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The Branding Coefficient (BrandCo)

Written by Nico Black

Digital Strategist and early-stage investor, Nico is also an AdTech enthusiast. He has over a decade of digital marketing experience and has been investing in tech companies since 2006.

May 15, 2012

The only way you can really optimize an online business is work against a single metric. That metric should be the one your business is judged by, whether it is leads, downloads, sales, etc.

I had a very interesting discussion this week with an online retailer. This retailer was concerned about the intrinsic tension between performance based marketing and branding.

Generally, performance based marketers cringe at the mention of the word “brand”. They care about hard conversions, returns on investment and cold cash.

The brand fanatic has a vision; they see where the company is headed. They see that in order to capture the vision they can’t wallow in mud too much. They cannot sacrifice their brand for one off sales. They want to build a relationship, nurture a community and build brand equity.

Being a like fan junkie will kill your business

The Likeoholic by Assaf Hanuka: Being a like fan junkie will kill your business

So how does one reconcile the brand with the science of online marketing? Well, I thought it over and decided to call it: “the branding coefficient” or “brandco”. This coefficient is something for the brand owner to decide on. It should be a percent. This percent is how much of pure performance marketing they are willing to sacrifice for the brand. So while the performance based marketer will naturally aim for positive ROI, their results should be judged by an ROI coefficient. This might represent 10% of their ROI, so if a campaign is 95% ROI (so a 5% loss) when adding the brandco the campaign now swings into a positive ROI of 105% (whether or not to keep that campaign is another question entirely).

Additional metrics that must be considered with the brandco are: email signups (relationship building), time on site (indicators of engagement), bounce rate (relevance) and social sharing (enthusiasm, endorsement). Each one of these metrics can comprise the brandco. This helps avoid the undoing of an online business: pure intuition based decision making.

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