“Branding costs money and can’t be measured”
Whenever the conversation turns to investing in the brand, two concerns come up almost every time.
The first concern: branding costs money and its results can’t be measured. The second is more practical: whichever month you spend on the brand, that month’s profit and loss report gets worse, while the effect, if there is one, only shows up several months later.
Both have some truth to them. Behind them, however, there are usually two misunderstandings: one word, “branding”, conflates three very different things, and brand investment is being judged by the wrong yardstick. This article works through each misunderstanding.
Part 1: “Branding” is three different things
When a business says it is “investing in branding”, it may be talking about any one of three layers:
| Layer | What it is | Cost type | Measured by | Time to effect |
|---|---|---|---|---|
| Strategy | Deciding who the brand is, what it says, who it speaks to, where it wins | Lump sum, done once, revisited when the market changes | Whether it exists, and whether the whole team uses the same one | As soon as the team starts using it |
| Identity | Logo, packaging, imagery, presentation guidelines | Lump sum, refreshed every few years | Whether it is consistent across every touchpoint | Gradually, alongside communication |
| Brand-building communication | Content, KOCs (key opinion consumers), awareness advertising, partnerships | Regular monthly spend | The leading indicators in Part 2 | Several months or more |
We call these the three layers of branding. Separating them makes it clear that the “can’t be measured” worry does not apply equally to all three.
- For the strategy layer, the worry is mostly wrong. Strategy is a decision, not a campaign. Its measure is very concrete: are the content team, the people running ads and the KOCs all working from the same set of written-down decisions?
- For the communication layer, the worry is partly right. It can’t be measured by this week’s ROAS. But it can be measured with other indicators, on a different rhythm, as Part 2 shows.
Order matters
The right order is strategy, then identity, then communication.
Doing identity without a strategy means the designer has to guess who the brand is. Running communication without a strategy means content writers and KOCs have to guess what to say. The article on affiliates producing many videos but few orders shows what that looks like in practice. Whatever was guessed wrong has to be redone, which means paying twice.
The strategy layer is a one-off cost, but it determines how effective every recurring cost in the third layer will be.
Part 2: Reporting brand investment when P&L runs monthly
Brand lag
Spend on brand-building communication today, and the effect typically arrives 3-6 months later, or later still. We call this gap brand lag.
Les Binet and Peter Field, in their study The Long and the Short of It for the UK’s Institute of Practitioners in Advertising (IPA), showed that sales activation delivers fast but short-lived results, while brand building delivers slower results that accumulate and last. They once put forward a reference point of roughly 60% of budget for brand building and 40% for activation. In later studies, they themselves emphasized that this is a starting point, not a law: the right split varies by category, brand size and market context.
The practical consequence: judging brand-building spend on the monthly profit and loss report misrepresents an investment that comes with a lag. The month of spending always looks bad, and by the time the returns materialize, no one remembers which spend produced them.
Split two buckets in management reporting
The simplest approach is to split marketing spend into two buckets, each with its own KPIs and review cadence.
| The “sustain revenue” bucket | The “build assets” bucket | |
|---|---|---|
| Includes | Conversion ads, promotions, affiliate commissions paid per order | Strategy, identity, awareness-focused communication |
| Goal | Revenue and profit this month | The brand’s position over the coming months |
| Measured by | GMV, marginal ROAS, contribution margin | The six leading indicators below |
| Review rhythm | Weekly, monthly | Quarterly, with checkpoints set in advance |
The “sustain revenue” bucket stays fully subject to the discipline of the monthly report. The “build assets” bucket is judged on the kind of results it actually produces.
Six leading indicators
| Indicator | What it measures | When you should see movement |
|---|---|---|
| Repeat buyer rate | Whether past buyers were satisfied enough, and remember the name well enough, to buy again | 2-3 months, for repeat-purchase goods |
| Organic traffic share | The share of page visits that come from search, the shop page and recommendations, not from ads | 2-4 months |
| Direct (non-affiliate) sales | Revenue the shop sells on its own, not through affiliates, both in absolute terms and as a share | 3-6 months |
| Branded search volume on marketplaces | How many people have remembered the name and actively search for it | 3-6 months |
| Shop followers | How many people want to keep hearing from the brand. Excludes growth driven by follower-only offers | 1-3 months |
| Cumulative review count | The volume of reviews, meaning proof from earlier buyers, that later buyers will see | Continuously, in line with order volume |
Timeframes are indicative and vary by category and spend level.
Three things to keep in mind when using them:
- Look at the trend, not a single month. An indicator that edges up three months in a row is far more reliable than a one-month spike.
- Record on the same day each month. Some marketplace figures only show the value at the moment you look and keep no history.
- Don’t try to measure “organic revenue”. Many people want to isolate the revenue that did not come from ads. That figure is hard to separate cleanly, because the marketplace may credit ads with orders that would have happened anyway. Organic traffic share and direct (non-affiliate) sales are approximations, but more reliable ones.
Les Binet has also proposed another indicator: share of search, meaning searches for a brand’s name as a share of total searches across the group of brands in the same category. Measuring it on Google search data, he found that it moves in the same direction as market share and often ahead of it. On marketplaces, the tools for measuring this figure are still limited, so treat it as a way of thinking rather than a mandatory metric.
Presenting to leadership: a plan with checkpoints
Brand-building spend is much easier to get approved when it is presented as an investment plan, not as spending with no clear stopping point. Such a plan has four parts:
- Goal: where the brand wants to stand after the investment period. For example, moving from the high-price, weak-brand zone up toward the premium cell.
- Quarterly budget, sitting in the “build assets” bucket.
- Expected leading indicators at the 3-month and 6-month marks.
- Adjustment conditions: if the indicators haven’t moved by the checkpoint, change the approach, or stop.
An example timeline:
| Time | What happens |
|---|---|
| Month 1 | Spend VND 300 million on brand-building communication, assigned to the “build assets” bucket. The month 1 profit and loss report worsens |
| Months 2-3 | Shop followers and branded searches edge up |
| Months 4-6 | Organic traffic share and direct (non-affiliate) sales rise |
| 6-month mark | Compare against the expected indicators; decide whether to continue, adjust or stop |
Illustrative example.
Looking only at month 1, this spend is a loss. Looking at all six months with the right measures, it is an investment that can be evaluated.
This article only covers how to present the spend in internal management reporting. How it is recorded in the accounting books is a matter for the accounting team, under its own rules.
Self-check
- Which layer did the spending you called “branding” last year belong to? Which layer have you never done?
- Does your current monthly report have any line that measures the asset layer, or only GMV and ROAS?
- When you approve spending on the brand, does it come with expected indicators and checkpoints?
Conclusion
Once “branding” is split into three layers, the question “should we invest in the brand?” becomes three much clearer questions: have we decided who we are, is our image consistent, and which yardstick are we using to measure our communication spend?
For more on the first layer, what it contains and what it produces for content, ads and KOCs, see the article on brand strategy for marketplace sellers. This article is part of our series on marketplace growth foundations, which starts with the three-layer map.