Of Brands and Bubbles

The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It
John Gerzema and Ed Lebar

Book titles are like product names. They catch the eye and grab the imagination. That’s probably as good an explanation as any for why so much reading results in so much disappointment.

I desperately wanted to like this book. If you’re educated as a researcher and analyst (as I am) and if you conceive of yourself as a quantitative marketer (as I do), then you may share my fascination with brands. The triumphant brand story is a staple of the marketing world and if you’re driven by hard metrics the story can often seem perplexingly free of solid data. So a book that suggested something might be amiss was of great interest if only from a contrarian point of view.

As leaders (at time of publication) of Y&R’s Brand Asset Valuator (BAV) practice, the authors are in the business of assessing the financial value of brands. Gerzema and Lebar set out a two-part task in this book:  to demonstrate that the equity markets are overvaluing brands and to provide a road map for marketers and managers looking to address the problem. They succeed in at least one of those tasks.

I believe the authors are intent on building a way to value brands and demonstrate how that value can grow. What leads them to the notion of a bubble is the ever-growing premium Wall Street places on seemingly all brands regardless of whether the buying public is rewarding the brand.

BAV uses, in large part, trans-national survey data supplemented with focus groups as a basis. So rewarding is indicated by responses to questions asked in surveys and focus groups; the financial data I’d expect to see incorporated seem not to be. Or at least they are never mentioned.  Maybe it’s my limitation but if a brand is suffering and not worth a premium I’d like a direct financial indicator rather than a series of extrapolations from attitudinal data.

This is probably what lies at the heart of my disappointment with the book. Despite the faux-academic trappings and the obligatory b-school charts and graphs the book is remarkable free of the hard science it suggests lies beneath. I don’t think it’s asking too much in a book about marketing to ask for a claim to be substantiated. If you claim methodological prowess you ought to demonstrate it.

Ok, ok. Business is about making money and you don’t spill your cookies in the lobby. But there are problems all over the place—not just in the skimpy bibliography. The authors make much of the astonishing amount of research, quantitative and qualitative, conducted annually in support of their project including tens of thousands of surveys from around the globe. Yet almost any research professional will tell you that it’s the quality of the sample and the response that matters, not sheer numbers.

There are other issues as well. The authors create a new concept of differentiated energy to explain the differences in consumer attitudes towards different brands. This leads to two things I find troublesome. The first lies in the only hint of substance in the book when they define a key measure as the log of the ratio of two scalar scores. There are a lot of good reasons for employing mathematical transformations in analysis but absent any explanation as to why the step was necessary it just left me wondering.

The energy thing becomes its own editorial and narrative problem. As the second half of the book, the ‘how to’ part, progresses energy appears over and over again. Each time a new appeal to the authority of science is made often by applying concepts from physics. But the understanding of even elementary science is so lacking it grates. An example? The authors state energy is motion or the possibility of motion. That’s nice and seems to cover both potential and kinetic energy. It also requires you to ignore the plant kingdom which most definitely stores energy and has made a virtue of not moving.

My favorite misstep is when the authors declare that red is the color of energy and motion. I’m not sure what culture they are rooted in and I wonder whether either one drives regularly.  In my town the most frequently appearing sign is a 4-square foot red octagon emblazoned with a word designed to arrest motion—STOP.

There are other problems, too. The authors make a great show of saying their data is available at a website for the book but it’s inoperable. The link takes you to Gezerma’s website and sets up a great circle of “buy the book” advertising. It also quietly lets you know the Mr. G is no longer with Y&R and that he is now a social theorist.

What’s wrong with that, you ask? I suppose nothing. But the website for Robert Putnam’s masterpiece, Bowling Alone, which was published in 2000, is still operable and the underlying data is still downloadable. And by the way, one of those datasets is from DDB, a Y&R competitor, and Robert Putnam is widely acknowledged as one of today’s premier social scientists.

There’s plenty more but you get the drift. Whether the authors, editors or circumstances are to blame, you have to question a method that identified eBay and Palm as high energy brands just as both began to decline. If I were the editor, I’d try to save the day by quoting Schumpeter on creative destruction and call it a day.

I know this was long. Thanks for seeing it through.


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