so we did a kind of foundational research study a while back where we took you know bear attracts thousands of brands when we took a sort of collection of publicly traded companies where we could you know conceivably marry the the brand perception data that we're tracking over time with publicly available financial data and not just looking at things that we talked about revenue and and profit margin but actually looking at enterprise value and what that relationship is there and we did find a pretty strong relationship between brands that we're growing their equity over time and growth and enterprise value so we found that for a 1% increase in our brand equity measure and it's captured by those four metrics I talked about that there's a 0.37 percent increase in enterprise value so that effect is actually stronger than the effect that we measured on revenue so increases in brand equity both drive revenue but they also increase value by a greater amount than that and why do you think that the enterprise value ends up increasing higher than revenue gain why does that have a stronger effect on that? Yes so most brands enterprise value is a multiple of their actual revenue so most brands trade at a multiple of their revenue because they had investors had expectations around what the future looks like for brands and they take those expectations if a brand has a really strong future really strong growth prospects profitability and is more stable or as less risk sort of discounting that back to today it means more value and a brand will trade at a higher multiple and brands that have sort of more dire futures trade pretty close to what their revenue was today so brand equity actually strong brand equity is a signal to investors around what the potential and the future looks like for that company how insulated it is from those competitive effects economic effects how favorable consumers are to our brand also it provides a great signal in terms of what the growth prospects for that brand are so you know beyond just yes brand equity brand associations influence your decision my decision today over what we might buy it's also providing a more of a guarantee and less risk around what that future sales will be and again that equates to more value today yeah and so that is a great point about you know getting stability for your company right investing in brand equity and actually that's so important because we are living in a volatile world brands can easily get caught up in crises often not even of their making so how does brand equity help companies whether a crisis yeah so we did a piece with work year or two back where we actually looked at five brands that had kind of gotten themselves into crises some by their own doing some not but one of the key findings there we looked at was how did the wall of brand equity so brand equity kind of heading into the crisis, the level of it, determined sort of how long that crisis lasted, as well as how big the financial hit was were those brands. And what we found was that brands had entered a crisis that really had very strong brand perceptions. We saw pretty much within a month or two perceptions kind of rebound back to what they were prior to the crisis and really negligible top line impacts of that. Again, at least attributing the component that a drop in brand equity would have, somewhere in the fraction of a person, other brands we looked at that were a bit more commoditized or a bit more on par with their categories. The impact of the crisis really lasted longer, six to 12 months, and much more sort of severe financial impacts. So while most companies don't believe that there's a crisis around the corner, it really is a great insurance policy for if something does come up, you have a bit more protection, a bit more forgiveness among consumers. And I think this is really where the idea of consumers have relationships with brands, the way they do with people have relationships with each other. If you have a stronger, deeper connection with somebody, then they do something wrong, the odds are, you're going to forgive them faster and get back on track versus somebody that maybe you're not as close with where if they offend you in some way, it becomes a challenge to kind of get back to where you were. And I think the strength of that relationship and that perception that consumers have with brands kind of works the same way where if there's a crisis, if you had a stronger foundation of a relationship going in, you're much more likely to survive that. This has all been so great, so many great points that a CMO could bring into the C-suite to argue for stronger brand investment. But if you had to wrap up and give CMO's one piece of advice on how to adopt true effectiveness measures, what would they be? What would you say to them? Yeah, I'm going to go back to sort of how we open, which was brand as an asset, not an expense. And proving the case for that involves not just building the case for how your marketing investment is driving sales, but it's feeling all the rest of the blind spots that we talked about on how is your marketing building associations of your brand? How is that materializing into greater revenue in terms of the base of your business? How is the improvements in brand equity actually helping your performance marketing achieve better results and get that multiplier effect? So there's a lot of these connections now that are-- again, they're sitting there waiting to be discovered, but their discovery and their aggregation together is really what forms that strong case, business case, for, again, convincing the CEO and the CFO that this is not an expense that brand is an asset. Thank you, Michael. This has been a really great conversation and a great way to kick off our multiplier playbook podcast. So thanks for joining us. I really appreciate it. It's been my pleasure. Thanks for having me. So you can find more about various findings in how to implement these strategies in the new multiplier playbook. It's out now on work.com. Be sure to subscribe to the work podcast so you don't miss the next episode in June, where I'll be joined by executives from analytic partners and we'll be talking more multiplier playbook strategies. Thanks for listening. [MUSIC PLAYING]