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BY JOHN GERZEMA AND ED LEBAR
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15,000 consumers in the United States. We have SIud­
ied 40,000 brands across 44 coumries on more than 70
brand metrics, which include everything from the
awareness consumers have of a brand to the particular
ways it makes them feel.
Beginning in mid-2004, we discovered several curi­
ous and sobering trends in the dara.. Consumer attitudes
about all sizes and segments of brands were in serious
decline. Across the board, we saw significant drops in
the key measures ofbrand value, such as consumer "top­
of-mind" awareness, trust, regard, and admiration. This
was true not just for a few brands, but for thousands,
encompassing the entire range of consumer goods and
services, from airlines and automobiles and beverages to
insurance companies and hoteliers and retailers. We
found that most brands were not adding to the intangi­
rou
Most consumer brands are not
creating value. The exceptions share
a set of "energized" attributes that
companies can identify and exploit.
Many companies that produce goods and services
for consumers face a serious dilemma - quite apart
from the eflects of the current global economic down­
turn. For ar leasr the past five years, the tried-and-true
fOrmulas to boost the sales and market shares of brands
have been becoming increasingly irrelevant and have
been losing traction with consumers. Globally, the
aggregate value ofbrands to consumers has been falling
steadily, and this decline began well before the recent
slump in stock prices.
We know this through extensive research we have
conductoo on brands. Since 1993, we have been track­
ing the way consumets perceive and value products and
services around the world to explain how brands grow,
decline, and recover. Each year, we interview almost
500,000 consumers around the world, and each quaner,

2. - - - - -
John Gerzema
[john.gerzerraidyr.comlls chief
insights officer at Young &
Rubicam and previcusly
fan Fallon"s International net­
work. He has guided brand
strategies for many global
businesses, Including Coca­
Cola, McDonal(fs, Microsoft,
5ABMiller, Nikon, and Sony.
Ed Lebar
leLl.lebar0
brandassetconsulting.com) is
rhlef ~xeClJtjvE! officer of
BrandAsset Consulting and
oversees brand strategy and
research for Young &
Rublcam. He is a tormer pro­
fessor of economics at the City
College of New York and Finch
Co{{eJe,
ble value of their enterprises the way they used to.
Instead, the majority of brands seemed to be scalled in
the consumer marketplace. .--- ..
But at the same time, separate re.earch we did on
the financial performance of consumer companies
revealed that brands were indeed creating more and
more value for companie. and shareholders. This was
evident in increasing share prices, driven higher by the
intangible value that the markets were implicitly
attributing to brands. This pattern held as equity prices
tose thtough 2007, but even after the recent collapse of
prices, Our models show that brand value continues to
account for toughly a third of the total slOck market
value ofcorpoeadons. In other woeds, meee was - and
is - a mismatch berween the value that consumers
saw in brands and the aggregate value that the markets
wen: ascribing [Q them. This contradiction comes aboUI
because the perceprions influencing the doUar VOtes of
consumers on MalO Sueet are very d.iHeTeor from the
fmanclal and meChanical analysis used by traden; and
analysts on waIi Stteet.
When all the factS were put together, we discovered
that, yes, there was an increasing expansion of the value
that financial markets are attributing to brands, but
this ue rowth is actuall artributable ro 'er and
fewer brands. Sure, for financial juggernauts like Goo e.
Apple, and Nike, brand value continues to increase
powerfully, but the numbet of these kinds of high.
performance. value-creating brands is diminishing
across the board, while the actual value created by the
vast majority of brands is stagnating or falling.
This overall mismatch between consumer attitudes
toward brands and the market values of the universe of
companies that produce and own them is, we believe, a
This article was adapted from
The Brand Bubble: The
Looming Crisis in Brand Value
and How to Avoid It. by John
Gerzema and Ed Lebar
!Jossey-Bass,2008J.
Originally published in s+b,
Summer 1'009
-.
recipe for disaster at cwo levels. At the macroeconomic
level, it implies that the srock prices of most consumer
companies are overstated: A "brand bubble" is implied in
their stock prices, and once it deflates - or worse, pops
- it could fUrther drive down valuation multiples and
stock prices around the world. Meanwhile, for leaders of
consumer-related corporations, the mismatch points to
a serious, continuing problem in brand management.
n..,.. .t can consumer companies do to make sure
that cheii brands arenY-among the losers? OUt research
revealed that the most successful brands today ­
including Adidas and iPhone and Pixar and Wikipedia
- resonate with consumers in a special way: They
communicare excitement. dynamism, and creativity in
ways that the Vast majority ofbrands do not. ~ this
quality "energized differc::ntiation," and we have identi­
fied, out of dozens of brand atttibutes in our consumer­
research database, the metries rhat capture this quality.
By fOcusing on these attributes, marketers tan keep their
brands constantly moving and gaining value. In a world
of excess capacity and diminishing trust, creating these
kinds of energy-infused brands can help companies re­
invigorate their brand management practices.
The PLunge in Brand Perceptions ~
As we set out in 2004 to compare consumers' and Wall ~
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meteorologisUi analyzing the various forces of nature [Q ~
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assess which combination causes hurricanes. To measure ..
how brands affect the current and future financial per­
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fOrmance of their enterprises, we merged our brand ·!
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database with 15 years' worth of financial data from
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Standard & Poor's Compustat database and the
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3. would expect a positive correlation bl"tween brand value
and the classical metries of performance and sales.
Instead, we found a ~ignjficant negative correlation. We
looked ar orher analysts' brand dara ro oonfirm rhar our
measurements and conclusions were sound. Sure
enough, we found Q[her marke[ researchers around the
world noring Some early signs of the same brand melr­
down. The Henley Centre, a markering analysis firm in
London, highlighred an erosion ofbig brands beginning
in 1999 in the Unired Kingdom. In the firm's annual
study of rhe 17 largesr, most iconic Bnrish brands, 16
showed a decline in consumer trust. In successive stud­
ies between 2000 and 2007, the Carlson Marketing
Group, headquartered in Minneapolis, found a decline
in consumer loyalry ro brands. In 2000, four in 10 con­
Sumers showed a genuine preference for or" cqmmitmeri't
to only one brand in a gwen category, but that measure
dropped all rhe way ro one in 10 by 2007.
The big quesrion, of course, is whar's behind rhis
malaise. Wny have consumers lost truSt in, and respect
for, brands? Whar should brand markerers do abour the
drop in performance and sales, the mosr meaningful
indicarors for the future of their brands?
Clearly, the issues are complex, wirh diverse facrors
dragging down brand percepdons among consumers,
and we investigate many of those issues in our book,
The Brand Bubble Gossey-Bass, 2008). Bur we believe
rhe problem can be summarized by three fundamental
causes that are collectively diminishing consumer desLre
for br.:nds, each of which intensifies rhe orhers.
Although none of these phenomena are entirely n~,
they've never before operated simultaneously or quite so
intensely. And ser againsr rhe dramaric changes of a new
digital landscape, rhey're raking a far grearer roll on
brands than anyone had previously thought. 0
The first major problem wirh brands is excess
capacity. Every marketer is up against [his new- ~
The world is overflowing with brands, and consumers
are having a hard time assessjng the differences among
them. In 2006, rhe U.S. Parent and Trademark Office
issued 196,400 rrademarks, almost 100,000 more than
ir had in 1990. The average supermarker roday holds
30,000 different brands, up threefold since 30 years ago.
Globalization and increased oomperirion compound the
nwnber of new brands. According ro a Daramoniror
report, 58,375 new products were introduced world­
wide in 2006, more rhan double the number from
2002. The report points our rhar "despire the facr rhar
advertising spending was up from [US]$271 billion in
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2005 to $285 billjon in 2006, 81 % ofconsumers could
not name one of the top 50 new plOducts launched in
2006, an all-time high for lack ofrecognition and a huge
leap up flOm 57% in the previous year." r£',
The second major plOblem is lack of creativio/:1n
a world with Hulu, Yelp, YouTube, and Twirrer, con­
sumers are continuous!y exposed to and able to share
brilliant content Witness how TIna Fey's characteriza­
tion of Sarah Palin on Saturday Night Live ricocheted
around the globe, Or the fact that directors of music
videos are now factoring the diminutiv~ screens on
mobile phones into their produaion techniques. The
result of this democratization of cleativi is that it has
raised e consumer s "creativicy quotient." Consumers
expect more big ideas from brands, and they expect ~o
get them faster. t1l
The final major plOblem with brands is loss oft~
Our data shows that the amount of trust consumers
place in a brand today is a ghost ofwhat it was 10 years
ago. In 1997, mOle than halfofall brands enjoyed high
levels of consumer trust. But society's faith in instiru­
tiow, corporations, and leaders has been severely rocked
by scandals and betrayals, from miscondua at our
investment banks to salmonella in "our peanut butter to
human growth hormone in our baseball players. One by
one, such revelations have barrered corporate credibility,
l<aving few brands immune. By 2008, consumers voted
just over one-fifth of brands as trusrworthy, more than
halving the number of trusted brands in just over one
decade. (See Exhibit I.)
Where does this leave those of us who are re­
sponsible for marketing and managing brands? How
can brands build sustainable long-term value to get back
into alignment with Wall
Street's expectations andEXhibit 1: The Collapse
valuations? The answer isin Consumer Trust
not found in simply redou­
bling effortS to win back
consumer awareness, es­
teem~ and respect. Too
much has changed in the
world to just return to the
old methods of marketing
and expect better results.
..- We contend that con­
ventional marketing conp
'~·-·--tinues to operate in a
time warp. Most market.ers
£eep striving ro build con-
SUffier perceptions that drive current sales only for today. *They skip along happily, stressing reason over emoti;;'n
and persuasion over inspiration, still believing that cus­
tomers can be programmed to form lifelong relation­
ships, and that brands can forever maintain their intan­
gible elixir of attraction and cachet. This manner of
marketing pays too much deference to the brand's exist­
ing equities, a reflection of past accomplishments. A te­
Iiance on brand equity can create a false sense ofsecurity.
as though past recognition can generate an endless
stream of future profits. Usjng only historic brand data
to plot a course in today's dynamic market is like driv­
ing 90 miles an hour looking out the back window.
The Anatomy of Energized Differentiation
Through our studies, we began noticing that consumers
were concentrating their passion, devotion, and pur­
chasing power on an ever-smaller portfolio of brands.
We then noticed a correlation berween these successful
brands and a set ofintetrelated consumer metries that all
add up lO a more exciting, dynamic, and creative expe­
'*rience :;- in shorr. one that reflects the brand1s energy.
Energy~ linked in the data to three main factors. FitSt
was the~sion the brand presents to consumers) often
originating from the leadership, conviaions, and repu­
--frtaW of the company behind the brand. Second was
the InventiQ.n consumers perceive in the brand, through
produc);;Qf service innovation, design, or content. Third
was th~ynamism consumers feel - how the brand
creates a persona, emotion. advocacy. and evangelism
among consumers through its marketing and othe;
forms ofconversations with them.
Brands chat rank high on our energy merries
include Arlidas, iPhone, Nike, and Microsofr. The data
shows that energy is not a function of brand maturity:
Many established brands have as much energy as young­
er, flashier ones. Both McDonald's and Walmarr, for
example, are highly energized. Energy plays a particular­
ly powerful role in commoditized industries where
brands usually struggle to build attributes like loyalty. :;
In the airline seaor, for example, the highest-energy ~
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brands include Southwest, ]etBlue, and Virgin Atlantic; ,"those brands have evoked much greater loyalty among •~
consumers than low-energy brands like British Airways
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and Delta. ~
As we analyzed 48 different brand attributes in our
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database to isolate the metries that capture brand energy, ~
we began to find explanations for the anomaly we had
discovered, and a way for brand managers to succeed in !
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5. Every marketer is up against this new reality:
The world is overflowing with brands,
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and consumers are having a hard time assessing
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'~oday's changed marketing environment. We now know,
and we can demonstrate, that brand energy is what
i1iceps brands consrantly moving and that it is critical to
(",aintaining ongoing consumer appeal, loyalty, and suc­
~. To~how how this workS:'~eneed to give you some
!;iackground on the metho 0 we use to measure
';""ds. Our randAsset Valuator (B the empiri­
,."
:C;iI model weve u WI e of consumer
's,rvey information - has become well Mown in mar­
j;..ting venues and is cited in many marketing textbooks.
:Numerous major marketers rely on the validity of this
:research methodology and its powe" of measurement
~d prediction.
The B V is ronsrructed with two categories ofmet­
rics. rand stature captures what a brand has achieved
up to e ume of this survey. It incorporares such met­
tics as esteem (consume,,' perceptions of quality and
lOyalty) and knowledge (consumers' awareness of and
experience with the brand). This reflects the brand's cur­
rent position in the market and its current value, and is
"'a,$fetor: It tends to be affected arter trie brand
has .
~::;~~stren~easutes the brand's growth poten­
tial.~: rpo:t:the brand's relevance (consume,,'
perceptions aboUl how appropriare the-brand is for
them) and its differentiation (consumers' perception of
the brand's unique meaning to them). Brand strength
,eflects the brand's future value, and is a leading indica­
!Of: an early visible sigo ofChange.
=Once we identified the amibutes and importance of
jrand energy; we fuund that it fit closely with differen­
:iacion, and thus rombined them into the single metric
;r;;;-rgizec' differentiation. The impact that energized
lifferentiatio~ has on relevance is extremely important.
.Without relevance, the brand will languish. The brand
.may stand out with energy but have no meaning to
consumers. tRelevance is the pathway to strong con~
siderationl triat preference, and ultimately share of
wallet. This is especially important in today's downwatd­
spiraling market. I
The unique measure of energized differentiation
establishes a direa link between brand momentum
and creativity, financial earnings, and stock perfor­
mance. Brands that currently have energized differentia­
~n vast quantities include Amazon, Axe) Facebook,
Innocent, IKEA, Land Rover, LG, Lego, Tala Nano,
Twirler, Whole Foods, and Zappos. Given the impor­
tance of energized differentiation in determining overall
brand strength, it's useful to look more closely at its
subcomponents,
Differentiation not only represents the brand's
point of difference, it also creates the meaning, margin,
and competitive advantage in the brand. Differentiation
is made up of the way consume" perceive three brand
attributes: the ~ or the measure of the brand's
special characteristics in terms ofproducts, services, and
other contem that the consumer experiences; uniqu:~
ness, ,she brand's essence, positioning, and brand equity;
and distinction, the repulation the brand has earned
through existing communications and btand image cre­
ated up to this point.
But energy is where the action is. It reflects the con~
sumee's perception of motion and direction. It sustains
the bran<!'s advan~es. High-energy btands create a
constant sense of interest and excitement. Consumers
sense that these brands move faster, see fu.rther, and are
more experiential and more responsive t~ their needs. In
our corrdarions, we see a definite pattern in energized
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brands: The more energy they have, the greater consid­
eration, loyalry, pricing power, and brand value (as a per­
cenmge offirm value) they command.
The rhree attribure clusters that make up energy
have all been associated. with momentum and industry
leade hey are:
~:~", 1. ision. ran WIt ViSion embody a dear direc­
~. nan' t ofview on the world. They convey what
~~.. ey're on this planer ro achieve. Some brands p;omise
..... to change the way people rhink; orhers seek ro shift
expectations abour rhe way rhings are done. Vision­
,. driven brands see farrher; they galvanize and inspire con­
I, sumers co join in, allowing the brand to navd into new
categories and create new meaninrJ .­
i parent company's reputation can playa signifi­
cant role in driving brand vision: How does the com­
pany act and behave toward its consumers, its employ­
ees, or rhe world beyond commerce~ Does rhe company
have an inspiring reputation that consumers admire? Is
rhe company a grear place ro work? Does it care about
social issues? Does it have a unique and powerful cul­
ture? In a transparent society, consumers don't divorce
rheir perceptions of rhe brand rrom overarching com­
pany values and conduct. They expect visionary brands
/to srand for higher-order benefits - and that also goes
Hor the company behind the brand.
Brands that score strongly on vision include
General Electric, Walmatt, and Toyota, which have led
in their categories on energy sa~ings; Southwest Airlines,
which says 'iEmployees are our first customers" - and
means it; IKEA, named one of the world's most ethical
corporations in 2007 for its employee practices and irs
promorion of environmental issues and children's wel­
fare; and Subway, which invented a new category of
quick-se' esmurant, healrhy fasr food.
2. Inventi n. Brands that score high in invendon
<:l'll""l!;c:JI=~oplefeel and the way they behave. N the
most functional element ofenergy, invention is ~n
ifle tactile and sensory associations that come from
,rodliet and service experiences and other physical
,riind interactions. Invention can be built through inno­
varion, brand iconography, packaging design, applied
technology, retail environments, and customer service.
A brand's invention can never be static. It requires a
commitment to continuous innovation, service excel­
lence, and new forms of brand expetience.
The brands rhat possess demonstrably strong inven­
tion include W Hotels, which offers irs guests Wi-Fi in
the lobby, "fasruon emergency kits" rrom Diane von
Furstenberg, and products rrom Bliss Spa; Zappos,
which excels at customer service, including free rewrns
on shoes purchased over the Internet; Nike and Apple,
which teamed up to create Nike+, where Nike shoes
transfer workout data to an iPod Nano; and Kidft-esh,
which introduced nutritious fut food for children wirh
playful"r 'on and packaging.
. ynamism. rands wi ynamism create excite-
me place through the way rhey present
themselves to consumers. Dynamism is the most emo­
donal and immediately visible ofthe three components.
It reflects the brand's abiliry to inspire consumer affinio:;
""raditionally rhe outcome of a big ad campaign, guer­
rilla marketing event, or highly visible marketplace
event, dynamism engenders a persona, community, and
evangelism among a brand's users. Dynamic brands
penetrate popular culture. They give consumers some­
thing ro talk about, facilitating enthusiasdc word-of­
mouth discussion across consumer social netWorks and
brand ecosystems.
The brands with rop scores in this category illus­
trate rhe many flavors of brand dynamism: Harley­
Davidson, which holds a rally in Sturgis, S.D., each
August that mar.ks the largest concentration ofmotorcy­
cles on the planet; Twitter, which rook SMS messaging
ro a fluid form of social networking used by millions;
Design Barcode in Tokyo, which patented its idea ro
turn ordinary barcodes on products into forms ofvisual
communication; and Mini Coopet, which mailed own­
ers RFID chips with customizable messages that flash up
on Mini billboards when they pass by.
PUlling the Metrics to Work
By plotting a brand's scores for measures of borh
brand strength and brand stature, we can paint an ac­
curate, holistic picture of its status as a forward-woking
measure ofperfimnance. We accomplish this by charting
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a rwo-by~two matrix that plots strength against stature.
1b.is can be done for a single brand at a time or for as
many as thousands of global brands, crearing a sorr
of "brand consrellarion," something rhar resembles a
'mrgazer map showing where all brands are ar any given
moment in comparison to one another without regard
to brand caregories.
Exhibit 2: The Universe of Brand Performance
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8. Brands with energized diHerentiation drive
future corporate financial performance
more than the traditional brands that dominated
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the market for decades.
more than 2.000 brands in the BAV darabase over
a four-year period and found that brands with higher
energy-to-equity ratios in a given year showed subsran­
rial growth in usage and preference over the following
year. One revealing exercise is to plot high-energy
brands against their categoty averages and array them
in the grid ofstature and strength. These brands. thanks
to energized dillerentiation, zoom upward out of theu
industries into much highet realms of performance.
This exercise shows that they have become
irresistible brands that transcend their cate­
gories and redefine their own markets. (See
Exhibit 3.)
Energized brands like those shown in
Exhibit 3 become market leaders that set
new expectations for the way things .hould
be. They don't aim for mere awareness.
Instead. they upend ideologies, challenge
convention, and market themsdves to con­
sumers' value systems. They rap into mind­
sets that find business in a broadet cross­
section of the marketplace. attracting new
users and growing their categories. And they
go where the money is, creating greater
margin 'power and future value creation.
Companies with energized brands also deliv­
er superior returns for shareholders over
time. (See Exhibit 4.)
Building the Energy-driven Enterprise
We now know that the brands that are thriv­
ing even in today's difficult markets, and that
will succeed in the future, have a more
powerful form of differentiation than other
IExhibit 3: The Power of Irresistible Brands
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Brands packed with energy break out of their categories. Among these high performers.
for exampLe, Axe has 3.6 tlmes the Level 01 energIzed differentiation as the average brand jin the deodorant category, and Boogle, iPod, and Target all scored at least two times as
high on consumer emottonal commitment 8S their category averages.
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performance more than the traditional brands thar
dominated the market for decades.
There's an old adage, "Something that's truly in­
novative can't be measured." But we're now able to
demonstrate the economic value of creativity in brands
and explain how brands can break our to affecr the
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9. For molt busin~ thought leadership, sign up for r+b's RSS ked.s at
WYtW.ST.rategy-business.rornJrss.
Nick Wredcn, "Marketing; By thc Numbers, ~ Hb, Winter 2006,
WYtW.S1:raregy-busines.s.rornJpress/arciclel06407: Areview of books about
marketing's n~ ilCOJuncability.
Leslie H. Moeller and Edward C. Landry, ~Measurlng Your Way to
M2rket Insighl,~ Hb, Spring 2009, www.srrategy-businesHomi
prw/m.iclel09107; Markcccrs can develop their analytiC'<li prowrss to
better undecsund their customers.
Gregor Haner, Edward Landry, and Andrew "lipping, ~'fhe New
Complete Marke:rer." r+b. Aurumn 2007, www.s[ra~·bwiness.com/
press/anide/07308: OrganizatiOlls with strategically focused.
broadly responsible CMOs may produce better results than meic tr2di­
cionalist peers,
Resources
Reprint No. 09205
all participants must understand how theit own actions
boost the energy level of rhe brand and fuel the cote.
This process needs to begin in the C-suite and extend to
all functional areas - sales, manufacturing and opera­
tionsl distribution, information technology, CllSt:omer
relationship management, and human resources.
4. Become an energy"driven enterprise. Man­
agement must next focus on formalizing this way of
working throughout the organization. Stakeholders
need to rransfer their energy and passion to their busi­
ness units and functions. Once management's aspira­
tions for the brand and business become part of the
culrure, the process of building an energized bran~1
enterprise is propelled forward. /t'tDfH81TZ/ffl ~ I
5. Create a loop of constant relnvenllon. Ihe fuial
srage is to make sure that the organization and its brand
are in a state of constant renewal. Brand managers must
be ready to reshape themselves over and over again.
Brands, like business, are in permanent flux. We must
listen carefully ro the market. and continuously modify,
petsonahze, share, and improve upon our offerings.
Especially in todays economic environment, the bene~
fits consumets are looking for in brands are evolving. By
being keenly aware of these shifts in consumers' perC<:f'"
tion and values, marketers can help their brands survive
- and even grow into irresisrible ones. -+
/riJ..-i[,-1' n£ N-rJf
---­
2001 2002 2001 2004 20U5 2006 2007 lU08
$5,000 - - - - - - - - - - - - - - ­
I:'
i~
~{i'
:.,~';:
:' $10.000....... £ r "........ _...... ....
" ': Sovru: Young & Rybicam BrindAs5~1'o'aluat<lr. YaM¢ Finance
{"
t,Exhibit 4, Energized Brands Outperform
lft·
~;,:'~ $10.000 inves.tment in 50 stocks with top energized diflerentiation
~~::, 5cores c.oosistently returneo more than the S&P 500.
6:;.$20,000
- "-Ii $15,000 ~_
future fmancial performance oftheir fums. We can link
brand momentum and creativity with predictive finan­
cial performance.
The results suggest that there is a comprehensive
fi've-step framework for companies that wish to build an
irresistible brand by infusing it with energy.
1. Perlorm an "energy audit" on your brand. Your
.goal is to capture a baseline that identifies the current
SOurces and level of enetgy so you can understand your
brand's strengths and weaknesses and detect how well
your brand management is aligned with the dynamics of
the new marketplace. As an entry point to the energy
audit. we invite you ro draw upon our proprietary BAV
database at www.thebrandbubble.comlexDlore'
~­ 2. Make your brand an organizing prineiple for the
business. Do this by finding an essential brand thou&>t
that everyone can buy into. We eaIJ this process "build­
ing the energy core" ­ and it should be a lens through
Which every aspect of the cuswmet experience, includ­
ing productS, services, and communications, is defin~
A strong core allows a brand to segment customers by
anirude and values, reotganizing its productS and ser­
vices with regard to customer insights and deeper emo­
tional needs. A powerful core aligns the organization
and allows it ro more aggressively shape its future.
3. Create an energized value ehain. The organiza­
'. tion's goals for the brand must become real for everyone;