Why You Should Reconsider Your Definition of Brand Equity

Don't forget to share this post!


Brand equity - the value of a brand’s perception amongst consumers - has always been key to winning in business. From Ford to Fenty, this is as true today as it was a hundred years ago.

However, the rise of social media has had radical implications for the ways businesses build, maintain, and monitor brand equity.

As social media has grown to occupy a larger part of everyday life, global brands are redefining what brand equity means, and are exploring new and better ways to measure this equity.

In this post, we’ll take a close look at why defining and tracking brand equity with traditional methods is no longer good enough.

Instead, we’ll take a look at alternative approaches to brand equity measurement in the social media age, including through social listening tools.

First, though, we’ll get started with the basics: what is brand equity, and why does it matter for business?

What is brand equity, and why does it matter?

Defined by David Aaker in his seminal 1991 text Managing Brand Equity, ‘brand equity’ refers to the commercial value derived from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.

In other words, brand equity is a set of assets and liabilities linked to a brand, its name, and its symbol, that adds to (or subtracts from) the value provided by a product.

In markets where product differentiation is minimal - think smartphones or luxury goods - brand equity is crucial. After all, brand equity is the only thing setting one fragrance apart from another.

For Nike’s Air Jordans, brand equity is the image of the great Michael Jordan mid-flight on his way to the hoop - and the associated willingness to shell out more for a premium sneaker. Without all that trusted brand equity, customers probably wouldn’t front $250 for a pair.

pasted image 0 27Source: Footwear News

For marketers, the concept of brand equity helps to position products and shape advertising, especially in crowded or undifferentiated markets.

Let’s think about another example: the Android vs. the iPhone. Despite what their die-hard fans might insist, both products essentially do the same thing. In this situation, brand equity is one of the only things setting the products apart.

pasted image 0 30Source: SOSAV

That’s why Apple spends so much time and effort packaging its products as sleeker, smarter, and more intuitive. If they didn’t, customers would wonder why they were paying a premium for their products. Hence all the nifty art, music, and celebrity endorsements.

Put another way, brand equity is the value premium a company generates from a product with a recognizable name when compared to a generic equivalent.

brand-equity-definition-cerealsSource: Taste of Home

Cereal is another great example here. The brand equity of Kellogg’s Froot Loops is higher than Market Pantry’s generic alternative. That’s why Kellogg’s can charge a higher price, even though the taste and nutritional content of the two products is pretty much the same.

Brand equity accumulates and varies over time. It is a cultural value based on public information, and the collected perceptions resulting from brands communicating with consumers through advertising and other exchanges.

This is why companies do their best to communicate the “feel” of a product in advertisements - it’s a shortcut to creating positive and unique brand equity.

Let’s stick with the Apple example. Apple’s brand equity is everything the company has ever presented to the public about their products, from the late Steve Jobs’s turtlenecks through to the colorful iPod ads in 2003 to the original “hello” ad for the iPhone in 2007.



Brand equity is negatively affected by information that runs against the public perception of a product. This is why Apple’s brand equity has been complicated by coverage of working conditions in the Chinese factories where iPhones are assembled.

So, that’s a short primer on what brand equity is, exactly. But how do companies measure it?

How have companies measured brand equity in the past?

In the past, businesses invested in traditional forms of market research to try and pin down brand equity, as well as tracking changes in equity over time. By traditional forms, we mean surveys, questionnaires, and focus groups.

With these methods, brands would ask participants about things like:

  • Brand visibility and recognition: How quickly does a brand come to mind in response to need? When a participant thinks of a particular product, which brands come to mind?
  • Value associations: What positive or negative feelings come to mind in relation to a brand? What associations does the participant have in relation to a brand? For example, participants might consider a brand like Dior as elegant, sophisticated, and refined.
  • Brand differentiation: When a participant thinks of two competing brands, how distinct are they? What differences that come to mind when describing them?
  • Customer loyalty: How likely is a participant to commit to a brand’s offerings? Does this level of commitment change to take into account factors like price and availability?

Answers to these questions help businesses to better understand their brand equity. If market research is conducted repeatedly, it allows brands to track perceptions of their equity over time.

However, as we’ve seen in our previous post on market research in the modern age, traditional approaches to market research like surveys and focus groups have a lot of downsides. Namely:

  • Customers need to participate, and they don’t always feel like it
  • Surveys and questionnaires only focus on past experience, giving a static impression of a product at a fixed point in time
  • Observer bias can lead to participants reverting to preconceived beliefs
  • Market research is time-consuming and expensive
  • It can be hard to get true market representativeness
  • Results are rarely able to be compared, unless a business engages the same participants over time

So, traditional approaches to market research aren’t always so great at measuring brand equity. Unfortunately, for most of history, these methods have been the only game in town.

That is, until the rise of social media.

But how exactly has social media changed brand equity? How have platforms like Facebook, Twitter, and Instagram changed the way brands build and measure their equity?

Let’s take a look at this in detail.

Social media is changing brand equity

It’s no exaggeration to say that social media has changed what it means to be a consumer, and have radically transformed the relationship between brand and audience.

Before the rise of social media, consumers had a much smaller platform to voice opinions concerning brands and products. Besides recommending a product to friends and family, there was little a single consumer could do.

Now that social media has flattened communication between individuals and companies, it’s a lot easier for a brand’s fans, cheerleaders, or haters to make their opinions known on a huge scale.

With a single post, conversation, or exchange, consumers now have the power to improve or demolish a brand’s reputation - especially when these exchanges get public exposure.

pasted image 0 29Source: Live Chat

More than just funny takedown tweets, social media facilitates the spread of information, including negative reviews of a brand or product. When everyone is connected, it doesn’t take much to build a wave of public sentiment.

For example, United Airlines’ decision to forcibly remove a passenger from a flight - assaulting him in the process - wouldn’t have received as much public outcry if not for other passengers capturing the moment and tweeting the video.

Studies have shown that social media’s accessibility creates unique considerations for brand equity. This is because communication with brands becomes immediate, personal, and transferable, able to be spread quickly around the world.

Brand presence on social media has turned brand equity into a constant exchange. Instead of a relationship spaced out with advertisements and product releases, maintaining brand equity is now a 24/7 responsibility.

Of course, social media also creates new opportunities for brands to define and measure their brand equity. This requires a redefinition of what brand equity means.

Enter the concept of social brand equity.

The rise of social brand equity

The rise of social media has changed the way customers engage with brands and businesses, turning Twitter and Facebook into direct lines to pretty much any company out there.

In this environment, brands and businesses need to reconsider what brand equity means to them, especially the ways they build, maintain, and track this equity.

Social media conversations now have a real, meaningful impact on business. Brands need to broaden their definition of brand equity to include these conversations and need to focus on social media engagement as part of maintaining brand equity.

This isn’t just a question of necessity - it also has major benefits for brands.

Measuring brand equity on social media is cheaper than traditional methods like surveys and focus groups, and can be performed in real time. With the help of data science and AI, these measurements can be infinitely more specific and helpful.

pasted image 0 28

A breakdown of negative tweets from late 2018. Source: Linkfluence Search

Broadening the definition of brand equity to include social media conversations also allows for an enriched picture of brand perception. With this new definition, brands can use tailored KPIs based on social media exchanges to track what’s being said.

For example, a business could assess the positive sentiment attributed to a brand across all social media platforms before an advertising campaign, then afterwards. This allows an accurate and detailed picture of the campaign’s impact.

This requires a change in methodology, moving away from surveys and focus groups to social listening tools (e.g. the Meltwater brand management solution) and data-driven analysis backed with AI and data science.

By making these changes, brands can radically improve the way they measure equity, getting helpful and detailed information quickly and easily.

Brand equity is evolving fast - you need to keep up

The concept of brand equity has always been crucial for businesses wanting to set their products apart.

In the age of instant information, we need to redefine brand equity to make room for the huge amount of conversations and exchanges happening on social media.

Social brand equity is evolving at the speed of the web, and businesses need a way to keep up. Customers are engaging with brands in new and different ways, and brands need to get on board. If not, they risk being left behind.

Unless you rethink the way you create and track social brand equity - including through social listening tools - you’ll miss out on some amazing opportunities.

We’ll be taking a look at these tools in greater detail in future posts, so keep an eye out!

New call-to-action

Don't forget to share this post!