Advertising has both short-term and long-term effects that drive return on investment (ROI). In the short term, the effects are analyzed using econometric and/or attribution modeling and look to understand the ways in which advertising affects sales. In the long term, advertising is known to affect measures of brand health and brand perception – so-called brand equity metrics – and these, in turn, support and drive sales. The challenges marketers are facing today is that traditional econometric modeling is unable to measure or account for these long-term effects accurately.
This is where Equity modeling comes in. An extension of standard econometric modeling married with path modelling, Equity Modeling puts hard, financial value on the measure of brand equity and demonstrates clearly what they deliver for a business.
It gives advertisers a deeper knowledge and understanding of their brands and how they work. With a comprehensive understanding of the most and least valuable metrics, advertisers can have clear direction on which few, specific levers they need to pull to have the most impact.
This Viewpoint answers the following:
- What is Equity Modeling?
- Why does Equity Modeling matter?
- How does Equity Modeling work?
- What types of data are needed to undertake Equity Modeling?