You Can Measure Brand Value

I’ve written about the value of branding before and why it matters. One way to assess the value of a brand is measuring its consumer-based brand equity, or CBBE.

By definition, CBBE is the differential effect that brand knowledge has on consumer response to the marketing (specifically, the promotion) of that brand. The figure illustrates this differential effect.

CBBE-exampleLet’s say your competitor is Brand A and you are Brand B. Then, let’s say that you have very closely competing products, in terms of key functions and features that are important to customers.

Finally, let’s say you both spend approximately the same amount on promotion for your respective products, to educate and motivate customers to buy them.

All things being equal, the larger result of purchases of your product (Brand B) versus your competitor’s (Brand A) – as represented by the dollar signs “$$$” – is the measure of CBBE.

In short, you could say that your brand equity is the aggregate of that differential effect, on an annualized basis.

Or, in other words:

  • IF you run four major campaigns during the year,
  • AND sell an average of $250,000 more than your competitor each campaign,
  • AND spend roughly the same amount on promotion as they do,
  • AND use approximately the same techniques (i.e., couponing, PR, etc.),
  • THEN your CBBE is $1M or more, per year.

That’s one way that branding delivers value to your business.

Here’s another…

Brand value is a significant contributor to the intangible assets, specifically, what is known as goodwill, of a company.

When you look at a balance sheet, the major components include Assets, Liabilities, and what people refer to as Owner’s Equity. Assets include tangible assets (like cash, bonds, etc.) and intangible assets. Goodwill is a key intangible asset.

CBBE-balance sheet

In accounting terms, when a company is acquired, goodwill amounts to the excess of the “purchase consideration” (the money paid to purchase the asset or business) over the total value of the assets and liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.

Over the past several decades, intangible assets generally – and goodwill, specifically! – have represented an increasing percentage of acquisition costs…largely, many would say, due to the growing added value that effective branding represents to a firm.

In our rapidly evolving mobile/social/location-based digital economy, there are evermore services for helping companies increase their CBBE.

CBBE-influencers

For example, new services like HYPR Brands and Narativ that provide access to large networks of brand ambassadors — who themselves are key influencers in specific categories — are becoming powerful allies to brand building.

For marketers, the key is to be committed to measuring your CBBE and be bold about arguing the business case for your brand-building programs, when it comes to budget allocation and strategic initiatives for the company.

You are the stewards for one of the most valuable assets and powerful tools that your company has in its quest to lead your market segment. Don’t forget that!

Ebook to Softback: The Digest for Students of Entrepreneurship

SBF 2016-2I’m excited to announce that a revised and updated 2016 edition of the Naturally Caffeinated ebook is now available for download.

Further, the ebook is now a “pbook” — a “physical” book, printed as a softback, that you can buy for $10.

For an author-signed copy, send me an email using my Contact page. I’ll send you a link to a secure Paypal page.

A lot has happened since the 1st edition of the ebook was published a year ago.

May 2015

The ebook, sub-titled “Addicted to Entrepreneurship,” was first made available for download, with a new, dedicated Naturally Caffeinated blog for communicating updates, events and more.

We were grateful for the early support and reviews like these:

“I’m flattered to be included. I do wish Steve tremendous success with both the book and the Community!” -Guy Kawasaki, Author, Speaker, Entrepreneur, Evangelist 

“Your Ebook is now in my iBooks! Awesome pieces of advice!! So many are hard learned.” -Dr. Steve Elmore, Doctor of Business Administration (DBA) and Head of Customer Success, Convo, Inc.

“…very well written and seems to hit all the high points of the subject. I applaud your effort and am sure this will be useful to many, many readers.” -Ben Dyer, Entrepreneur-in-Residence, The University of Texas at Austin, Cockrell School of Engineering

“A refreshing and effective guide to help jump-start your new venture.” -Dr. Lynette Reed, Doctor of Ministry (D.Min.) and Author, Researcher, Consultant

June 2015

The Community Edition of the ebook was launched, in collaboration with the online publisher, Weeva.

A “pay it forward” project from the beginning, the book’s goal was always two-fold:

  1. to provide lessons learned and stories of inspiration by experienced entrepreneurs for students of entrepreneurship and first-time founders
  2. to donate any proceeds from books sales and other fund-raising raised to programs providing entrepreneurial experiences and education among teenagers

nc-authorsBy soliciting men and women founders from around Austin and the world, we were able to capture the experiences and stories of more than 70 entrepreneurs, with insights in every aspect of new ventures.

July 2015

We agreed to publish two version of a hard back edition of Naturally Caffeinated, combining the original ebook content and the contributions from guest entrepreneurs like Jimmy Treybig, Jan Ryan, Admiral Bobby Inman, Kerry Tate, and many many more!

This edition is available for purchase on Amazon and at the Weeva online book store, where you can also download an excerpt from the hard back edition.

August

We announced that TEDxYouth@Austin – the country’s largest licensed TEDx event focused on young people – would be the first recipient of proceeds raised with the book.

September

PwC, Bridgepoint Consulting, Concepture, and Powershift Group hosted the Naturally Caffeinated: Community Edition launch party at Powershift’s offices, two blocks west of the Capital.

Q4 2015

NC-suzi sosa LinkedIN postLots of promotion and sales of the hard back book, including a great series written by Weeva, highlighting a variety of contributors’ posts, like this one by Suzi Sosa – Are There Gender Differences Holding Women Entrepreneurs Back? and this one – Would You Trade Places with Me? by Greg Businelle.

January 2016

Presentation of funds raised through Naturally Caffeinated to TEDxYouth, from on-stage at the Paramount Theater, during The Austin Forum’s January monthly meeting.

February

TEDxYouth@Austin 2016 was held at Westlake High School in Austin.

March

We began discussing plans for revisions to the ebook edition of Naturally Caffeinated, along with a limited run of printed, softback copies of the book for sale.

April

WIT kidsWe announced that WIT – short for “Doing Whatever It Takes” – would be the second recipient of proceeds raised with the book.

May

We debut the revised and updated ebook, as well as The Digest, at a series of events, including the Small Business Festival, featured in the photo at the beginning of this post.

All Good Things: SXSW Will Die Someday and So Will You

iris plans home page

Let’s talk about dying. Like being born, we all die.

I, for one, don’t expect this fact will change anytime soon, despite what Ray Kurzweil and others hope.

That’s why I’m eager to tell you about Iris Plans, a new startup that is officially launching at SXSW Interactive 2016, although it’s founding team have been working on the venture since late 2015. I’m an active advisor for the company.

The team has developed a way to combine a variety of technologies and services to make a highly tailored form of personalized medicine — known as Advance Care Planning (ACP) — to nearly everyone in the US who would want it, no matter where they are located or when they are available.

The best way to understand a real life situation for ACP may be to watch the video (produced and directed by my son, Andrew Guengerich).

 

UT-Austin CAET Gives Us Some STEAM

UT Ctr for Art and Ent Tech (CAET)I attended the launch event for UT-Austin’s Center for Arts & Entertainment Technology this evening. The Center (or CAET) is a new program of the College of Fine Arts.

As Dean of Fine Arts, Doug Dempster explained, it’s been a few years in the making. But, now that it’s here, the CAET figures to quickly become a significant magnet for UT-Austin’s Fine Arts school.

Why? Because, the CAET’s new Bachelor of Science degree in Arts & Entertainment is the quintessential Gen Z major.

It is the true expression of STEAM – Science Technology Engineering & Math (or STEM) education, with the fundamental integration of Arts, be it performing, visual, digital, or more.

Congratulations to Dean Dempster, Bruce Pennycook (the CAET Director), long-time Austin colleague Paul Toprac (Assoc Dir of Game Design & Dev at UT-Austin), and all of the other faculty and staff for the program.

I, for one, look forward to vetting some of the first crop of BS in AET students, in 2017 and 2018, for internships with our new ventures…the CAET program is fine-tuned to produce future great product, tech strategy, and creative directors, ready to unleash some innovation on the world – can’t wait!

David Bowie – Bond Genius

Before I get to the “bond genius” part of the title, a personal moment, to share my 3 Bowie favorites:

Diamond_dogsAlbum: Diamond Dogs – nothing like it. On first listen, it’s nearly repelling, in its unconventional musicianship and song-writing. But, listen closely and play it again, and the whole thing starts to become absolutely mesmerizing – an other-worldly lyrical vision and sound.

Song: Rebel, Rebel – ironically, the “hit” from Diamond Dogs. The irony is from the fact that the song sounds nothing like the rest of the album. Being over 40 years old, the track is far lesser-known to the Gen X and Y kids. It gets lost because it’s sandwiched in between the original Ziggy tracks and the latter-day, far better known Let’s Dance tracks. But, for my money, Rebel, Rebel is one of the most hard-charging rock-and-roll riffs of all time.

Video: Heroes – just watch…

bowie - backyardLive: The Backyard, Austin TX, April 27, 2004 – An amazing night. The Austin Chronicle’s review is on target, but of course comes up short with being able to capture the magic of the night.

Bowie was “on” and the crowd ate it up, me included. He and the band delivered the perfect set list. A night and a concert performance I’ll never forget.

* * *

Ok, now for the “bond genius” part. For this, I have to give full credit to one of my new favorite, morning newsletters, Quartz. I recommend that you check it out. It’s become part of my morning routine, with multiple round-the-clock issues available to be sent to your email. I get the early morning edition that hits my inbox around 5am.

This past weekend, they editors did a marvelous intro to the daily edition, talking about Bowie’s forward-thinking, on multiple levels. I really can’t improve on what they wrote, so I’m citing it here, in full – all credit (copyright) goes to Quartz. (Keep up the good work, Team Quartz!)

“If you ever doubted that David Bowie was from the future, consider how Ziggy Stardust clairvoyantly shorted the music industry.bowie - new yorker

The late musician was always internet savvy—he started his own ISP way back in the AOL days, and was among the first artists to offer a downloadable album, just when Napster was starting to scare the bejesus out of the record labels.

His insight into digital music led him to predict the internet’s disruption of the music industry and cash out early. Back in 1997, he created an entirely new financial instrument: “Bowie bonds” were essentially a bet against the recorded-music business, providing the musician a $55 million payout, secured by future royalties from his enormous back catalog.

”Music itself is going to become like running water or electricity,” he told the New York Times in 2002. “The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. So it’s like, just take advantage of these last few years because none of this is ever going to happen again.”

In 1999, global music industry revenues were $14.6 billion; by 2009, they were only $6.3 billion. The entire offering of Bowie bonds was sold to Prudential Securities, which didn’t turn out to be very prudent: The 10-year bonds were eventually downgraded to junk status as music sales, including Bowie’s back catalog, evaporated.

Not all of Bowie’s predictions came true: He also told the Times that copyright itself was doomed. Due to the lobbying prowess of major media companies, copyright protection is stronger than ever—not that it has helped musicians much.

Streaming music services like Spotify pay out tiny fractions of a penny for every song played, making most professional musicians dependent on touring and other revenue streams. (Bowie predicted that too.)

Incidentally, the banker who helped to create Bowie bonds is now securitizing the royalty streams of one-hit wonders like Right Said Fred, the luminaries behind “I’m Too Sexy.”

RIP, Starman.”

RIP, indeed. Carpe diem, my friends.