Brand equity in the data age

This 2024 paper reviewed the empirical literature on brand building and challenged widely held practitioner assumptions that brands grow mainly through loyalty, heavy buyers and precise targeting. Based on a systematic review of 47 peer-reviewed articles, six institutional effectiveness reports and 12 practitioner publications, it concluded that growth comes mainly from penetration, meaning more buyers, and that the mechanism is mental availability: the probability that a brand comes to mind across the situations that trigger category purchase.

The paper integrated the Double Jeopardy Law, the NBD-Dirichlet model and the 60/40 brand-to-activation budget principle into a three-proposition framework. It identified a measurement problem: brand effects play out over six to 36 months, while most marketing dashboards report weekly or monthly, so performance channels look stronger than they are.

For marketing directors and CFOs, the paper presented media mix modelling, with adstock carryover and base-revenue decomposition, as the most defensible way to show the financial return on long-term brand investment.

Key findings

• Analysis of 996 effectiveness case studies supports allocating about 60% of budgets to brand building and 40% to sales activation, adjusted to around 50/50 for subscription businesses and up to 70/30 for FMCG leaders.
• The Double Jeopardy pattern, in which smaller brands have both fewer buyers and lower purchase frequency, has been replicated in more than 400 studies, implying that loyalty follows penetration rather than driving it.
• Distinctive brand assets need three to five years of consistent exposure to become both famous and uniquely attributed, which makes premature redesign a costly form of brand equity destruction.
• Media plans should favour unduplicated reach at an effective frequency of two to three exposures, reaching at least 30% of category buyers for established brands with more than 10% market share.
• The paper finds that long-run returns on brand-building media are two to four times week-one returns, so short-run reporting undervalues brand investment by that factor.
• It recommends tracking the base-revenue term quarterly as a leading indicator, since it signals brand equity erosion six to 18 months before revenue declines.

Archive: written in 2024; figures and assessments reflect conditions at the time of writing.Summary of the paper; the full analysis is in the PDF.