Wharton Research Adds to the Evolving Brand Story

by Diana Drake

On Episode 45 of Wharton Global Youth’s Future of the Business World podcast, tea brand innovator Victoria Fang Gao, says: “Buying a brand is like opening a book; only a good story can keep the readers coming back and back again.”

We agree that the topic of brand in business – with its power to communicate identity, purpose and ethos about a company’s products and services – has an intriguing allure in the world of marketing. With that in mind, we set out to explore some of Wharton’s latest research around brands and marketing. We discovered some fascinating insights to share with our Global Youth readers:

🧬 Analyzing Brand DNA. Brand identity guru Americus Reed, a Wharton marketing professor (and one of our favorite Global Youth Video Glossary contributors) recently visited Wharton Business Daily on SiriusXM radio to talk about how companies are building their brands in a post-pandemic market.

According to Dr. Reed, now more than ever brands need to articulate their purpose and vision because shoppers want to connect with companies that align with their values. “Consumers are in this state of heightened self-awareness about what’s really important to them, so we’re seeing a lot of brands really lean into the notion of a meaning system — Why do I exist? How am I making the planet better?” he said. “Broader kinds of questions that are built into the brand’s DNA are rising to the surface because consumers care about that.” Visit our newest mini-site featuring Levi Strauss & Co’s brand identity to learn about how the company is aligning with social issues like gun violence – and to learn some more from Americus Reed.

“I think the biggest message is to not make the mistake of thinking the brand is just simply the tagline, the logo, the colors on the website,” added Dr. Reed. “The brand is a true asset, and if you invest in the brand, and if you create a very deep, well-articulated, clear, and richly understood meaning system, in addition to the external markers — you’re on the right path.” What’s your brand identity? Visit the conversation starters at the end of this article and tell us more.

“We find almost universally that this follower elasticity, this bang for the buck you’re getting, declines pretty dramatically as influencer popularity goes up.” –Ryan Dew, Wharton Marketing Professor

⚽ The Cristiano Ronaldo Effect. During his Wharton Business Daily appearance, Professor Reed also mentioned how dramatically social media has changed the branding landscape, requiring companies to find their customers on different platforms and even co-create with them, rather than dictate the entire brand strategy.

Part of this new approach is recognizing the power of the influencer. For example, soccer star Cristiano Ronaldo is not only the world’s highest-paid athlete, Reuters news service has reported that he’s also the highest-paid athlete on Instagram, scoring $3.23 million per post.

New research from Wharton marketing professors Ryan Dew and Raghuram Iyengar (along with co-author Zijun Tian from Washington University in St. Louis) studies whether or not brands should spend millions on social media mega-influencers or much less on micro influencers to drive interest in their products and services.

Their study, which offers marketers a new framework to measure the tradeoff between the popularity of an influencer and the cost of using them in an ad campaign, had some surprising results, which they shared on Wharton Business Daily on SiriusXM radio.

They created a data point known as FEI or Follower Elasticity of Impressions, a measure of a video’s percentage increase in views (their work analyzed more than 500,000 videos on TikTok over six months) corresponding with a percentage increase in the number of followers for the content creator. They boil this down for brands as “bang for the buck.”

They conclude that videos posted by mega-influencers are seen by more people, but that high volume does not guarantee more comments, likes or shares – in part because the really famous influencers have less direct connection with their followers.

“We find almost universally that this follower elasticity, this bang for the buck you’re getting, declines pretty dramatically as influencer popularity goes up,” said Dr. Dew. “For every additional follower you’re paying for, you’re getting less and less for that.”  As with all studies, there are exceptions. For example, FEI climbed higher for more popular influencers who are promoting gaming-related content, which has a strong social component. Visit a Knowledge@Wharton summary of their research, read their full academic paper, or listen to the SiriusXM interview for more insight on the power of influencers in branding.

📺  Brand Inclusivity. As Wharton professors like Dr. Dew and Dr. Iyengar study different dimensions of the business world and experiment with new approaches and ideas, they are generating data and research that companies can use to make smarter decisions.

In another recent study, Wharton marketing professor Zhenling Jiang, along with two co-authors from Washington University in St. Louis, examined the impact of racial minority representation on advertising effectiveness in their paper, TV Advertising Effectiveness with Racial Minority Representation: Evidence from the Mortgage Market.

 The study, which examined television commercials for mortgage refinancing, found that as minority representation depicted in the ads increased from 15% to 25%, the advertising elasticity went up 14%. Advertising elasticity measures a campaign’s effectiveness in generating new sales. Professor Jiang and her co-authors focused on mortgage ads because of the potential for mortgage refinancing to save consumers money through lower interest rates. The fact that those types of consumer-finance ads don’t always reach everyone could be a contributor to the racial wealth gap in the U.S.

The paper also concluded that ads including diverse people didn’t just increase sales among minority borrowers. They had a positive effect among white borrowers, as well.

The resounding message to brands: your genuine effort to attract diverse customers will pay off.

“When we think about DEI [Diversity, Equity and Inclusion], we tend to think we are sacrificing something to feature more diversity. We are making a tradeoff,” Dr. Jjiang told Knowledge@Wharton. “But it’s quite the contrary. It’s actually a nice message that they can achieve both higher sales as well as the societal goal of more inclusion and representation.”

Why does that happen? Dr. Jiang has her suspicions, which include consumers responding positively to what they see as a brand’s inclusive values, as well as the fact that ads with diversity stand out to viewers because they are less common. Stay tuned. She may be preparing new studies to test those theories.

One comment on “Wharton Research Adds to the Evolving Brand Story

  1. “Now more than ever brands need to articulate their purpose and vision because shoppers want to connect with companies that align with their values.” This quote, attributed to Wharton marketing professor Americus Reed, led me to reflect on my research this past year in which I analyzed the moral conflict surrounding sweatshop labor. I aimed to answer the following question from an ethical perspective: To what extent do developed and developing countries differ in their views on sweatshops?

    Although my research did not begin with a pre-determined conclusion, I expected to find a disproportionate number of sources supporting the “common” ethical approach to sweatshop labor: To boycott and shut down the production of companies that abused human rights. This view aligns with my belief that all workers are entitled to fair wages, health care, proper working conditions, and recognition for their humanity above their manufacturing capacity. Moreover, it is a comfortable and familiar solution for someone like me, living in a first-world consumer society protected by wage laws and federal labor standards. Consequently, my discovery of the many sources supporting the continuation of sweatshop practices was an enlightening experience. The supporting authors were not the CEOs of wealthy corporations that benefited from exploitative practices; instead, a diverse group of people– consisting of economists, free-lance journalists, philosophers, and even sweatshop workers themselves– are questioning the definition of ethics as it applies to sweatshop labor and for several reasons. When these differing perspectives are placed in dialogue, many complex questions arise. Is it ethical to shut down such factories, depriving impoverished workers of a main source of income and forcing them into other unstable, equally dangerous forms of employment? Or is it ethical to allow sweatshop practices to continue, despite their long history of human rights abuses, continued mistreatment of workers, and contribution to the leading social issues today?

    I realize that as a student growing up in the United States of America, an economically robust nation making great advancements in human rights, it is easy to identify with a company whose values reflect the goal of immediately ending sweatshop practices, whether it be in their manufacturing lines or others; however, as a learner, thinker, and individual striving to make an impact in the business world, I need to recognize the bigger picture. The argument is not that reforming sweatshops is unnecessary or unattainable. Instead, activism concerning this issue must invite as many differing perspectives as possible because social issues are rarely one-sided; as I learned from my research, the most meaningful conclusions, or potential solutions, come from deep reflections prompted by well-articulated arguments unique in nature. I believe that the future of the business world, concerning workers’ rights and safety, includes a deeper analysis of a brand’s DNA—namely, how is this brand addressing global concerns and incorporating the voices of diverse individuals impacted by its message or purpose?

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