• by Robert Passikoff , Op-Ed Contributor, February 3, 2004

For the first time since June 2002, when Martha Stewart was accused of selling ImClone shares, the brand's strength has shown some positive growth.

Brand Keys (www.brandkeys.com), a New York City-based brand and customer loyalty research consultancy has been tracking the strength of the Martha Stewart brand since 2002. At that time Martha Stewart was one of the strongest American brands, indexing at 120 (100 baseline). In early January 2004, based on the initial 2002 accusations, and the 2003 Federal indictment, Martha Stewart brand's strength had fallen to 73.

In light of the turn of courtroom events last Friday, the brand's strength moved up to 80. "That's a significant move for this brand," noted Robert Passikoff, President of Brand Keys, Inc.

"L'affaire Stewart is a perfect example of the fragility of brands that are invested in a human being. We often see how impermanent these brands can be, how dependent they are upon public perception," said Passikoff.

"Any sudden change in public perception of that "human brand" has an immediate, and potentially devastating, effect on the brand's equity, and soon after, its profitability. For the first time the events of Friday provide some positive sense for consumers that Stewart 'has been telling the truth,'" said Passikoff.

Brand strength is provided as indexed assessments. One Hundred (100) represents average brand strength, so the Martha Stewart brand at its 2002 height of 120, was 20 percent stronger than average. An increase or decrease of seven index points is significant at the 95 percent confidence level. The tracking is conducted among consumers who have purchased $20 or more of Stewart products in the past year.

Douglas Faneuil was expected to testify Thursday that he provided the tip that led Stewart to unload her stake in ImClone Systems in late 2001. But Faneuil's testimony was delayed after defense lawyers said they had received information from Faneuil's former lawyer that cast doubt on the truth of his story. This revelation raises substantial issues with respect to Stewart's explanation for the sale of the stock.

"It reinforces some of the trust issues that have been eroded by all the bad press over the past two years" said Passikoff.

Robert Passikoff is founder of Brand Keys Inc. (New York) a brand and customer loyalty consultancy. He can be reached at 212-532-6028, x12, or robertp@brandkeys.com.