Thursday’s Joke

This one has a message. In the Shoulders of Giants free downloads there is an excellent paper by Howard Leigh on how to value and negotiate the sale of your business. The wisdom and knowledge contained in it could literally make millions for people if they are interested in selling their company. And of course almost everyone is, at the right price. So this weeks joke……

A nice looking guy goes up to a pretty girl in a bar. After a few pleasantries he tells her that he is multi-millionaire and asks whether she would make love with him for a million dollars. The girl blushes and says coyly, “That’s a lot of money, I suppose I’d have to think about it”.

“Well, then”, he asks, “do you fancy a quick shag for 50 cents?”  Outraged, she slaps his face. “What kind of girl do you think I am?”

“I know what kind of girl you are”, he replies,” I’m just negotiating the price”.

Get rich with John Maynard Keynes

I recently received a book summary from getAbstract about John Maynard Keynes. Called ‘Keynes and the Market” it is written by Justyn Ward and it reveals a side of Keynes I never knew. I remember Keynes hazily from my studies at university – micro and macro economic theory. I did quite well in those exams because I borrowed the notes for all the lectures I missed from a certain Hugh Sloane. Yes, that Hugh Sloane, founder of Hedge fund company, Sloane Robinson, 291^st on the Sunday Times rich list. He was very clever and worked incredibly hard at Bristol. He should have been at Cambridge (so should we all) but he proved it by being the only guy in the faculty to get a first class degree.

Anyway, I digress. For some reason I always assumed that Keynes was a dull Cambridge academic. Not so. Apart from being a rather liberal, bi-sexual philanderer who ran with the Bloomsbury set he was also a shrewd and successful investor. Justyn Ward presents him as the Warren Buffet of his day with a very similar approach to investing. He believed in value rather than momentum investing. In other words, rather than carrying baskets of shares and trying to make money by getting ahead of the market trends he cherry picked under-valued companies. A natural contrarian, he liked to “lean into the wind”, as he put it, and buy into “out-of-favour stocks with sustainable earnings”. He advocated that holding a fewer number of carefully selected stocks was much less risky than a diversified portfolio. I guess it is if you pick the right ones. This was easier for Kenynes than it has been for Buffet because in Kenyes’ era company assets were largely tangible which made the judgement of whether or not they were under-valued considerably easier. Buffet has had to contend with intangible assets that can be well over half the asset value of a business. In other words he has had to get to grips with brand value. As is well known he made a killing during the dot com bubble by buying heavily into a small brand called Coca Cola when it was under-valued.

A ground breaking economist who was also smart enough to make himself a small fortune through his investments and human enough to enjoy life to the full – that’s someone to look up to.

Some tips on measuring Brand Health

You’ll have gathered that I don’t blog regularly. I know I should but I don’t. I blog spasmodically, when I have something I want to share, a book I have read or some piece of business/marketing insight I’m thinking about. So, here’s something about measuring Brand Health. It was prompted by a question an old colleague asked me the other day. He works for a large global business (no hints) that wants to become even more brand-led and wants to make a regular review of the health of its brands the catalyst for this.

I wrote him quite a nice thought piece on this (no I won’t share that just yet – I may develop it a bit first and maybe write an article). It is a subject on which I have some strong views based on several years wrestling with it, although I would not claim to be the world’s expert (marketing expert is an oxymoron – marketers are a mile wide and an inch deep, sometimes not even an inch). Tell you what – I’ll give you the headlines.

Brands account for roughly half the value of a business if they have them. If not you can call it reputation and it amounts to the same thing (the value of a brand is its reputation).
Therefore, brand health (or a company’s reputation) should be reviewed by the board of a company as often as they review their financial performance. Just doing this will force the business to be more brand-led.
You have to start with inputs and outputs. The inputs are the various things you can invest behind a brand to create growth – product quality, distribution, competitive pricing, weight and quality of marketing & communications. The outputs are the market place performance results that should come from all this investment – market share, revenue, margin, ROI. Are we doing the right things, are they having the right results?

Some people look for some composite score for all of this. Some even focus on brand value using whichever methodology has caught their eye. In my view this is all pointless. It will be some form of a balanced scorecard where “apples” will have been added to “pears” and some of the fruit salad will be both arbitrary and subjective. Either way it ends up being very theoretical and not very useful – neither predictive nor diagnostic in my experience.

It is nevertheless worth focusing on what converts the inputs to the outputs in order to get some insight that is both diagnostic and predictive of future performance – surely that’s the point of the whole thing, if not then you might as well just count the cash and plot the financial graphs.

To do this properly requires some fact-based understanding about how brands work, in particular how people in the category come to adopt – or unadopt – brands. Most brand owners don’t have this understanding – they may think they do, but they don’t. They will have pieces of the story (based on some facts and a lot of speculation and prejudice) but nowhere close to the whole story of why someone chooses, this time, to buy a BMW rather than an Audi, or an Apple rather than a Dell.

There are consultancies who will tell you otherwise – there are as many models of brand health and brand conversion as there are consultancies, all sold to potential clients with total conviction that they are right. What does that tell you?

The perfect model of what drives conversion to a brand is the Holy Grail of marketing. Many claim to have found it, no-one has, at least not yet. So while we keep looking – and we should – here are the things I look at in a brand to see how healthy it is:-

Brand Price Elasticity – since the ultimate test of the strength of a brand is that people are prepared to pay a price premium for it (or a higher volume at parity price) price elasticity, how it compares versus the consideration set of competitive brands and how it improves over time, is the ultimate measure. The issues are that a) getting accurate data regularly is expensive b) very careful thought needs to given as to the competitive consideration set (it is rarely who you think) and the sample (you don’t want to know the views of everyone or the data just gets flattened). However, there are useful proxies for price elasticity that can be tracked.

Recruitment – any brand needs to be recruiting younger (than its target) users or it eventually goes into decline, a decline that can be hard or impossible to reverse. Declining uptake (and weakening attitudes) among younger users has proved to be an extremely accurate predictor of future brand performance.

Differentiation – not a lot of people know that the Y&R Brand Evaluator model was developed by MIT. Even fewer know that MIT did an exercise to look at which of the 4 key measures in the model correlated highest with actual market performance. The answer was differentiation. The more the target audience perceives a brand to be different to its competitors the stronger it is and the better it performs over time. One would assume the perceived difference would need to be relevant (one of the other scores in the Y&R model) but it doesn’t (or maybe sensible marketers ensure the difference is always relevant). But the fact is that brands that stand out as different from their consideration set perform consistently well (Apple, VW, Guinness, Nike)

Momentum – this is based on the latest from social sciences but again, like differentiation, has been to shown to reflect brand strength accurately and in the short term (unlike standard image and attribute measures, momentum scores can change in just a few months). As humans we tend to gravitate towards what we perceive to be what everyone else is doing – we follow the perceived trends like a flock of birds or shoal of fish (literally). The extent to which people think that a brand is ‘getting more popular’ is a key score.

As I say, all of these can and should be measured and tracked. But a healthy brand needs some other things to stay healthy. A healthy brand needs healthy foundations. I list my top three below but would stress that in my view these cannot be measured. They need to be assessed by people with experience:-

A Great Brand Positioning – clear, competitive and inspires great execution

Famous Brand Signifiers – strong brands are shown to have well known collaterals (can be a pack design, logo, some aspect of the product experience, music etc)

“Product Recipe” – a clearly set out technical specification that is linked to its brand positioning and its signifiers. Distinctive brands don’t just happen by chance and they don’t remain distinctive over time by chance. Someone or something is keeping them that way.

Last but not least – consistency. Healthy brands are consistent (even though their form and their messages will evolve over time albeit executed with a freshness that feels almost inconsistent). All the strongest brands adapt with the changing trends of its market and society and yet maintain a consistency of personality and identity. Now that is tough to do – about as tough as all of us find it to enjoy life, build careers, please the family and stay healthy.

Thursday’s Joke (from Stame)

For some reason Sherrington is pissed off with me. I know he has been ‘blogging spasmodically’ when he has something important he wants to share (funny how this always coincides with some new book or business he’s punting). Not true of good old Stame – I constantly have gems and pearls I want to share but Sherrington keeps spiking them. This is not so hard to do if, like me, you have no access to the BCST (bloggy content system thingy) and no idea how to use it even if you did.
He has however let me start posting some Thursday Jokes (he had to – most people disregard the rest of the blog and just read this). So here’s my latest:-

A guy staggers home from the pub late at night, happy and pissed. As he passes a bush he hears a woman’s voice.
“Hey you, yes you – I don’t normally do this kind of thing but if you give me 30 quid you can have your way with me”
He thinks to himself that he doesn’t normally do this kind of thing either, but what the hell, so he hands over the money and in he goes.

After a few minutes a policeman comes along and shines his torch on the couple in the bush.

“What the hell do you think you two are up to?” he shouts.
The man replies:
“Do you mind officer, I’m making love to my wife”
“Terribly sorry, sir” says the Policeman, “I had no idea”.
“Neither did I ‘til you shone the torch”, replied the man.

So You Wanna Know About eMarketing?

With such poor use of English you’d imagine this to be a post by Stame, but no, it’s me, the patron of this blog and this is the title of my latest eBook available here. As you may or may not know, I am non-exec Chairman of an eMarketing Agency, Quirk. They have written an excellent book that explains and educates people about eMarketing in much more detail. It is available as a free download and based on it, and other educational tools they have, they offer an on-line accreditation for aspiring digital marketers.

My eBook comes at eMarketing from a different angle – my angle. In other words it is mostly aimed at the ‘Old School’ marketer (like me a couple of years ago) who wants to understand eMarketing and what’s so different about it compared to the marketing they have grown up with. In the next two sections I give an insight on how to develop an eMarketing strategy and argue the case for having an eMarketing agency of record rather than going through your ad agency. Have a read (it’s only 50 pages) and let me know what you think.

I admit that my secondary target for the book is the ‘new school’ of digital marketers. I have learned the hard way that many of them (my Quirk colleagues being the exception, ahem) don’t understand what we ‘old school’ don’t understand. The have grown up digital and don’t get why we don’t think like they do and visa versa. As you might have guessed, I make a case for the best of both worlds – the basics of business and brand strategy still have a place in the new digital world.

So do you ‘wanna’ know about eMarketing? Well you should, so start with my eBook and then read Quirk’s so you can actually learn how to do it.