I’m often asked by clients how to cope with the ‘appeal to brand equity’ made frequently by (some) marketing people (particularly those selling advertising) in defense of promotional activities.
(To review my position on ‘brand equity as a management metric’ you might like to read this article.
The marketer’s position is typically as follows: We do not spend promotional dollars to *directly* generate sales opportunities. We generate them *indirectly* via the following method:
- We spend promotional dollars to generate incremental brand equity
- Brand equity is a key driver of sales opportunities
This logic can be hard to argue with. Certainly, it’s seems reasonable that an appropriately structured promotional campaign should favorably dispose a potential client to transacting with us.
Here’s how I attack this reasoning. First, I highlight that the marketer is alleging two cause-and-effect relationships (causal connections) as follows: PROMOTIONAL SPEND => INCREMENTAL BRAND EQUITY => SALES OPPORTUNITIES.
I then acknowledge that it is impossible to objectively value brand equity. (Sure, marketers have created formulas that are supposed to value brand equity. However, a cursory examination of them will suggest that marketers are probably better at marketing than they are at mathematics!)
Because brand equity cannot be objectively valued, it can be noted (if you’re feeling particularly combative) that the marketer cannot prove his theory. A proof requires more than evidence of correlation. A proof requires an understanding of the mechanics of the causal connections.
But, that aside, if we assume for a moment that the marketer’s theory is sound — and that those two causal connections *are* robust — let’s ask ourselves, what additional effect we might expect to observe?
Well if those causal connections were robust, you would obviously expect to see a linear correlation between promotional spend and the emergence of sales opportunities. In other words, you would expect that when promotional expenditure increased, the in-flow of sales opportunities would increase; and visa versa.
While — as per my comment above — the existence of this correlation does not technically constitute proof of the marketer’s theory, the absence of the correlation *definitely* disproves it. So all you have to do is ask for evidence.
A simple line graph should do (with one line for promotional spend and another for sales opportunity in-flow). This graph should span a reasonable period to allow you to discount environmental influences. If the marketer doesn’t have the data required to generate the graph, then he is in no position to promote his theory. After all, in logic, the onus vests with he who proposes a positive to present evidence. (You can’t prove a negative.)
Therefore, in the absence of evidence, you have no choice (and abandoning reason should not be an acceptable choice) but to assume that those ‘branding campaigns’ do not generate sales opportunities.
Which, of course, they rarely do!