or 'How Betsy and half a million amateur traders had fun calculating brand value for us all'
this is an article written for module four of the IPA's Excellence Diploma, it was originally written in February of 2008, prior to recent economic fluctuations. further articles from the course can be found be clicking on the relevant categories link on the right. endnotes are referenced in square parenthesis and listed at the end of the post.
Part One – because we’re
all talking in different tongues
Behold, the people is one, and they have all one
language; and this they begin to do: and now nothing will be restrained from
them, which they have imagined to do. Go
to, let us go down, and there confound their language, that they may not understand
one another's speech. 
Brand Equity is unique in the
marketing lexicon in that it is intangible.
It’s therefore frustratingly difficult to know what marketing efforts to
improve brand equity are actually achieving.
“CEOs … feel that they get
accountability for their investments in finance, production, IT, even
purchasing, but they don’t know what their marketing spending is achieving.” 
Unlike business metrics such
as sales, or marketing metrics such as competitive advertising spend – brand
equity has no universally comparable  metric .
Tim Ambler categorises five
stages of sophistication in the assessment of marketing; from Unaware to
Scientific . Different corporations regard themselves as
being at different stages of this evolution . This highlights the key problem in the measurement
of brand equity; the lack of a consistent model of measurement. To use a scientific analogy; we have no
paradigm to either support or refute by evidence and experiment; to quote Kuhn,
“there is no such thing as research in
the absence of any paradigm.” 
The ideal is ‘Scientific’  measurement, barriers to which are twofold.
Firstly, few companies have access to sufficient data, both in terms of
number of metrics but moreover in the consistency of any data over time. Secondly, the priorities of organisations –
and especially marketing departments – change over time, mitigating consistent
collection of metrics . To confuse matters further, different
brand-owners and agencies adopt different models for measurement of Brand
The current state of brand
measurement is therefore in many ways akin to the fate of the ancient citizens
of Babel who,
for having the ambition of building a tower to the heavens, were punished by the
removal of a universal language. Brand
Equity measurement in the early part of the 21st Century suffers from
a confusing mix of models and methods; from our lack of a universal language.
Part Two – because we need
a tangible model for an intangible future
What the industry needs is a
benchmark which allows brands to consistently compare an agreed metric of brand
equity over time; against their competitive set, other categories and against
the market as a whole.
Given brand equity is “the sum of future cash flows driven by the
investments of today” , how
could such a model be built? Where else
has a model been devised to put a tangible metric on the future intangible value
of an asset?
The Undercover Economist Tim
Harford observes that “shares are called
shares for a reason; they give you a right to have a share in the profits of a
real company.”  Furthermore, in stock markets the value of
shares is significantly greater than the amount the value of those shares would
be worth if invested in a savings account.
That is because the values of shares represent not the present value of
a company, but the future potential
profits of a company.
The description serves as
more than a passing allegory for brand equity.
The stock market tracks future potential profits in the same way that
brand equity represents future potential profit. The stock market is capable of evaluating
what is essentially an intangible value – what the market collectively deems the
future return on a stock to be. In other
words, the share valuation model represented by stock market trading is the
perfect model for capturing, monitoring, reporting and comparing brand equities.
I believe the IPA  should seize the initiative in brand measurement by creating a stock market for the trading of shares in brand equities.
Part Three – because
actions speak louder than words
The stock market model is appropriate
for a third crucial reason; stock markets are based not on claims by
individuals, but on the actual behaviours of individuals.
As Ambler observes, “the difficulty with brand equity is that it
cannot be measured directly … so we have to use proxies of three kinds: inputs,
intermediate measures and behaviour.” 
Brand equity is the promise of
future sales –  in the diagram above – it is measured based on current inputs
 and actual behaviour . What can’t
be measured directly is what’s in people’s heads . It is for this reason that various and varied
proxies (such as attitudes or perceived quality) are used instead. But these proxies are unreliable at best.
However humans are
consistently unreliable in expressing thoughts and feelings. This is because thoughts are not distinct
from feelings; “Emotions constitute an
integrated element of the seemingly most rational decision-making. Whenever thinking conflicts with emotions,
emotions win.” 
Because brands – and
therefore brand equities – are emotionally underpinned in the brain, asking
people to talk about brands in a cognitive exercise is fundamentally flawed .
A model based on future
behaviour as opposed to present conscious recall would also capture some of the
lost equity predicted (and subsequently observed in research )
by Robert Heath’s Low Involvement processing model.
Ultimately, behaviour is widely considered to be the most reliable indicator of what we really think and feel. being able to measure brand equity in the brain based on an individual's future behaviour would be the most reliable measure of all, and that's exactly what Betsy would achieve.
Part four – because the future us more easily viewed as history
The Brand Tracker of Sales
and Equity, BTSE  opened
for trading on November 3rd 2008 . It listed the top 200 brands as measured by
marketing investment across 2007 . Initial Brand Equity capitalisation – share
value – was set by an expanded model of the Equitrend survey ;
which accounted for all of David Aaker’s Brand
Equity Ten  metrics, each of which was weighted by relative importance to each other and
across categories by an IPA working group.
Once trading opened, participants bought and sold BTSE shares of listed
brands according to how well they thought those brands would perform in the future.
The expanded Equitrend survey
continued to be conducted every month, with dividends paid accordingly to
shareholders. If McDonalds’ brand value
went up relative to the previous survey, the brand was deemed to have made a
profit and dividends were paid accordingly .
The BTSE – like its
predecessor the FTSE – relied not on any individual getting the price right,
but on the trading floor as a whole getting it right… As James Surowiecki articulated, “the idea of the Wisdom of Crowds is not
that a group will always give you the right answer but that on average it will
consistently come up with a better answer than any individual could provide.” Humans are irrational, but “individual irrationality can add up to
collective rationality.” 
This was the key to BTSE’s
success. By the end of 2009, over half a
million players were trading . And they got good. They were better than previous models because
rather than relying on a relatively few individuals correctly articulating
their emotional unconscious, they were using the sums of their knowledge,
impressions, intuitions, feelings and considerations to put a collective future
value on hundreds of brand equities.
BTSE was so accurate that by
the end of 2010 there was a proven correlation between the BTSE 100 Index 
and the equivalent FTSE share prices. Marketing
investment, acknowledged and incorporated by BTSE’s traders, had a more
significant effect on share value than anyone could have predicted. In 2011 the IPA’s BTSE brand equity valuation
was adopted as a key metric used by investment bankers. The boards and FDs of corporations were soon
The last word – what are
we waiting for?
In appreciating that the
stock exchange represents the perfect model for estimating brand equity, I
believe the IPA is in a unique position to create a parallel trading
model. We each of us carry in our heads
at any given moment our own share portfolio of brand equities… Let’s get trading.
Marketing and the Bottom Line
– Tim Ambler
The Undercover Economist –
Marketing Genius – Peter Fisk
The Structure of Scientific
Revolutions – Kuhn
The Mental World of Brands:
Mind, Memory and Brand Success – Franzen and Bouwman
Brand New Brand Thinking –
Merry Baskin and Mar Earls (Editors)
The Wisdom of Crowds – James
Brain Science, That’s
Interesting, But What Do I Do About It? – David Penn
2. Marketing and the CEO: Why CEOs are fed up with Marketing – Philip Kotler
Brand Equity has no universal metric, recent consensus has been reached on the
accounting of intangible assets.
International Financial Reporting Standards (IFRS) for the accounting of
intangible assets have standardised the articulation of intangibles on balance
sheets across the areas of Market (eg trademarks), Customer (eg databases),
Artistic (eg jingles), Contract (eg broadcast rights) and technology (eg
as defined as a standard of measurement that can be consistently applied and
5. The five stages outline the generalised process
through which most companies develop thinking about assessment of marketing,
and are 1. Unaware, 2. Financial, 3. Many Measures, 4. Market focus and 5.
regarded them selves as being at the ‘Financial’ stage. In this stage marketing assessment is made
purely on financial grounds, as opposed to the next ‘Many Measures’ stage, in
which a diversity of additional measures – such as customer-based metrics – are
used. Centrica described their
organisation as being at this ‘Many Measures’ stage. Duracell claimed to be moving from the ‘Many
Measures’ stage to the fourth stage; ‘Market Focus’. In this stage the range of financial and non-financial
measures are consolidated into fewer more meaningful metrics, which are
presented to and assessed by the board.
Kuhn – The Structure of Scientific Revolutions p79
Ambler’s ‘Scientific’ stage; a “database
of past and current metrics, derivatives and diagnostics is mathematically
analysed to provide the shortest list of sensitive and predictive metrics. Source: Marketing and the Bottom Line –
Tim Ambler, p79
9. Both of
which are suggested by Tim Ambler in Marketing and the Bottom Line
10. Y&R’s BrandAsset Valuator and WPP’s BrandDynamics Pyramid are both well
documented models for the measurement of brand equity based on comprehensive
11. Marketing Genius – Peter Fisk p343
Undercover Economist – Tim Harford p144
role of the IPA is to serve the collective interests of IPA members; and in
particular to define, develop and maintain the highest possible standards of
professional practice within the business.
Abridged from the ‘about’ section of IPA website
Marketing and the Bottom Line – Tim Ambler, p53
The Mental World of Brands: Mind, Memory and Brand Success – Franzen and
16. A fact underlined by Wendy Gordon when she observes
that compared to the results obtained when asking about brands cognitively “encouraging people to re-experience a brand
in memory provides a completely different set of information. Source:
Wendy Gordon writing in Brand New Brand Thinking – edited by Merry Baskin and
17. In his article Brain Science, That’s Interesting, But
What Do I Do About It?; David Penn notes that “from our analysis [advertising awareness] clearly does not tell the
full story … It’s clear that if we only base an assessment of effectiveness on
conscious recall, we potentially miss out on those who are positively affected
yet have no conscious recall of having seen it.” He also cites a campaign by Conquest research
for a retail client which indicated that a group who recognised and correctly
branded the ad, but were not aware of advertising, were as favourably disposed
toward the brand as those who were consciously aware of the campaign.
Betsy as it affectionately came to be known
model adopted was not dissimilar to the BBC’s Celebdaq, in which players trade
shares in celebrities to compete for prizes.
For more information visit http://en.wikipedia.org/wiki/Celebdaq
20. The top
200 brands had a combined advertising and direct marketing investment alone of
£2.6 bn – and together account for 24% of total 2007 advertising and DM
Equitrend survey from Total Research is a measure of brand equity based
directly on consumer perceptions. It’s
annual survey of 2,000 respondents currently covers 700 brands. Source: Brand Valution, a review of current
practice – David Haigh – IPA.
22. The US academic David Aaker has proposed a flexible approach to brand equity which he
calls the Brand Equity Ten. It focuses
mainly on consumer-orientated measures of brand strength, although it also
looks at market orientated measures. The
ten are: (1) price premium (2) satisfaction / loyalty (3) perceived quality (4)
leadership / popularity (5) perceived value (6) brand personality (7)
organisational associations (8) brand awareness (9) market share (10) market
price and distribution coverage. Source:
Brand Valution, a review of current practice – David Haigh – IPA.
not inconceivable that dividends could be in actual sterling. A levy of advertising and DM of only 0.01%
would – based on a £10.9bn total advertising and DM spend – generate over £1m
every year. If such a levy had been in
place in 2007, the biggest single contributing brand would have been DFS, paying
just over £10,000 towards BTSE. However
a cap on contributions could be considered.
quotes from The Wisdom of Crowds – James Surowiecki.
success is far from inconceivable. World
of Warcraft currently has over 10m active subscribers worldwide, and Second
Life – the online role playing world has it’s own established currentcy. According to the site “Rates fluctuate based on supply and demand, but over the last few years
they have remained fairly stable at approximately 250 Linden Dollars (L$) to
the US Dollar.” Source: http://secondlife.com/whatis/currency.php
collective index performance of the top 100 companies according to their brand