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Brand Purpose Advertising

Truthiness in marketing: is the evidence behind brand purpose flawed?

By Richard Shotton, Deputy head of evidence

April 12, 2017 | 6 min read

Stephen Colbert, the American comedian, coined the word ‘truthiness’ to refer to arguments not based on fact but what we want to be true. He famously said:

Stephen Colbert

"It used to be, everyone was entitled to their own opinion, but not their own facts. But that's not the case anymore. Facts matter not at all. Perception is everything. It's certainty. People love the president because he's certain of his choices as a leader, even if the facts that back him up don't seem to exist. It's the fact that he's certain that is very appealing to a certain section of the country. I really feel a dichotomy in the American populace. What is important? What you want to be true, or what is true?..."

It’s not just politics that is plagued by ‘truthiness’; marketing also suffers. Too many people passionately promote stories about what builds brands without troubling themselves as to whether there is any evidence. And there’s no better example than brand purpose. Many planners are so desperate for its ethical angle to be true that they don’t ask whether the evidence is robust.

Is there any evidence for brand purpose?

The statistics that are regularly regurgitated to support brand purpose are those from Jim Stengel’s Grow: that companies with an ideal at their heart see share price growth far in excess of those lacking such values.

Before examining the flaws in this study, let’s review the methodology. Stengel began by selecting the 50 brands with the highest loyalty or bonding scores from Millward Brown's 50,000-strong database. These star performers were termed the Stengel 50. Stengel then searched for a link between the brands. This was found to be a 'Brand Ideal' – a shared intent by everyone in the business to improve people's lives.

Next, he looked at the chosen brands' stock value growth between 2000 and 2011. Since the Stengel 50 had grown by 393% compared with a -7% loss for the S&P 500 benchmark, he declared that ideals were driving stratospheric business success.

It’s an extraordinary claim that something as simple as adopting an ideal can generate such returns. If we’re to have confidence in his findings they need to pass four tests:

1. Is the data accurate?

Unfortunately, Stengel’s study stumbles at this basic level. He picked the best performers in Millward Brown’s 50,000 strong database; that’s the top 0.1% of brands. It’s not surprising that those brands performed well in terms of share price. If they hadn’t performed well in the past they wouldn’t be in Millward Brown’s top 0.1% of brands.

Stengel’s finding, it you restate it at its most basic, is that brands that feature in the top 0.1% of companies have performed well in the stock market. That’s circular logic.

2. Do the tactics predict the future?

To test the predictive ability of Stengel’s theory I examined the share price performance of his companies after the publication of the book, over the five years up to March 2017. It’s only possible to analyse 26 of the companies as the others are either private companies without share prices or small parts of much larger holding companies, where the share price is misleading. For example, for one of the brands in the Stengel 50, Stonyfield Farm, its 2014 revenues were about 2% of Danone’s. Can you claim that Danone’s share price rose because 2% of its holdings have a brand ideal?

Just 9 of Stengel’s 26 stocks beat the S&P 500. To put this into context, imagine you ripped the share page out of the FT and let a blindfolded monkey throw darts at it to pick the stocks. Well, the odds are that the monkey would have a better performing selection of stocks that Stengel’s.

3. Are the brands linked by an ideal?

For the theory to be valid, the brands in question must be linked by an ideal. Unfortunately, even this doesn’t seem to be true.

My suspicions were first raised by the claim that all 50 brands exhibited an ideal. That’s strange, isn’t it? Theories rarely predict events quite so conveniently; reality is messier.

Stengel can claim such widespread uptake of ideals becomes he has stretched the definition to such a degree that it’s meaningless.

Have a look at the definition for three of the brands:

  • Moët & Chandon 'exists to transform occasions into celebrations'.
  • Mercedes-Benz 'exists to epitomise a life of achievement'.
  • BlackBerry 'exists to connect people with one another and the content that is most important in their lives, anytime, anywhere'.

Notice a problem? These ideals are just category descriptors. They could apply to any champagne, luxury brand or handset provider.

4. Do brands with ideals outperform those that don’t?

In order to prove that ideals boost share price it’s necessary to have demonstrated that successful companies have brand ideals more often than unsuccessful ones.

You can’t make sweeping claims about what drives success just by looking at successful brands. Otherwise you might falsely attribute growth to an inconsequential factor that occurs in all companies. Unfortunately, Stengel makes no attempt to determine whether brands outside the top 50 have an absence of ideals.

Think about the other ridiculous claims you could make if you only examined the best performers. If you followed Stengel’s methodology you could also identify that having a vowel in your name was the secret to success.

So has Stengel’s theory passed our tests?

Carl Sagan, the astronomer, said: “Extraordinary claims require extraordinary evidence.” Unfortunately, Stengel doesn’t provide ordinary evidence, let alone the extraordinary kind.

To paraphrase Colbert, we can all have the opinion that brand purpose is a panacea for brands but we shouldn’t claim that it’s a fact.

Richard Shotton is deputy head of evidence at Manning Gottlieb OMD. He tweets @rshotton

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