• by Karl Greenberg , April 25, 2007

The Association of National Advertisers "Brand Forum" kicked off yesterday with Roger Adams, senior vice president/CMO of Home Depot, moderating a panel discussion on the creature under every marketer's bed: brand deterioration. On hand to discuss it were Frank Cooper, vice president/marketing at PepsiCo; Katy Frohling, vice president/marketing at Wells Fargo; and Don Sexton, professor of business at Columbia University.

The discussion was timed to the release of an ANA study developed in conjunction with consultancy Guideline, the results of which were reported in Marketing Daily on April 20.

The survey revealed that marketers don't put much truck in advertising as a long-term builder of brand equity. The majority said 75-80% of sales would take place without advertising and with marketing only at the promotional level. Also, advertising only accounted for 20-25% of the advertisers' sales, per Adams.

"Great advertising makes a lousy product fail even faster," said Sexton.

Adams noted that survey respondents chose Apple, Coke, Nike and Target as benchmarks for strong and well-established brands. YouTube, Google and Apple again were touted as young, healthy brands. Seventy-five percent of marketers surveyed said brand equity is very important to company success, and that brand equity is what makes a brand stand out in a commodity category.

Surveyed marketers listed elements of a healthy brand by importance. The results weren't surprising. Product topped the list, customer service was second. Advertising and marketing communications were the last two elements listed, with respondents saying that combined, they accounted for 20% of brand health.

"Products are the baseline," said Cooper. "If you don't have product that delivers, you have nothing, and advertising can't save you." His caveat was that product attributes and functionality are no longer enough. "Now, with productivity and technology advances, people can replicate products pretty easily."

Frohling of Wells Fargo said brand health in financial services depends on marketing that puts a sharp focus on differentiation. "In financial services, all of us have a lot of products, and probably too many products, so strong brand equity can break the handcuffs of commoditization. It's not about offering free checking, which everyone has, it's about being more relevant."

The proliferation of media platforms not withstanding, 80% of marketers in the survey still see television as the most powerful tool for building brand equity, and banner ads ranked higher for emerging brands.

But Sexton said that non-traditional approaches were notably absent from the survey. He gave the nod to BMW for using them in its film series and the guerrilla Mini tour across America that launched that brand. "These things are ways to get away from clutter inherent to mass media," he said.

Said Frohling, "TV remains a critical medium but there are other things: experiential marketing, the blogosphere--we look at those things closely."

Cooper said Pepsi's perspective on media is to avoid it in building the "big idea, the meaningful experience in the brand equity plan. "We are increasingly thinking about it from the center of a big idea. Not from the perspective of traditional 360-degree marketing approach, but 'where does this idea live? where should it live'?"

The ANA survey also tapped marketers for ways they thought brand equity should be measured. Number one was brand preference, then customer satisfaction, followed by market share, net promoter scores and, lastly, price premium gap.

But when asked which measures they used at their companies, advertisers favored only two of the measures to track brand health: market share and customer satisfaction.

"I found this disappointing," said Sexton. And he added that a brand's ability to charge a premium doesn't necessarily measure brand health--naming brands like Southwest Airlines as an example of a healthy brand that offers bargain prices--and that simple brand recognition is a trailing indicator of brand health, "but a lot of companies still use it."

Frohling agreed. "Ninety percent of the market could be aware of you, but you have to have consideration. We look at relevancy: are you relevant to your consumers."

Finally, the ANA survey queried advertisers about the best means of undoing brand deterioration. Eighty-seven percent cited product innovation; 74% said refocus marketing efforts on growth; 68% said explore new targets; 67% said do root cause analysis; 66% said engage in "deep qualitative on brand issues."

Cooper said the problem, ultimately, is that the speed at which the market is evolving means that even healthy brands with strong brand awareness can't afford to have a mission accomplished moment. "Everything is evolving. When a brand stands still in that environment, it's done. It's over. The challenge is to keep pushing."