Ever wondered why some of the most loved brands still fail? Or why others seem unstoppable despite customer complaints? The truth about brand equity and value isn't what most marketers think - and getting it wrong could cost you millions.
Back in March 2019, during a particularly heated board meeting in North Sydney, I watched a CFO and CMO argue for 45 minutes about brand equity versus brand value. Neither was wrong, exactly. They were just talking about completely different things.
Brand equity and brand value are different beasts entirely. The confusion between them has derailed more marketing strategies than I care to count (including one memorable disaster in Melbourne that we'll get to later).
Let's break this down properly.
Brand equity is all the intangible good stuff that makes people choose your brand. It's why people line up outside the Apple Store on George Street at 5am for a new iPhone launch when they could stroll into any number of stores later that day and grab a perfectly good Android phone instead. It's the trust, the emotional connection, the "I'll-pay-more-for-this-because-it's-worth-it" factor. (And yes, I've been one of those people in line – sometimes we do crazy things for brands we love.)
Measuring brand equity is where things get interesting. Every consulting firm has their "proprietary methodology" (which usually turns out to be a slightly repackaged version of something from the 1990s). The Brand Asset Valuator framework – developed back in 1993, if anyone's keeping track – breaks it down into four pillars: differentiation, relevance, esteem, and knowledge. Not bad actually, though try explaining "differentiation metrics" to anyone outside of marketing.
Brand value, on the other hand, is where the accountants earn their keep. Since ISO 10668 came out in 2010 (riveting reading, by the way), we've had three official ways to calculate it: market, cost, and income approaches. Each has their disciples in different consulting firms. Just don't get them started on which one's best.
The relationship between these two? It's not as straightforward as you might think. You'd assume high brand equity automatically means high brand value, right? If only it were that simple. I've seen brands with passionate fan bases and glowing customer feedback struggle to turn that love into revenue. And I've seen others with seemingly less customer affection quietly build solid financial value. Turns out converting warm fuzzy feelings into cold hard cash requires more than just having people love your brand.
Take Kodak. In 1999, they had 80% market share in the US photo paper and chemical market. Everyone trusted them. "Kodak moment" wasn't just a tagline – it was part of our cultural vocabulary. But when digital cameras took over (something they actually invented, by the way), all that lovely brand equity couldn't save them from missing the biggest photography revolution since, well, photography.
These days we're drowning in data points. Social media sentiment analysis (which somehow always needs another zero in its budget), online behavior tracking, AI-powered brand analysis – you name it. But here's the thing about measuring how people feel about your brand: it's still more art than science. Truth bomb: anyone who tells you different is probably trying to sell you something expensive.
Don't even get me started on Net Promoter Scores. Yes, reducing all customer sentiment to a single number is beautifully simple. No, that doesn't make it right.
The digital world hasn't made this any easier. Direct-to-consumer brands can build equity faster than ever – I watched a Sydney-based skincare brand go from zero to cult status in six months. But turning all those Instagram likes into actual revenue? That's still proper hard work. (And no, going viral on TikTok doesn't count as a sustainable brand strategy)
Here's what I've learned after 25 years in this game: brands that obsess over perfect measurements usually miss the point. The ones that win? They own the mental availability of consumers, have a bloody good product and consistently deliver on their promises. Do that right, and both equity and value tend to follow.
Mind you, this is just what I've seen from my corner of the industry. Your mileage may vary, and that's fine. Brand building isn't exact science – no matter what you're being told. Simple in theory, complex in application.
Oh, and one last thing: if anyone tries to measure your brand equity to two decimal places, they're either trying to sell you something expensive or they're new to the industry. Possibly both. Just smile politely and back away slowly.