earnEd

brAnd2016

Earned Brand 2016 MethodologyA Global Study

In field April 7 – April 25, 2016

13 countries

Online survey conducted in Australia, Brazil, Canada, China, France, Germany, India, Japan, Mexico, The Netherlands, Singapore, U.K., and U.S.

13,000 respondents

1,000 per country, nationally representative of age, gender, and region based on most recent country census data.

Social listening

In U.S., U.K., Germany, India, and China, we listened to consumer conversations on social media to assess the impact of 15 recent cause-related brand campaigns or actions. The analysis focused on the impact these campaigns had on consumers’ relationships with the brands, as well as their personal opinions and behaviors connected to the cause.

The Earned Brand has a world view, a belief system, a purpose, and a reason for being that define not just how it communicates, but how it behaves in all contexts.

The pace of change in marketing and the marketplace continues to accelerate. Unicorn companies are challenging long-established brands, and categories are being re-imagined. Upstarts question the safety of ingredients, the integrity of the supply chain, and the sanctity of long-held business models. Consumers have new expectations of brands, with 62 percent saying they refuse to buy a brand if it fails to meet its obligations to society.

In this context, the 2016 Edelman Earned Brand study identifies and quantifies a new territory for marketers that can augment the classic purchase funnel—where committed consumers themselves will drive new and repeat sales as they advocate for and defend a brand against these kinds of disruptions.

We asked 13,000 consumers in 13 countries about their relationship with their favorite brand (one they already buy) in one of 18 categories—from food to financial services—and created the first-ever measure of the strength of the consumer-brand relationship. The newly codified Edelman Brand Relationship Index reveals that the average global relationship strength, by our measure, is 38 out of a possible 100 points. This suggests a tremendous, yet-unexplored opportunity for brands to strengthen their ties with consumers.

Interestingly, the index score is similar across all surveyed markets (four in Europe, four in North and South America, and five in Asia, with highest scores in China at 53 and India at 52), all categories (OTC

medicines lowest at 33, cars highest at 43), and all generations (Matures the lowest at 28, Millennials highest at 44), and gender (Males at 40, higher than females at 36).

Beyond “Involved”The index confirms that, on average, consumers have reached what we call the “Involved” stage, but these buyers indicate they are willing to go much further than simply purchase devotion. In fact, they signaled a desire for a deeper connection – relationship stages we quantify and define as “Invested” in or “Committed” to their favorite brand.

Our study shows that a clear majority of consumers who reach these stages will buy first, stay loyal to, advocate for, and defend their favorite brand. These stronger relationships bring much-desired benefits: 77 percent will adopt innovation more quickly; 79 percent will pay a premium price; 82 percent will recommend the brand through liking and sharing; and, 80 percent will defend it against critics. In short, “Committed” consumers will work for you.

The good news is that some consumers have reached the “Committed” stage in all 18 categories we tested, including low-involvement businesses like utilities. On average, 12 percent of consumer-brand relationships fall into the “Committed” stage. How do we create more of these “Committed” consumers?

Towards commitmentThe data shows that the mix of paid, peer, and owned media must be reconsidered at every relationship stage.

How brands can disrupt

62% will not buy if a brand fails to meet its obligations to

consumers, the community, and society at large

A consumer relationship powered by “we” opens up a new world of buying and

advocacy for a brand

not brand loyalists count in the final tally of marketing success. Our study is designed to take a sidelong view of the new realities shaping the consumer-brand relationship, with the goal of helping marketers, who have long studied this connection, to better prepare for disruption—and be disruptors themselves.

We’ve learned that when a consumer moves from a relationship rooted in “me” to one powered by “we,” a new world of buying and advocacy opens up for a brand. Instead of worrying about potential disruption, brands can be creative societal disruptors—because their consumers will be right there by their side as committed partners in a better life.

At the early stages “Indifferent” and “Interested,” consumers need paid strategies to spark awareness and consideration, but at the “Involved” stage, we begin to see a significant shift in their usage of media: peer and owned now are as important to the consumer as paid. Consumers who are in the “Invested” and “Committed” phases consistently engage peer and owned media over paid. In fact, the data shows that the 8-point advantage paid has over peer and owned in the earliest relationship stage shifts to an advantage for peer (+ 7 points) and owned (+ 8 points) over paid in the “Committed” stage. “Committed” relationships require greater brand interactivity, and committed consumers thirst for that interactivity. Second, the study shows that brands can most easily address consumer expectation and desire through purpose, storytelling, and listening. The Earned Brand behaviors that scored lowest are “acts with purpose” (33), “tells a memorable story” (34), and “listens openly/responds selectively” (35). These brand behaviors have the greatest potential to unlock a more committed consumer relationship through strategies that entail collaboration, participation, shared values, and shared actions—the difference between presenting consumers with a campaign and empowering them to join a movement. The consumer now wants the brand to act, and to be a meaningful presence in his or her life and in the world.

Although the respondents of our study might be termed “brand loyalists” (they were asked to volunteer their favorite brands), it isn’t our intention to wade into the debate, fueled by Professor Bryon Sharp, over whether or

Richard EdelmanPresident & CEO

Edelman

Respondents selected their favorite brand in a category – one they already buy.

They evaluated seven dimensions of their relationship with the brand by selecting one of five statements that best describes the relationship.

The Edelman Brand Relationship Index score is an average of seven dimensions of a consumer-brand relationship.

Embodies a unique character

Makes its mark

Tells a memorable story

Listens openly, responds selectively

Inspires sharing and invites partnership

Builds trust at every touchpoint

Acts with purpose

Building the Edelman Brand Relationship Index

18 BRAND CATEGORIES 7

DIMENSIONS OF THE CONSUMER-BRAND RELATIONSHIP

38of possible 100

current strength of the consumer-brand

relationship

DIMENSIONS OF THE CONSUMER-BRAND RELATIONSHIP

32 5333

32

30

3440

32

39

3943 52

USA

Mexico

Brazil

France

UK Netherlands

Germany

China

Japan

Singapore

India

Canada

32Australia

BY DEMOGRAPHICS

BY CATEGORIES

36

Home Energy

Manage-ment

32

Boomers (51-70)

35

Household Products

39

Generation X (37-50)

34

Prescrip-tion

Medicines, Utilities

44

Millennials (22-36)

33

OTC Medicines

38

Generation Z (18-21)

Beer, Wine and

Spirits

37

Matures (70+)

28

Mobile Carriers,

Credit Cards

38 41

Luxury Goods

Fashion

42

Retailers, Financial Services

40

Female

36

39

Travel, Personal

Care, Grocery, Food &

Beverage

40

Male

Auto-mobile, Social Media

43

2016 EDELMAN BRAND RELATIONSHIP INDEX BY COUNTRY

Points of purchase

The 5 brand relationship stages

One way to think about the five relationship categories we have established is to compare them to shopping behaviors. At the Indifferent level, shoppers buy without much thought. At Interested, they might choose a brand over competitors based on their recall of a review or a logo. By Involved, consumers actively scan the shelf for the brand. But the real commitment comes in the last two stages, where the consumer mindset moves from ‘me’ to ‘we.’ At Invested, the consumer believes the brand shares his or

her values, and might try to convince another shopper not to buy a competitor. Finally, at the top of the scale, the relationship truly becomes about shared benefit—the consumer will take action with and for the brand. Even in seemingly low-involvement categories like utilities, brands have achieved commitment with some consumers. It’s also important to note that in each category, consumers reported relationships in each of the five stages.

Interested7-26

Indifferent0-6

Involved27-43

Invested44-69

Committed70-100

38

Interested

I know a little about you, beyond

your product. I am making an

educated choice.

Invested

We share common values and see the world in a similar

way.

Involved

Given a choice, I would pick your

brand. I appreciate what you stand

for.

Committed

We do things together and for each other. We

share a past and a future.

Indifferent

I may buy your product, but I don’t

really put much thought into it.

GLOBAL EDELMAN BRAND RELATIONSHIP INDEX

STRENGTH OF RELATIONSHIP WITH THE FAVORITE BRAND CONSUMERS BUY IN A CATEGORY

coMmitmenT IS withIn

ReAch

Some consumers are already in Committed relationships with their favorite brands in all categories

PERCENT OF RELATIONSHIPS IN EACH CATEGORY THAT ARE IN THE COMMITTED STAGE

18%

Socialmedia

14%

Automobile

13%

Fashion

12%

Luxurygoods

12%

Beer, wine& spirits

12%

Retailers

12%

Food &beverage

12%

Travel

12%

Personalcare

14%

Mobilecarriers

10%

Homeenergy mgt.

10%

Householdproducts

10%

Prescriptionmeds

11%

Utilities

8%

OTCMeds

14%

Financialservices

A new way to build brand equityStrong relationships drive and protect the bottom line

The untapped opportunity

As the consumer-brand relationship strengthens, so do the actions consumers will take on behalf of the brand. Once they are in the Invested and Committed stages of the relationship, a clear majority will reliably buy, stay loyal, advocate for and defend the brand. Committed consumers are far more likely to pay a premium, buy the brand exclusively, stick with the brand even when

faced with disruptive competitors, recommend the brand, and stand up for it against critics—behaviors with direct impact on a brand’s revenue, cost per acquisition, loyalty, and retention rates. These behaviors bring tangible, powerful benefits that simply don’t exist at a substantial level without a committed relationship.

A clear majority ofcommitted buyers will

buy first, stay loyal,advocate for

and defend your brand

InterestedIndifferent Involved Invested Committed

RELATIONSHIP STRENGTH

% OF BUYERS WHO WILL BUY FIRST, STAY LOYAL, ADVOCATE FOR AND DEFEND

20

0

40

60

80

Stay Loyal“I will stick with

this brand even if a competitor is more

innovative.”

Advocate“I advocate for this

brand even when I am not directly asked for

advice.”

Defend“I defend this brand if I ever hear someone

criticize it.”

Buy First“I am one of the first

to try the brand’s new products.”

You can’t buy commitmentConsumers change media usage as the relationship deepens

“I rely on my peers to reassure me. Because their

experience is my evidence.”

Earned Brand 2015

To help brands understand where consumers interact with them at each relationship stage, we explored their engagement with their favorite brands across paid, peer, and owned media. As expected, early in the relationship, consumers engage the most with paid media as it works to get their attention. At the Interested stage, consumers use all three media at relatively the same level.

What is striking is the change in engagement across the three channels when the relationship moves from Involved to Committed. While paid media engagement jumps 8 points, that pales in comparison to the 18-point jump in peer media, and the 21-point jump in owned media engagement. At the Invested and Committed stages, which prove most beneficial to brands in today’s volatile world, consumers turn to media and owned media more than paid. Marketers who tailor their media mix across each stage can expect to reach more of the consumers they desire to engage.

86% rely on

peer sources for learning

about brands

Paid Media

Peer Media

Owned Media

From Involved to Committed stages, consumers’ use of earned and owned media grows twice as fast as use of paid

Involved Invested Committed

PERCENT WHO HAVE USED EACH TYPE OF MEDIA TO ENGAGE WITH THEIR FAVORITE BRAND IN THE LAST 90 DAYS

57 63 65

54 66 72

52 64 73

Embodies unique character

Makes its mark

Listens openly, responds

selectively

Invites sharing,inspires

partnership

Builds trust at every touchpoint

Acts with purpose

Tells a memorable

story

44

38

34

3539

42

33

38

Best bets for a brand

When we look at the seven relationship dimensions that determine the global Edelman Brand Relationship Index score, it’s clear where brands are falling short. While marketers get credit for creating brands that are trusted and unique, we fare more poorly in acting with purpose, storytelling, and listening. What marketers can take away from the drivers that have the most impact on those scores is that we simply need to be more interesting. Be a

force for good in the world. Share content and tell stories that grab the attention. Collaborate more and worry less about control of the brand. Coupled with a shift in the media mix to reach more consumers at each relationship stage, it’s clear that we need to deliver on our consumers’ expectations on social media — we have the mandate and the freedom to be a bit cheekier, certainly more fun, and absolutely a more inspiring daily presence in their lives.

Brands falling short on purpose and engagement

2016 EDELMAN BRAND RELATIONSHIP INDEX, AND THE AVERAGE STRENGTH OF EACH DIMENSION OF THE BRAND RELATIONSHIP

Brand attributes that strengthen the relationship through purpose, listening and storytelling

Be interesting

Be reliable Be aspirational

Be authentic

Stay engaged

Be personal

Collaborate

Spotlight your leaders

Make a difference

Earning their commitment

The deep, shared connection between brandsand consumers at the most committed stagesof the relationship brings about a virtuous circle in which brands are acting and consumers are engaged—but also the reverse. When the relationship is committed, consumers also take action on a brand’s behalf, and expect the brand to engage as well. Earned Brands understand

the power and potential of this relationship, and listen, engage and respond to consumers, but also inspire them to be advocates on their own. When brands are hitting hard on all these drivers and acting like Earned Brands, they can benefit from more consumer behaviors that stem from their desire to be a partner in the brand’s success.

The 4 consumer behaviors that increase the most from Involved to Committed

+48 I participate in creating the brand’s content

+38 I like/rate what the brand is saying on social media

+35 I am happy to share personal data with this brand

+35 I am one of the first to try the new products/services of this brand when they come out

DIFFERENCE BETWEEN THE PERCENT OF INVOLVED CONSUMERS WHO WILL TAKE AN ACTION AND THE PERCENT OF COMMITTED CONSUMERS WHO WILL TAKE THE SAME ACTION

Involved Invested Committed

KEY TAKEAWAYS

You must reconsider your brand’s marketing

mix at each stage of the relationship to reflect

your consumers’ desire for engagement.

Consumers will give your brand the license to

disrupt if they are in it with you.

As you pursue a broader consumer base, engage

committed consumers who will defend your brand, drive sales and advocate for you.

Earned Brand 2016 research was conducted by Edelman Intelligence, the global integrated research, analytics, and measurement consultancy.

Design by FLOK, Berlin

© 2016 Daniel J. Edelman Holdings, Inc. All rights reserved.

the

earnedbrand

The Earned Brand’s story is not simply told, it is demonstrated and experienced; and, to do that,

brands can’t operate with a style guide alone.

The Earned Brand has a world view and a belief system, a purpose and a reason for being—one that defines not just the communications, but how the brand behaves

online, offline, and in all contexts.

An expressed set of values informs which products are made, which language is used, how customers are treated, and ultimately the legacy the brand

leaves in the communities it serves.

Edelman is a leading global communications marketing

firm that partners with many of the world’s largest and emerging

businesses and organizations, helping them evolve, promote and protect

their brands and reputations.

Edelman.com#EarnedBrand