Sparkline Brand
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lycancapitalBrandintheInfluencerEra
ExecutiveS
ummary
October 2021 Social media is democratizingconsumer
influence,empoweringordinaryindividuals
to shape brand perception. We identify brands with strong positioning using social
Kai Wu mediadiscourseandnetworkstructure.We
find strong brands have outperformed the
Founder & Chief Investment Officer stockm
arket.W e alsoe xplore the trends ofs ustainable andM illennialb rands.
[email protected]
However,not allcustomers
are createdequal.
Inthe
creator
DemocratizingInfluence economy, somewield
undue influence.Influential
bloggers,
MadMen’sDemise YouTube stars, Instagram influencers, and popularpodcast
hosts can reach audiences of millions. Moreover, they are
“Change isn eitherg ood norb ad.I ts implyi s.” often perceived as more authentic, credible, and relatable
📺 DonD raper thant heb rands themselves.
The modern history of branding began in the early 1900s Inthesocialmedia
age,brand
perception arises emergently
with the riseof
massmedia
-- print, radio andtelevision.
The from theconversationsofmillionsofindividualconsumers.
advertising industry rose to prominence withiconic brands Brands can no longer count on their customers sitting at
such as Coca-Cola, Campbell’s Soup, and Quaker Oats. In home staring at the TV absorbing corporate messaging.
particular, the unprecedented reach and creative flexibility Instead, they must proactively spark engagement through
ofT Va dvertising helpedt urnb rands into household names. viral marketingo rb y entering thef ray themselves.
Inthepast
fewdecades,
technology has once again ushered Exhibit2
ina
wave of change.The
internet is empoweringconsumers.
#Burn 🔥
Access to the world’s knowledge on sites like Google, Yelp
and Amazon is breaking down informational asymmetries.
Meanwhile, e-commerce isgivingconsumers
amuchlarger
andm ore diverses election ofp roducts.
Yet the most empowering trend is the democratization of
consumer influence. Purchase decisions are based on the
wisdom of the crowd rather than that of Don Draper. The
customer is truly king whenhe
can persuade thousandsof
others by posting his buyinge xperience online.
Exhibit1
Influencers:T hena
ndN
ow
Source:Twitter.
Whilebrand
perception is nolonger
tightly controlled by the
suits onMadisonAve,brands
are not powerless. Savvyfirms
have merely shifted their resources to digital, social, and
influencer marketing.Whiletheinternetmay
have killed the
MadM en,t hei ndustrya sa w
hole ist hriving.
Source:AMC,Instagram,Sparkline.
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BrandintheInfluencerEra|Oct2021
CustomerisKing(maker) 👑 BrandPersonality
“Your brand is what other people say about you when
you’ren oti nt her oom.” BrandPersonality
📚 JeffB ezos,A mazonF ounder
Marketers have long recognized that people prefer brands
that reflect their identities. Brands give us the ability to
With the democratization of consumer influence, the image manifest our desired values and personality traits. In fact,
brand managers hope to project is irrelevant. We want to many researchers even believe that brands themselves have
know what actual customers are saying when brands are not personalities.
int her oom.W en eedt ob ei nt her oomw herei th appens.🚪
Firms craft their brand personalities to appeal to their target
The internet is a big place -- where should we focus our customers. A perfect example is Apple’s prolific “Get a Mac”
attention? Below is a rough estimate of the distribution of advertising campaign, in which two actors literally p ortrayed
brand-related chatter across major websites. The bulk takes a Mac and a PC. Apple imbued its Mac with a young, casual,
place on Facebook, Twitter, and Reddit, although this varies and trendy personality, while it presented the PC as stuffy,
widely by product (e.g., Lululemon is much more active on unattractivea ndn erdy.
Instagram,J etBlueo nT witterandK rafto nF acebook).
Exhibit4
Exhibit3 Hello,I’ma M
ac
The( Chat)roomW
hereI tH
appens
Source:G oogle,F acebook,T witter,R eddit,A mazon,S parkline.
Source:A pple,S parkline.
This paper will focus on Twitter for three reasons. First, it is
one of the top three forums for brand-related discussion. The research on brand personality begins with Aaker (1997),
Second, we can enrich our analysis using the social graph of who defines five dimensions of brand personality. These
Twitter. Third, the Twitter API is far less restrictive than that dimensions emerge from factor analysis of a survey in which
ofF acebooka ndI nstagram. participants were asked to rank 40 popular brands on 114
personality traits. Aaker found that the top five principal
While social media do have some well-known biases, these components explained over 90% of the variance in brand
are diminishing with broader internet adoption. Moreover, personality. These components are: sincerity, excitement,
the costs of using digital datasets are far outweighed by the competence,s ophisticationa ndr uggedness.
benefits, especially relative to traditional studies, such as
thoset hatr elyo ns mall-samples urveyso fc olleges tudents.
2
BrandintheInfluencerEra|Oct2021
Exhibit5
Once we have trained the embeddings, we seed five word
Dimensionso fB
randP
ersonality clusters using the keywords from Aaker’s taxonomy. The
visualization below plots words that fall within a specified
distance from each seed group. The five factors form distinct
clusters,i mplyingt heya rei ndeedr easonablyi ndependent.
Exhibit6
BrandE mbeddings
Source:A aker( 1997),S parkline.
Over the past two decades, several other researchers have
found Aaker’s taxonomy to be quite stable both across time
andp roductc ategories( e.g.,t oothpastes,s oups,T Vs).
BrandEmbeddings
In Measuring Culture (Aug 2021), we laid out a methodology Source:T witter,S parkline.A so f1 0/15/2021.
for creating “company culture profiles.” We used Glassdoor The next exhibit zooms in on some top phrases. We find
reviews to assign firms scores on each of seven dimensions many intuitive but non-obvious word combinations, such as
ofc ompanyc ulture( e.g.,i nnovation,i ntegrity,t eamwork). “not all heroes wear capes” for sincerity and “made in the
USA” for ruggedness. The embeddings s eem to accurately
We can repurpose this method to build “brand personality capturet hee ssenceo fb randp ersonality.
profiles.” We only need to make two modifications. First, we
measure the dimensions of brand personality rather than Exhibit7
company culture. Second, we train our model on Twitter BrandP ersonalityK
eywords
insteado fG lassdoor.
Following the procedure laid out in our last paper, we start
by training word embeddings. Word embeddings encode
words in a dense matrix, where the distance between pairs
of words corresponds to their similarity. For example, the
words “customer” and “client” have similar meanings and
thusa ren eareacho theri ne mbeddings pace.
Social media text presents a couple of unique challenges.
First, since its vernacular can vary widely by topic, we train
our model only on brand-related chatter to help reduce this
noise. Second, since social media slang rapidly changes, we
retrain our models on rolling two-year periods and include
combinations of words (n-grams) to capture emerging
idioms, such as “weekend warrior,” “side hustle,” and “boy
shorts.” Source:T witter,S parkline.A so f1 0/15/2021.
3
BrandintheInfluencerEra|Oct2021
Once we are satisfied with our model, we use it to measure FollowerOverlap
the personality of each brand. The next exhibit shows
chatter about Tiffany & Co. While some words are merely “Birdso fa f eatherflockt ogether.”🐦
descriptive (e.g., “necklace”), many others relate to brand
personality. T he prevalence of words like “luxury,” “bling,” While embeddings provide an effective way to measure
“exquisite,” and “timeless” indicate high sophistication. In brand personality, the social graph of Twitter enables a very
addition, phrases such as “true love” and “excited” suggest different approach. This technique leverages the homophily
secondaryt raitso fs inceritya nde xcitement. principle, which is the tendency for individuals to associate
with similar others. We can learn a lot about a person by the
Exhibit8
companys hek eeps.
Tiffany& C o
More precisely, we can compute the similarity of any two
accounts based on the overlap of their followers. For
example, there is high overlap between the followers of the
World Wildlife Fund and Patagonia. This is because people
who care about the environment are likely to follow both
WWF and Patagonia. In contrast, there is less overlap
betweent hef ollowerso fW WFa ndE xxonMobil.
Exhibit1
0
FollowerO verlap
Source:T witter,S parkline.A so f1 0/15/2021.
The radar chart below compares Tiffany & Co to a few other
brands. First Republic Bank is seen as competent, Christian
Minglea ss incere,a ndW D-40a sr ugged.
Exhibit9
BrandP ersonality
Source:T witter,S parkline.A so f1 0/15/2021.
In order to use this technique, we first need to define
representative accounts for each of the brand personality
dimensions. This is similar to our use of embedding seed
words. We implement a modified version of the method
from Culotta and Cutler (2016), which mines Twitter lists to
find accounts associated with a given topic. For each
dimension, this produces 30 to 80 seed accounts owned by
celebrities, media outlets, influencers, agencies, non-profits,
andb rands.
Source:T witter,S parkline.A so f1 0/15/2021.
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BrandintheInfluencerEra|Oct2021
Exhibit1
1 provides some reassurance that we are accurately extracting
SeedA
ccounts brand personality. However, since both approaches have
their own strengths, we combine them to create an even
morer obustb randp ersonalityc omposite.
ExploringB
randPersonality
We can now begin our exploration of brand personality. We
will restrict our universe to consumer brands that are or
have been owned by publicly-traded companies. This will
allow us to conduct backtests of the stock market
performanceo fb rand-relatedf actors.
We will start by surveying a few major consumer product
categories. We find that some industries tend to emphasize
certain personality traits. Apparel brands tend to exude
sophistication, consumer finance firms project an image of
competence,a ndr estaurantse mphasizes incerity.
Source:T witter,S parkline.A so f1 0/15/2021.
Exhibit1
3
ProductC ategoryA
verages
These seed accounts embody each of the five dimensions.
Sincerity is represented by the American heartland (e.g.,
country music and farming). Competence is symbolized by
scientific and academic expertise. Ruggedness is reflected
byt heg reato utdoors.
Next, we compute follower overlap between seed accounts
and brands. For example, we first compute the overlap of
@YETICoolers with each of the ruggedness seed accounts.
We take the average to arrive at a composite ruggedness
score.W et henr epeatf ortheo therf ourd imensions.
Exhibit1
2
FollowerO verlapE
xample
Source:T witter,S parkline.A so f1 0/15/2021.
However, as with human personality, individual variation
dominates group averages. The next exhibit shows brands
that score highly on each of the five dimensions. There is a
wide range of product categories represented. Sincerity is
manifested in restaurants, cereals and even motorcycles.
Excitementc anb ef oundi nc ars,c amerasa ndw ebsites.
Source:T witter,S parkline.A so f1 0/15/2021.
This gives us a five-dimensional brand personality profile for
every brand in our universe. The results are similar (but not
identical) to those produced by the brand embeddings. This
5
BrandintheInfluencerEra|Oct2021
Exhibit1
TopB
4
randP ersonalities
BrandPositioning
BrandMapping
“The way a company brands itself is everything. It will
ultimatelyd ecidew hetherab usinesss urvives.”
🚀 R ichardB ranson,V irginG roupF ounder
Brand mapping is a popular tool in the marketing industry.
The idea is to map out the competitive landscape to see how
one’s brand is positioned relative to competitors. Brand
maps can be used to identify gaps in the market, potential
strategic partners and crowded segments to avoid. Newer
brands in particular should think twice before positioning
themselvesd irectlya gainstm oree stablishedc ompetitors.
While brand is multidimensional, marketers usually select
just two dimensions for visualization. The brand map below
Source:T witter,S parkline.A so f1 0/15/2021.
rates apparel brands on sophistication and ruggedness. We
Our analysis also reveals that brand personality is malleable. drawc ircles izeb asedo nT witterfollowerc ount.
Instead of using the entire sample, we continually re-train
Exhibit1
6
our model on rolling two-year periods. This allows us to
ApparelB randM
ap
trackt hee volutiono fb rands,s ucha sY ETI.
Exhibit1
5
TheA
scento fY
ETI
Source:T witter,S parkline.A so f1 0/15/2021.
We find a strong inverse relationship between ruggedness
and sophistication. Luxury brands such as Versace and
Source:T witter,S parkline.A so f1 0/15/2021. Jimmy Choo anchor one end of the spectrum and outdoor
brands like Rocky Boots and Mountain Hardwear the other.
YETI sells expensive coolers (some upward of $500). Started Meanwhile, Canada Goose and to some extent Lululemon
by two Texan outdoorsman brothers, YETI has over the years havet riedt oa ppealo nb othd imensions.
established itself as an aspirational brand through clever
marketing (e.g., YouTube testimonials). Its success creating a
high-endr eputations howsi ni tsr isings ophistications core.
6
BrandintheInfluencerEra|Oct2021
In order to visualize all five dimensions of brand personality While having a well-defined brand personality is necessary,
simultaneously, we use a technique called t-SNE to project it is not sufficient. Brands also need to differentiate from
our data onto a two-dimensional plane. Unlike the prior competitors in a crowded field. Business is game theoretic.
exhibit, the axes no longer have any meaning. We care only Strongb randsm ustb eb othw
ell-defineda ndu nique.
aboutw heree achb randl iesi nr elationt oo thers.
In order to identify strong brands, we create metrics for each
Exhibit1
7 of these subcomponents. We identify well-defined brands as
5DB
randM ap those that score highly on one or more of the five brand
personality factors. It is more important that a brand scores
highly on a factor than which factor it scores highly on. We
calculate uniqueness based on a brand’s distance from its
industryc ompetitors.
The next exhibit shows some outstanding brands in eight
important product categories. These brands all have great
recognition and strong positioning, despite r epresenting a
diverser angeo fi ndustriesa ndb randp ersonalities.
Exhibit1
8
StrongB rands( ByI ndustry)
Source:T witter,S parkline.A so f1 0/15/2021.
We color code three clusters. As we saw earlier, apparel
brands use ruggedness and sophistication as brand moats.
We also find a less distinct but still noticeable cluster of
sincere brands. While excitement and competence are not
irrelevant in apparel, they are not salient enough to get their
own clusters. The most differentiated brand in this analysis
is Lululemon, which scores well on all five factors and has
carvedo uti tso wnt erritoryi ntheb randm ap.
Source:T witter,S parkline.A so f1 0/15/2021.
StrongBrands
Finally, let’s test if strong brands have produced superior
As with human personality, there is no one dominant brand stock market performance. In order to run a backtest, we
personality type. Extraverts are not inherently better than need to first map brands to public companies (e.g., Tide,
introverts, nor are rugged brands superior to sophisticated Pampers and Gillette are all owned by P&G). We also need to
ones. The ideal brand depends both on the target customer create rolling point-in-time snapshots of Twitter data. While
andc ompetitivel andscape. this is mostly doable, we cannot recover deleted (or
protected) Tweets, accounts or follows. It is unclear what
Firms imbue their products with a combination of attributes biast hisi ntroduces,b utp leaseb ef orewarned.
tailored to their target customers. The best mix can vary
widely. Harley-Davidson and Peloton have very different Our strong brand factor buys the stocks with the strongest
brand personalities, but both enjoy immense loyalty from brands and shorts those with the weakest. We neutralize
theirrespectivef ans. industry exposure (i.e., zero net exposure to each industry),
toe nsureb randsa rec omparedo nlyt ot heircompetitors.
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BrandintheInfluencerEra|Oct2021
Exhibit1
9 BrandSocialNetworks
StrongB randO utperformance
“Our experience of the world depends on the actual
structure of the networks in which we're residing and on
all the kinds of things that ripple and flow through the
network.”
🎓 NicholasC hristakis,Y aleP rofessor
Social scientists have found that phenomena as diverse as
obesity, smoking, and voting patterns spread through social
networks like viruses. Social ties serve as channels to
propagatet hesep henomena.
Researchers have uncovered similar dynamics in the spread
of shocks through networks of economically-linked firms.
Cohen and Frazzini (2006) show that strong stock returns
tend to predict future outperformance for a focal firm’s
Source: Twitter, S&P, Sparkline. Line shows the performance of the strong customers. Hoberg and Phillips (2014) find a similar effect
brand factor in a universe consisting of U.S. consumer stocks trading on for firms based on text-based industry linkages. Bekkerman
NYSE and Nasdaq. The strategy is industry-neutral (zero net exposure to et al (2021) find the same for stocks based on the textual
each industry). We exclude transaction and financing costs. From 1/1/2010 similarityo ft heirp atentp ortfolios.
to1 0/15/2021.S eei mportantb acktestd isclosureb elow.
The motivating idea behind network momentum strategies
Over the past decade, our strong brand strategy has is that shocks propagate with a lag through a network.
produced consistent outperformance. Strong brands are a Investors able to accurately model the structure of networks
deep moat that affords firms greater pricing power, sales can react more quickly to these shocks, generating excess
volume, and customer loyalty. Furthermore, the r obust returns.
historical performance of the factor implies that the market
does not fully recognize the value of this powerful but
intangiblea sset.
8
BrandintheInfluencerEra|Oct2021
Exhibit2
0
BrandS ocialN etwork
Source:T witter,S parkline.A so f1 0/15/2021.
We can use Twitter to build a “brand social network.” If two advantage of being much more granular than traditional
brands have a lot of common followers, we draw a link GICSi ndustryc lassifications.
between them. In addition, we use the Louvain community
detection algorithm to color code each cluster and set node But our brand social network is not solely composed of
sizep roportionalt on etworkc entrality. isolated product-level cliques. It is not like high school. In
contrast, strong social ties do form across industries. The
Most noticeably, cliques form around brands selling into the next exhibit shows pairs of brands that are linked in the
same product market (e.g., dating apps, luxury bags, socialg raphd espiteo peratingi nd ifferenti ndustries.
casinos, and dollar stores). These cliques make sense
inasmuch as sneakerheads follow many shoe brands and
powder hounds follow multiple ski resorts. While not a
revelationi ni tself,t hesep roduct-levelg roupingsh avet he
9
BrandintheInfluencerEra|Oct2021
Exhibit2
1 Exhibit2
2
FriendsinF arawayP
laces BrandN etworkM
omentum
Source:T witter,S parkline.A so f1 0/15/2021.
Many brand pairs are intuitive complements. Hikers buy Source: Twitter, S&P, Sparkline. Line shows the performance of the brand
network momentum factor in a universe consisting of U.S. consumer stocks
both PowerBars and CamelBaks; homeowners use Terminix trading on NYSE and Nasdaq. The strategy is industry-neutral (zero net
and Scotts lawn care. Other pairs are less obviously related. exposure to each industry). We exclude transaction and financing costs.
New couples buy an engagement ring from Brilliant Earth From1 /1/2011t o1 0/15/2021.S eei mportantb acktestd isclosureb elow.
before moving in together using Apartments.com; fans of
disruptivet echa rel ikelyt of ollowb oth$ TSLAa nd$ COIN. Over the past decade, our brand network momentum
strategy delivered consistently positive returns. Moreover, it
Now that we have built our brand social network, we can had a blowout year in 2020, when the fast-moving Covid
use it to backtest a network momentum strategy. We assign pandemic disrupted both supply chains and f inancial
each brand a score based on the 12-month rolling return of market price discovery. In times of crisis, having a detailed
the brands to which it is connected. When a brand’s friends grapho ft hel inksb etweenf irmsc anb ei nvaluable.
do well, we buy. When they do poorly, we sell. Since
research has shown that stock returns are higher after
industry peers outperform (i.e., industry momentum), we
runo urstrategyi ndustry-neutral.
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BrandintheInfluencerEra|Oct2021
However, rather than measure the five facets of brand
TheFutureofBranding personality, we focus instead on two facets of sustainability:
SustainableB
rands environmentalisma nde quality.
“If people believe they share values with a company, The exhibit below shows the seed accounts and keywords
theyw ills tayl oyalt ot heb rand.” we will use to find sustainable brands. In addition to the
☕H owardS chultz,F ormerStarbucksC EO World Wildlife Fund from earlier, our methodology identifies
several other seed accounts, many of which are non-profits.
One of the hottest current marketing trends is sustainable Thek eywordsa rea lsoq uitei ntuitive( e.g.,♻️ ).
branding. Surveys indicate that rising generations are more Exhibit2
4
likely to buy from brands that reflect their values, and firms SustainableA ccountsa
ndK
eywords
arer ushingt oc apitalizeo nt hisg rowingd emand.
Exhibit2
3
SustainableB randD
emand
Source:T witter,S parkline.A so f1 0/15/2021.
Source:5 WPR,S parkline.
Next, we compute the similarity of each brand to these seed
accounts and keywords. Below are some of the top brands
In turn, investors want to know which brands are perceived thate mergef romt hisa nalysis.
by consumers as sustainable. Unfortunately, the scourge of Exhibit2
5
corporate greenwashing has muddied the waters. Almost SustainableB rands
every large company now runs ads highlighting diversity
and inclusion, even those with racist or sexist leaders.
Meanwhile, an endless parade of consumer products are
labeled sustainable, even those manufactured with toxic
chemicals,f ibersa ndo therpollutantsb ye xploitedw orkers.
Thus, more than ever we need to look beyond corporate
propaganda. Fortunately, social media can be used to
directly measure the perceptions of actual consumers. While
consumers are of course susceptible to manipulation, we
would hope the public is savvy enough to filter out at least
someo ft hisd eception.
We identify sustainable brands using the same techniques Source:T witter,S parkline.A so f1 0/15/2021.
as earlier (i.e., brand embeddings and follower overlap).
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BrandintheInfluencerEra|Oct2021
Our eco-friendly brands make plant-based meat, electric On the other hand, brands able to win over Millennial (and
vehicle chargers, sustainable flooring, and lab-grown Gen Z) buyers are likely to experience happy tailwinds as
diamonds. Our equality-focused brands own properties in their relative incomes continue to rise. Investors should look
progressive media, mental health, online education, and intoh owt og ete xposuret ot hisg enerationalt orch-passing.
female-ledd ating.
In order to d o this, we need to determine the exposure of
While we believe our approach identifies many interesting each brand to each demographic cohort. While most Twitter
sustainable brands, the correlation with popular ESG scores users do not explicitly provide their age, extensive research
is not very high. This may be because we focus solely on (1, 2, 3, 4) has shown that this and many other demographic
consumer perception, while ESG scores address a plethora attributes can be estimated with frightening accuracy from
of other stakeholders (e.g., labor, investors). It may also onlineb ehavior(e.g.,l ikes,f ollows,p osts).😱
reflect the broadly unsettled nature of ESG ratings, which
canv aryw idelye vena mongste stablishedv endors. The techniques used by social media and digital advertising
firms to predict user behavior are extremely sophisticated.
MillennialBrands Since our ambition is more modest, we train a simple (and
anonymized) model to estimate users’ generational cohort
“My biggest fear for this company, of which I have very based only on who they choose to follow. Below are the
few,i st hatw
el oset hec onnectionw ithm illennials.” accountsm ostr evealingo ft heirfollowers’v intage.
🍦 P aulP olman,F ormerUnileverC EO
Exhibit2
7
While sustainable branding is an important marketing trend, TellM
eY
ourA geW
ithoutT
ellingM
eY
ourA
ge
it is being driven by an even bigger demographic trend -- the
rise of the Millennial consumer. Millennial spending power
recently surpassed that of Boomers, and this gap will only
growo vertime.L ett her eigno ft heM illennialb egin!
Exhibit2
6
Comingo fA
ge
Source:T witter,S parkline.A so f1 0/15/2021.
Gen Z users are more likely to follow Dream (a Minecraft
Twitch/YouTube streamer), Millennials tend to like Becky G
(a 24-year-old singer), and Boomers still watch Ben Affleck (a
49-year-old actor). I guess telling people we like Blink-182 or,
Source:W
orldD ataL ab,F inancialT imes,S parkline. worse,B onJ ovid atesu s!🤷
This demographic inevitability is worrying for established Now that we have a model to identify Millennial accounts,
brands that cater to aging generations. As with any major we can determine which brands have the highest share of
market inflection, companies must take great care to avoid Millennial followers. We can do the same for Gen Z and
beingd isruptedb ys hiftingc onsumerpreferences. Boomerbrands.O urr esultsa res hownb elow.
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BrandintheInfluencerEra|Oct2021
Exhibit2
8 them into advocates and apostles. In the words of Seth
GenerationG ap Godin, “People do not buy goods and services. They buy
relations,s toriesa ndm agic.”
In Investing in the Intangible Economy (Oct 2020), we argued
that, like other intangible assets, brand tends to be both
under- and mis-valued due to its intangibility. Our strong
brand backtest supports this view. Companies invest billions
of dollars to build up their brand equity, but this intangible
capitald oesn ota ppearonb alances heets.
The accounting profession’s decision to not capitalize brand
investment is not completely without merit. Efforts to build
brand equity can produce a very wide range of potential
outcomes. Marketing campaigns can go viral, flop or even
backfire. Since historical outlays on marketing have only a
weak link to brand equity, investors need to focus instead on
Source:T witter,S parkline.A so f1 0/15/2021. measuringt hea ctualv alueo ft heb rand.
The generational divide is clearly visible. Boomers are most Fortunately, in the influencer era, the nexus of consumer
comfortable with the real world, being loyal consumers of power has migrated online. It has moved to the very domain
boats, tools, appliances and ETFs (📈 ). On the other hand, that is the most fertile ground for NLP and other modern
Gen Z are true digital natives, embracing virtual products data analysis techniques. With the exponential growth in
likeR oblox,S onya ndN etflix. user-generated data, investors are better positioned than
ever to quantify this important intangible asset. Let’s get to
Fashion trends can be fickle, so we are not recommending work!
investors rush out to buy the hottest Gen Z and Millennial
brands. Case in point is the 100-year-old Champion brand,
which is seeing a surprising resurgence in popularity among
young consumers after being left for dead. It is especially
hardt op icki ndividualw innersi nf ashion.
On the other hand, the broader underlying themes driving
the popularity of these Millennial and Gen Z brands are likely
to persist. Younger people do tend to have a greater focus on
health and wellness, convenience and digital experience.
These are less likely to be fads than secular trends. Investors
may do well to consider a diversified portfolio of brands with
exposuret ot heseb igt rends.
Conclusion
“Products are made in the factory, but brands are
createdi nt hem
ind.”
📋 WalterLandor
Branding can be a powerful intangible asset. Strong brands
evoke powerful positive emotions in customers, turning
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BrandintheInfluencerEra|Oct2021
BacktestD
isclosure
The performance shown reflects the simulated model performance
an investor may have obtained had it invested in the manner
shown but does not represent performance that any investor
KaiWu actually attained. This performance is not representative of any
Founder&
C
IO,SparklineC
apitalL
P actual investment strategy or product and is provided solely for
informationalp urposes.
Kai Wu is the founder and Chief Investment Officer of Hypothetical performance has many significant limitations and
Sparkline Capital, an investment management firm applying may not reflect the impact of material economic and market
state-of-the-art machine learning and computing to uncover factors if funds were actually managed in the manner shown.
alphai nl arge,u nstructuredd atas ets. Actual performance may differ substantially from simulated model
performance. Simulated performance may be prepared with the
Prior to Sparkline, Kai co-founded and co-managed benefit of hindsight and changes in methodology may have a
Kaleidoscope Capital, a quantitative hedge fund in Boston. materiali mpacto nt hes imulatedr eturnspresented.
With one other partner, he grew Kaleidoscope to $350
million in assets from institutional investors. Kai jointly The simulated model performance is adjusted to reflect the
managed all aspects of the company, including technology, reinvestment of dividends and other income. Simulations that
investments, operations, trading, investor relations, and include estimated transaction costs assume the payment of the
recruiting. historical bid-ask spread and $0.01 in commissions. Simulated fees,
expenses,a ndt ransactionc ostsd on otr epresenta ctualc ostsp aid.
Previously, Kai worked at GMO, where he was a member of Index returns are shown for informational purposes only and/or as
Jeremy Grantham’s $40 billion asset allocation team. He a basis of comparison. Indexes are unmanaged and do not reflect
also worked closely with the firm's equity and macro management or trading fees. One cannot invest directly in an
investment teams in Boston, San Francisco, London, and index. The S&P 500 is a popular gauge of large-cap U.S. equities
Sydney. that includes 500 l eading companies. The Russell 1000 Index
consists of the approximately top 1000 U.S. stocks by market cap.
Kai graduated from Harvard College Magna Cum Laude and The Russell 1000 Value (Growth) Index includes those Russell 1000
PhiB etaK appa. companies with lower (higher) price-to-book ratios and expected
andh istoricalg rowthrates.
No representation or warranty is made as to the reasonableness of
Disclaimer the methodology used or that all methodologies used in achieving
This paper is solely for informational purposes and is not an offer the returns have been stated or fully considered. There can be no
or solicitation for the purchase or sale of any security, nor is it to be assurance that such hypothetical performance is achievable in the
construed as legal or tax advice. References to securities and future.Pastp erformancei sn og uaranteeo ff uturer esults.
strategies are for illustrative purposes only and do not constitute
buy or sell recommendations. The information in this report should
notb eu seda stheb asisf ora nyi nvestmentd ecisions.
We make no representation or warranty as to the accuracy or
completeness of the information contained in this report, including
third-party data sources. This paper may contain forward-looking
statements or projections based on our current beliefs and
information believed to be reasonable at the time. However, such
statements necessarily involve risk and uncertainty and should not
be used as the basis for investment decisions. The views expressed
area soft hep ublicationd atea nds ubjectt oc hangea ta nyt ime.
14
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