In Search Of Brand Accountability

Guest AuthorJuly 9, 20102713 min

In Search Of Brand Accountability

Many departments within a corporation will argue the need for accountability in marketing, but none steps forward to take ownership of how to account for brand equity.

Theoretically, the CEO is responsible for the value of the corporate brand. Unfortunately, it is a rare CEO who understands how brand equity value is created. CEOs would love to see their company prosper but few understand how to take command or utilize the tools available to make it so.

The CFO properly challenges the high costs of marketing today because there is no standard for accounting for the profitable return on investment for brand building activities. In the world of the CFO, marketing is ONLY seen as an expense without any direct connection to ROI. Thus, creating a self-fulfilling prophecy.

CMOs would be wise to step forward to take command of brand marketing accountability. Many would argue that they have done so, but attempts to date to create a unified set of standards have been anemic. Most attempts to build accountable ROI bridges to the CFO or CEO have been misunderstood or at the least unrequited.

Procurement officers, whose mandate is to dissect every transaction and shave off another percentage point from the already impossibly tight margins of advertising agencies and marketing communications firms, are reluctant to open their view of the total value of a transaction to include the impact of growth (or potential loss) of brand value. To acknowledge that brand building is a two-way street that creates ordestroys value with every communication would open an entirely new avenue for evaluating the performance of vendors.

Investor relations, which could help the CEO add billions in market capitalization, is usually focused only on the next earnings release. While they have the attention of the CEO, it is rare to find an IR professional who is willing to suggest that the corporate brand might need tweaking or that corporate clarity is a bit soft. Shouldn’t this department have its finger on the pulse of the corporate brand?

And, why aren’t advertising agencies and public relations firms demanding accountability? They have the most to gain by understanding consistent accountability measures for valuing product and corporate branding. Yet, the agency industry is too frail due to decades-long cost containment pressures or too afraid of the results to demand accountability. So, most seem happy just to survive another year.

Most unfortunately, the accounting profession has ignored the undeniable growth of brand value. GAAP standards don’t account for the value of brands until a company is bought or sold, which doesn’t accurately reflect the changing value of the living brand. Brand value fluctuates daily based on the decisions and communications of management and the impact on key constituencies. It can be easily identified, readily measured and valued on an ongoing basis in comparison to its industry or specific competitors. Accountants should embrace this process and shareholders should demand to better understand and to see brand equity reported on financial accounting statements.

Only one association has come forth ready to take on the issue of marketing accountability. The Association of National Advertisers, under the leadership of Bob Liodice, has been pursuing the concept of generally accepted brand valuation principles. The ANA represents the largest advertisers so it is logical and commendable that such an organization lead the discussion.

A group of academics and practitioners have also been in hot pursuit of brand accountability standards. It is aptly called the Marketing Accountability Standards Board, under the leadership of Meg Blair.

I believe the creation of consistent and reliable standards for marketing measurement is the single most important business issue of this decade. If you agree with me that marketing stands to gain tremendously by connecting the brand to accounting standards then you should join with the ANA and MASB and add your voice to the discussion.

Contributed to Branding Strategy Insider by: James Gregory, CEO CoreBrand

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  • Richardameyer

    July 10, 2010 at 9:58 am

    It’s hard for a single person to take accountability when there are so many hands in the marketing strategy development. Today’s matrix organizations usually mean that everyone has a say and thus a lot of people with personal interests tend to dilute what marketers want and need to do. This is especially true of people who see marketing as an expense.

    The other issue is that way too many senior marketing people are more interested in doing what is better for their status within the company than what is best for the brand. Politics way too often rules over common sense and for a perfect example of this just look at Microsofts debacle with the Kin.

    Linchpins have to be willing to give up the love of those they work with to do what is best for the brand but in today’s environment when we are graded on how well we get along with other it’s not easy.

    Finally let’s not forget the senior marketers who are over their heads and don’t understand that marketing in its current form is unsustainable. These are the same people who believe awareness leads to conversion and still use outdated metrics like GRP.

  • John

    July 21, 2010 at 10:11 am

    It is interesting that the concept of branding is being taken more seriously even as the tools for measuring brand equity remain weak. Yes, you can measure a lot of things that imply a brand’s strength, but there is no definitive dashboard. I suspect it is too complex.

    And why not? To a great degree a brand is a company’s personality, and it is not as if there is a formula for a personality. It depends on history, culture, habits, but in the end the personality of a business is set primilarly at the top.

    For that reason (and from experience), I put the responsibility squarely on the CEO. The CEO may not like it, and may not appreciate the lack of measuring tools, but the CEO will always set the tone towards the company brand.

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