What is brand equity

How to measure brand equity without expensive consulting

A full evaluation using the Interbrand or Brand Finance methodology costs tens of thousands of dollars and is not needed by everyone — it is justified when selling a company, franchising, or in court disputes. For internal control, regular tracking of four indicators is sufficient, which can be collected on your own through customer surveys and social media analytics.

• Spontaneous and prompted recognizability — a simple survey "what brands in the category do you know" without hints and with hints.
• Net Promoter Score (NPS) — willingness to recommend, measured once per quarter with the same wording.
• Share of repeat purchases and retention rate from CRM — this is behavioral loyalty that does not need to be asked, as it is already in the database.
• Tone of mentions in social media — the ratio of positivity and negativity, tracked through any monitoring service.

This set is sufficient to see the trend: is the equity growing or declining. Such monitoring does not provide an exact monetary valuation, but it is not always needed.

Cost, market, or income approach — which one to choose

When a brand evaluation is indeed needed in monetary terms, the question of methodology arises. The international standard ISO 10668 recognizes three approaches, and the choice depends not on the appraiser's preferences, but on the purpose for which the figure is needed.

A telling example is MTS: the brand generates 29,5% of the company's cash flows, and its revenue valuation — 169 billion rubles — exceeds the book value by 835,5 thousand rubles 204 thousand times. This is not an accounting error, but rather an illustration of how accounting and the real market strength of a brand are things from different universes.

Awareness or loyalty: what is more important

Awareness is the entry ticket; without it, a brand simply does not exist in the consumer's mind. But the scale of brand recognition can easily be confused with brand strength. McDonald's, Ryanair, and Diet Pepsi are known to almost everyone — and a significant portion of the audience associates these brands with irritation rather than sympathy. High awareness does not guarantee loyalty; these are different axes.

Within loyalty, two levels should be distinguished, and this is where errors in measurement are most often made.

• Behavioral loyalty — repeat purchases that are easily tracked through CRM data, but which may be explained by the lack of alternatives or the convenience of the store location, rather than brand attachment.
• Attitudinal (emotional) loyalty — willingness to recommend, pay more, and forgive a brand's failure.

Research from 2025 shows the direction of causality: emotional loyalty predicts future behavior, not the other way around. A customer who buys out of habit may leave to a competitor at the first convenient opportunity. A customer emotionally attached to a brand will stay even after a product release fails. Therefore, in brand tracking, it is more important to ask not 'would you buy again,' but 'would you be upset if the brand disappeared.'

Can brand equity be negative

Yes, and this is not a hypothetical situation from a textbook, but a real operational risk. Negative brand equity occurs when associations with the brand begin to actively repel customers rather than attract them — that is, the very fact of brand recognition starts working against sales.

The speed at which this happens has sharply increased in recent years due to social networks. In May of 2025 year, the Monochrome brand fell into a crisis after a single post: the post triggered massive negative sentiment on social networks, with overwhelming criticism and indignation. No costly evaluation method can reflect such a decline, because the money invested in the brand yesterday is physically the same, but perception has already changed.

A slower, but no less illustrative example is Tesla, whose brand value according to Interbrand dropped by 36% in a single cycle against the backdrop of reputational issues related to the founder's public actions, not product quality. This is an important observation: brand equity can collapse without a single claim against the product itself — solely due to associations.

Brand equity and brand value — why these are different things

Here, confusion even appears among seasoned marketers. Brand equity is a set of intangible assets in the consumer's mind: awareness, associations, perceived quality, loyalty. Brand value is the translation of these assets into a specific monetary amount on a particular date, usually for a balance, deal, or tax dispute.

The difference is practical: brand equity works to build business — it determines whether people will buy from you again, whether friends will recommend you, and whether they will forgive a mistake. Brand valuation works to sell business — it is needed by investors, company buyers, and courts during intellectual property division. It is possible to have strong brand equity and yet receive a modest monetary assessment if the category is small and royalty rates in it are low. And vice versa — formally high valuation will not save a brand if it lacks an emotional connection with the audience.

Theoretical basis: Aaker, Keller models, and valuation standards

Genre classic — David Aaker's (1991) model, which breaks down brand equity into five components: awareness, loyalty, perceived quality, brand associations, and other proprietary assets — patents, distribution channels, trademarks. Kevin Keller later developed the idea through the customer-based brand equity (CBBE) model, emphasizing that the entire value of the brand lives in the consumer's mind and is built from the bottom up — from recognition to resonance.

There is an international standard ISO 10668 (2010) for translating this theory into financial figures, as well as three competing commercial methodologies — Interbrand, Brand Finance, and Kantar BrandZ. They weigh the components differently, so the evaluation of the same brand by different agencies can vary by orders of magnitude. This is not a sign of dishonesty — rather, financial valuation and consumer perception serve different purposes, and mixing them in one report is a methodological error that novice marketers regularly commit.