Brand Equity in a Digital World

Starbucks Digital Brand

Companies focus on short-term returns. They must. They answer to shareholders on a daily basis. Investors are looking for returns to be instantaneous. But this may stop brands from investing and growing for maximum generational potential. In a quest for short-term gains, brands may even be encouraged to make decisions affecting long term brand equity.

We often talk about brand, and the most common measurement is brand equity. This is the overall value of the brand as perceived by consumers and investors. There is no single method of calculating brand equity. It is comprised of quantitative elements such as profit margin, market share, and so on. It is also derived from qualitative characteristics which are much more difficult to measure. These characteristics would include brand awareness and reputation.

Brand equity is the value of the brand in its entirety. Brand equity matters when you market. Placing a specific brand on a product clearly changes the performance of that product in a sales channels. This is the power of the brand.

Advertising like any other market or industry shifts. The direction of marketers to utilize particular channels continues to change as channels evolve. Mass media, such as broadcast TV and radio, was extremely popular in the 90s, and then of course the onset of digital in the new millennium shifted all eyes rapidly to online and eventually mobile devices. And even with Likes and Follows, brands were still struggling to create brand loyalty which is a great sign of Brand Equity.

The early 2000s also saw significant investments in experiential marketing, and the hype for this channel was all brand perception! Brands opted for live interactions to engage the public and prove their value to consumers. The brands watched this approach increase loyalty across product lines. Brands realized the now disparate consumer was no longer as engaged with or influenced by mass media. An even truer relationship was created through common causes, and thus this media channel quickly turned to a form of activism. To be friends with the consumer, brands aligned themselves with causes the consumer identified with. Brands were seeking to share values with the consumer. Have a connection beyond the product.

Experiential marketing was more expensive and required significant investments, and corporations could not sustain these investments with the downturn of the economy. Shareholders wanted less investment in marketing, but more return.

It was the rise of digital. The rapid deployment of new technologies continued to grow exponentially during the mid and late 2000, and into the second decade of the new century. This again caused a shift in advertising dollars. The marketers had found a great channel for driving quick, short lived, campaigns that yield instant results. However, this once again created a brand loyalty problem.

Digital activations were focused on the immediate results – impressions, clicks, conversions. There is an irony in the ability to measure results in digital spaces. Broadcast cannot typically be measured in a direct retail transaction, and while digital can be directly measured this may be a fatal flaw in how it’s implemented. This new medium would be seen as successful only if each and every campaign yielded direct results. This caused brands to enter and exit the digital marketing arena. Brands were in a quandary. They knew people were online and mobile, but the didn’t see direct results in the clicks. How could they justify continuing the investment?

This drove digital advertising to constantly employ incentives, promotions and discounts. These are all great options when choosing how to activate a market segment, but these are temporary relationships with a consumer. They fail to create street cred and are absent all brand loyalty for longevity.

Digital has only begun to be understood by serious marketers. There are vast opportunities in this one channel that splinters into hundreds. It is more complex and complicated than most area aware, yet offers many versatile tools. Digital marketing offers exceptional performance and outcomes, but also at great risk.

Digital is not about the next seven days. It is not just a game of clicks received during the time an ad is running. Campaigns and conversions can have a value in immediate return, but must also be recognized for longevity. It’s about creating campaigns digital relationships that go beyond a Like or Follow; relationships that consumers will enjoy and find rewarding long after the brand’s investment.

This creates a culture and a commitment between brand and consumer. These digital engagements pay dividends for just brand equity. Ultimately, they drive additional clicks and conversions when the consumer may otherwise debate a choice. They create loyalty with a brand. They increase brand equity.

When brands screw up, their equity matters. And, every brand will encounter a crisis at some point in their career. Whether it is Apple releasing a poorly tested map app or Target having breached data security or from years past with Tylenol falling victim to aspirin tampering, or Toyota’s car problems… every brand will have a crisis. Today, every brand will have mini-crisis created online and it doesn’t take much for one outspoken individual to become a group, and grow quickly.

Brand equity can be the healing agent. It will win a brand acceptance of a sincere apology and quickly the public will forget what could potentially be the ultimate downfall for the brand. The past decade has seen a rise in transparency and accountability. This was very much driven by the public and brands had to embrace the concept to protect their brand equity.

How do you move from click ands and conversion per $1 invested to a long term return? Invest in your relationship before you ask your customer to do so.

Starbucks creates avenues for new artists to be introduced to the world. They provide free wifi, a cultured connection to great products, even some free music streaming. There’s a perceived value in the comforts they create and provide. This is even in their messaging. A letter in 2013 from the CEO, Howard Schultz, stated, “From the beginning, our vision at Starbucks has been to create a “third place” between home and work where people can come together to enjoy the peace and pleasure of coffee and community.”

What could possibly be a better statement of brand position? They’ve stood up on issues from gay rights to gun control. Their leadership takes responsibility, embraces open and honest discussion. The brand equity is high.

There’s more to digital than free wifi and streaming music. Investing in digital may include easy-to-pay mobile platforms which include the free music of the week picks. Providing tools to consumers is a great digital extension. Here are some companies who have invested to maintain relationships:

Zillow – This real estate site provides apps to help with financing, mortgage calculation, etc.

Johnson & Johnson – This massive consumer products company invests significantly in apps for health, fitness, nutrition, etc.

Audi – The car company offers games for auto driving enthusiasts of all ages.

Ikea – The Swedish furniture maker famous for flat boxes offers many tools for room layout and design.

These companies are not profiting off the apps they develop – not directly for every click, at least. These are investments in relationships with consumers. If brands think short term, how will they ever choose to invest in long term relationships?

A proper digital strategy will leverage the short term clicks with building a long term relationship. Every single digital activation from PPC campaigns, e-commerce purchases to app downloads and email campaigns must have an audience nurturing component to build a relationship. Those relationships are your brand equity in the digital space.

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