Mad Metrics

To prove our hallucinations, we invent voodoo metrics that are self-evident to those of us inside the asylum, but for anyone else require just as much explaining and cajoling as the impassioned measures they replace, says marketing consultant Jonathan Salem Baskin. He argues that our equations exist in purposeful disregard for what anybody else in business would consider real math for measuring anything. In an exclusive blog article, he has given the Brand Strategy Magazine Blog his thoughts on a different approach to measuring brands. Let us know what you think!

The Dim Bulb Equation
by Jonathan Salem Baskin

Asking a marketer to explain branding is like asking a mental patient to describe sanity.

No two answers are the same or, if they are, they really aren’t, as no two people use the same terms the same way. Words like awareness, attributes, likeability, equity, intent, experience, engagement, loyalty, values, and behavior mean different things depending on who’s doing the talking.

When it does add up, it’s usually re-labeled as a tactical marketing expense, but then it doesn’t feel quite like branding anymore. We prefer to believe that there is some higher truth, or hidden reality, into which only we have insight. Knowledge that is so incomprehensibly important to the function of business that it defies objective definition.

So brands are everywhere, and branding is everything. And if you’re not bound by the straight-jacket of this certitude, you just don’t get it. You require education, so we choose to lecture (and sometimes dismiss) executives who never quite seem able to see what’s so obvious to us.

Isn’t it possible that we’re the ones who’ve got it wrong?
We could easily escape this branding bedlam if we wanted to: instead of berating the operational folks for not adopting our metrics, we could adopt theirs. Better brands could be simply better businesses, and we’d know it with common definitions that didn’t require special glasses to see.

Let’s face it: actions and results speak louder than thoughts and intentions for everyone else in the company. An approach to measure brands that’s independent of this reality is no more meaningful than measuring, say, your consumers’ eye color. Or which ones are left-handed.

So I give you the Dim Bulb Equation.

It’s based on astronomer Frank Drake’s famous equation for calculating how many alien civilizations might be willing to talk to us. He wanted to convert his associates’ sometimes wild hopes and expectations into measurable statistics. His calculation quantified things that had seemed unquantifiable.

Accordingly, here’s a variation intended to prove the existence of brands:

B = t* x c* x ∫ m x ∫ e x p* x l* ∫ r x ∫ j x v x 1/a

Ok, it looks complicated. But that’s because we should be able to see the benefits of branding in lots of functions within the business, so there are lots of places to look. The complexity of finding brands someplace and somewhat insubstantial is enough to make an extraterrestrial blush. Trust me, poking around in reality is easier.

So here’s the crib sheet:

B is the bulb rating: a binary indicator of brand existence, with “1” (or more) revealing a real, and really strong brand. Anything less is either evidence of a weaker brand or, just as likely, no brand at all.

t is for time: the average percentage of time savings you realize when you develop a new product (concept to first sale) vs. two lesser-well-branded competitors. Well-known brands should have an easier time identifying the products its customers want.

c is cost: the average cost-savings of your development process vs. your 2 main competitors. Better brands should be able to create things not just faster, but more economically, than lesser-known names.

m is marketing: the ratio of your total marketing expenditure over that of your 2 main competitors (“for every x we spend, they have to spend y”). Awareness of your brand should make it cheaper for you to tell people things.

e is efficacy: the ratio of the efficacy of your last 3 ad/marketing campaigns over those of your 2 main rivals, expressed as an aggregated return for every dollar spent (“for every x of money spent on a campaign, we collected x percent more than they did”). Branding should provide an umbrella that makes your tactical marketing work better.

p is premium: the average price surcharge you are able to collect for your top-selling product over those of your main 2 competitors’ top products (consumers and customers should be willing to pay more for all of your brand benefits beyond functional attributes, right?).

l is loyalty: the average percentage of your customers who’ve endured a product failure, corporate crime, or other negative impact to your brand vs. those of one lesser-known brand name in your business category. If people have relationships with brands, they’ll act on them.

r is retention: the average duration of your customers sticking with your business that is greater than the average duration of those patronizing your two two competitors (a strong brand should engender strong loyalty).

j is jobs: the average discount your employees are willing to take in order to work for your brand over the average pay scales in your business category.

v is valuation: the actual dollar amount that a reputable investment firm will go on the record (in print, publicly) stating that your business will achieve through nothing more than your brand awareness.

a is for addiction: the number of times your business has ‘rebranded’ itself over the past 20 years, expressed as a fraction. Successful brands build equity consistently over time, don’t they?

What does it add up to? Maybe I’ve picked the wrong variables, or the wrong amount. Perhaps the math itself is skewed. Feel free to comment or improve upon it.

My point is that the Dim Bulb Equation should help us stop giving the same answer about branding, and start asking a different question: can we agree upon an objective, behavior-based, financial performance-relevant, cross-industry-compliant equation for valuing brands?

I think we can.

Ok, fellow inmates, discuss.