How Much is Fame Worth?

How Much is Fame Worth to the Bottom Line?

How Much is Fame Worth?

It is an incontrovertible fact that people want and need famous people and brands. We have looked for role models who can help us achieve what we want since the beginning of time. The superstars of evolutionary days were the best hunters, who became role models, men to be looked to for inspiration on how to avoid hunger. The intervening centuries have done nothing to diminish an innate psychological mechanism that tells us people who get a lot of attention are worth following.

The 20th century saw a significant step in the notion of fame and much of this was driven by media developments. Cinema was an early protagonist in taking people who were familiar in small communities and making them well known on a wider scale. Television took the process a stage further, bringing famous people into our living rooms.

The ability of fame to make you rich is instinctively well understood. David and Victoria have not set about to create Brand Beckham out of a humble desire to share their lives with as many people as possible. The end-goal is putting a monetary value on their fame, an ambition that countless people have aspired to and achieved.

Marketing folk have also recognised the value of creating famous brands – for the same reason. There is an implicit understanding that the greater the stature of your brand, the better chance you will have to drive company profitability.

Indeed, the marketing community is responsible for setting benchmarks for wannabes if Victoria Beckham is to be believed. In her autobiography she shared her lifetime ambition, which is to become 'more famous than Persil Automatic'.

But here we have to consider a key business dynamic that Jeremy Bullmore wrote about some years back. Over time, there are perpetual shifts of influence between what he called the 'toothsuckers' and the 'go-for-its'. Toothsuckers are much more inclined to value prudence and like to be able to measure the effect of everything. On the other hand, go-for-its are naturally instinctive and will veer towards solutions that are not necessarily easy to measure.

Every company will rightly have a mix of these two types, although there is a discernible pattern. Go-for-its will more often be found in marketing departments and when times are good, they are allowed to run free with their ideas. Toothsuckers are invariably in finance functions and when times get tough, they increase their influence. The current climate is placing significant emphasis on the need for hard evidence of effect, so the toothsuckers are enjoying a period of ascendancy.

It is in this context that ITV launched the Values of Fame programme in 2004. We recognised the implicit benefits of fame in building companies' businesses, but we also understood that it can be difficult to pin-point the exact return on investment that comes from making your brand more famous.

Given television's role in bringing famous people into our living rooms, we believe that the medium remains the best guarantor of delivering and maintaining fame and celebrity for a brand. So we wanted to help marketers to more explicitly justify this investment.

We established two parallel but complementary paths. First, we invested in consumer research with the objective of getting under the skin of how famous brands live in consumers' minds. Second, we explored datasets that were renowned for linking marketing investment to company profitability to develop fame metrics.

For the first of these, we worked with a methodology pioneered in the US by BBH. The resulting research, called the ITV Fame Ratings, has enabled us to identify the key elements of fame and to determine how famous different brands are on a scale of 1–100. We chose 130 brands to test in the research. While most of these were brands belonging to our clients, we also included some celebrities and media brands for comparison purposes.

THE FIVE ELEMENTS OF FAME

First is Connection, which is about likeability and relevance – famous brands establishing a mutual bond of care with consumers.

The second element is Standout – famous brands create and demonstrate a point of difference to others around them.

Then we have Talkability. Whether it is at the breakfast table, the school gate, around the watercooler or in the pub, famous brands get people talking about them. A recent trend is for virtual conversations through internet chat rooms and blogs.

The fourth element is Familiarity. Through a combination of awareness and knowledge, consumers have a strong understanding of what the brand stands for.

Following on from this is the final element, Universal Meaning. As well as having a strong understanding of the brand for themselves, consumers know that their family, friends and colleagues share what the brand stands for.

This is important, since it is a strong part of human psychology that people around us endorse, either explicitly or implicitly, the choices that we make. Explicitly we might seek approval from others for choosing a particular car marque, while implicitly we will choose one grocery brand over another for fear of being caught at the checkout with something that might be embarrassing. Without universal meaning a brand will find it harder for its consumers to enjoy third-party endorsements that they are making the smart choice.

We found that these five elements do not carry the same weight of influence in determining a brand's overall fame. Universal meaning is the most important, followed by Familiarity.

In looking at brands' overall fame scores, Cadbury's achieved the highest Fame Rating of 71.81, pipping CocaCola to the post by a short head. While the latter scored better on universal meaning, Cadbury's pulled ahead as a result of having stronger connection and talkability (see Figure 1).

Other brands towards the top of the ranking included Royal Mail, Tesco and Nescafé; they rise towards the top by doing well against each of the five elements of fame. To use an analogy with the pentathlon, the great performers have to achieve across all five disciplines, rather than excelling at just one or two.

FAME OR INFAMY?

In talking to customers about these findings, we have found ourselves often drawn into the question of the dividing line between fame and infamy. Would an infamous character score highly on our measure because there is a widespread understanding of what he or she stands for? Similarly, how would a brand's fame be affected by a serious bout of negative publicity?

The connection score is important in the context of this debate. If a brand is not liked or is not seen as relevant this will drag down its score.

Victoria Beckham is a good case in point. Compared to the other five components of fame, she scores very poorly on this dimension. People feel she has little relevance to them and are unsure how much they like her. This is a major reason why she has some way to go if she is to fulfil her lifelong ambition. Her Fame Rating of 56.41 was comfortably eclipsed by Persil's score of 63.61 (see Figure 1).

Another interesting observation that we have pulled out of the research is the important effect of brand legacy. We included a number of brands that are relative newcomers and, while they have achieved significant awareness, they are not achieving the same level of fame as more established brands.

An example of this is the mobile network sector. Each of the five networks is well known and an integral part of consumers' daily lives, yet only Vodafone made it into the top 50. In a related field, Carphone Warehouse is a regular feature on most high streets, yet its Fame Rating of just over 501 lags some way behind the fame of other high street brands such as WHSmith and Woolworths, which score over 60.1

In due course, we plan to track how brand fame moves from one year to the next. This means we will be able to more clearly track the effect of marketing programmes – not just on overall fame, but also on the five elements.

FAME METRICS

Interesting stuff, but what does this mean for a brand-owner's bottom-line? This is where Fame Metrics come in.

In establishing Fame Metrics there were two important considerations for us. First, were we working with robust datasets? Second, could we tie the results back to consumer research in order to create a link between brand fame as it exists in consumers' minds and business KPIs?

We chose to work with two companies. Many readers will be familiar with PIMS, which for 30 years has been tracking the impact of marketing strategies on profits. OMD Metrics has six years' worth of econometric analysis, which not only enables analysis of the ROI of a campaign, but also identifies the contribution of different strands of the communication mix. These two companies have merged their learnings to create Pravda, a database that allows rich interpretation of the effect of various forms of marketing on profitability.

Our start-point was to examine the link between a brand's Fame Rating and its market share. The approach was to build a comprehensive dataset of fame alongside other potential drivers of market share. Rather than simply seeking to correlate market share with fame, other potential influencers of market share, such as marketing activity, market complexity and frequency of category purchase, were also taken into consideration.

Working across 110 brands, our multi-variate model unveiled a strong relationship between a brand's Fame Rating and its market share. It's a simple equation: as fame increases, so market share increases (see Figure 2). A 10% rise in the fame of a brand will, on average, increase market share by a fifth.2 We also found that when a brand's Fame Rating goes above 60, market share starts to rise exponentially. It's a non-linear relationship, with fame playing an increasingly important role. And of the five elements of fame, Universal meaning has the most significant influence on market share.

When we looked at different sectors, we found some that had stronger links between fame and market share than others. Telecoms, travel and retail had steeper correlation lines than sectors such as alcohol, electronics and motors. This is largely due to market dynamics, specifically the number of competing brands in the sector and the purchase frequency. However, we did find constancy in that the curve of market share against fame holds true sector by sector.

We went further to try to identify the proportion of a brand's market share that can be attributed to its fame. While, to a large extent, market share will be driven by base effects within the category, our work shows that around 40% of household brands' market share can be attributed to the effects of fame.2

Fame Metrics has also reiterated the importance of brand and image messages in building profitability. Looking at the service sector, the top-quartile performers in profit terms were investing 30% of their communications in brand and image advertising, as opposed to product or price-led activity (see Figure 3). This is ahead of the average of 25% across the whole services sector and three times the proportion invested by the bottom quartile performers.2

A similar picture emerges in the fmcg sector, where the top-quartile performers invest over 50% in brand advertising, while the bottom-quartile invest under 40%2 (see Figure 4).

RETAIL EXAMPLE: IMAGE VS PRICE

There is an interesting case study from the retail sector to back this up. It's the story of a retail brand that had historically focused its investment primarily, if not exclusively, on communicating line and price offers. This national retail chain then embarked on a test where seven regions of the country included brand image advertising on television to support product messages. The other five regions only carried the product messages, which were broadcast on television as well being printed in press and leaflets.

The ROI across all communications was £11.53 per £1 spent in the areas where brand-led advertising supported the product messages. In contrast the return was only £4.60 in the areas without brand support.

For the first time, we have created a direct, quantifiable link between the fame of a brand and its business performance and there is a wealth of data to support this argument. At this point, we have made public macro learnings. Over the next year we intend to explore in more detail the implications of fame within particular business sectors.

While we acknowledge that some of our learnings reinforce historical understanding, we also believe that we have uncovered new insight into the nature of fame, how brands can increase their fame and what this can mean to the bottom line.

ENDNOTES

  1. ITV Fame Ratings conducted by NOP Research. Fame Ratings is a trademark of Bartle Bogle Hegarty.
  2. Fame Metrics – an analysis of OMD Metrics, PIMS and Pravda.

This article featured in Market Leader, Winter 2005.