Member Exclusive   //   July 5, 2023  ■  6 min read

DTC Briefing: What’s driving the renewed interest in measuring brand

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

Many direct-to-consumer startups grew up on growth marketing. But now, they are increasingly looking beyond metrics like CAC and LTV to try and get a better sense of how much they are resonating with customers. 

Indeed, there’s been a renewed interest recently in figuring out ways to measure brand — especially on the venture capital front; Forerunner is one of the most prominent examples thanks to a Brand Power Score tool it released in May. The venture capital firm describes this as a new standard for measuring brand impact, and consists of asking customers how much they agree with statements like “this brand is inspiring” or “this brand is reliable. 

But there are also a few industry-wide factors driving the conversation. For starters, as the macroeconomic climate gets more difficult, some teams are under increased pressure to come up with ways to justify spending money on brand-building activities without a clear ROI. Additionally, a new generation of startups has grown more aware of the limitations of direct response marketing, particularly following Apple’s iOS 14 changes in 2021, and are shifting more focus to quantifying brand. 

“Historically, there has been this dichotomy between are you investing in [direct response] or are you investing in brand?” Eric Osman, founder and CEO of direct-to-consumer stroller company Mockingbird said. Now, he said “those are just getting more blended.”

Coming up with a definition for brand
Measuring brand is a particularly challenging because there’s no one uniform way that DTC startups define the term. And many of the things that make up brand — like how people feel about the service — boil down to intangible sentiments that are hard to quantify or even articulate. 

Osman said that another founder he knows defines brand as “how would someone describe our brand as a person at a party?” Venture capital firm Forerunner writes that “being a remarkable brand is a lot like being a great friend,” and that “the blend of the tangible and intangible is what creates powerful, enduring connections over time.” And Brent Vartan, managing partner at Bullish, describes brand as “a series of promises made and delivered upon” by a company. 

Vartan said that from his perspective he doesn’t think there has been a renewed interest in brand; he still thinks that “far too often, people reduce brand down to the concept of branding.” That is, how a brand’s website, logo and product look. 

Or, when some firms do try to come up with ways that quantify brand, Vartan said that they often survey customers using language that customers don’t typically use. For example, asking people if they find a brand to be “innovative” or “differentiated.” 

Bullish has tried to come up with its own internal way to quantify brand — what it calls the Remarkability Index. Vartan said part of the methodology revolves around asking people how frequently they say, or how much they agree with a particular statement, like “I like the founder.” 

Eurie Kim, managing director at Forerunner Ventures, said that in order to come up with a framework for surveying brand, Forerunner surveyed a few different groups of people. First, the firm surveyed executives at its various portfolio companies, asking them what things come to mind when asked to define “brand.” 

“What came to mind very consistently… was the stuff that we might historically think of his brand, which is, it’s this feeling, it’s a mission, a vision, values,” Kim said. 

Then, Forerunner conducted a survey of the general population, asking thousands of customers who their favorite brands were, and what stood out to them about those particular brands.

“Overwhelmingly, it was about my “my favorite brand is x, and they’re just super reliable. I feel like the experience is really consistent, I understand how the product of service is better and differentiated,” Kim said. 

Forerunner then married these two sets of answers, and came up with what it calls the FRIEND framework, which stands for Feelings, Reliability, Identity, Experience, North Star and Differentiator. After surveying customers on these six different characteristics, Forerunner then uses those answers to come up with a Brand Power Score in total. 

The Brand Power Score is free for both brands inside and outside of Forerunner’s portfolio to use. One of Forerunner’s portfolio companies, The Farmer’s Dog, measured its Brand Power Score both before and after it ran a Super Bowl ad. It was the first time The Farmer’s Dog had done a big, splashy, brand-building campaign. The ad, titled “Forever,” followed a puppy and its owner growing up together. 

“Feelings, and identity, and north star – the things that align with better education in the top of the funnel – those are the scores that went up,” Kim said. 

But a Super Bowl ad is a huge investment that reaches millions of people across the country. The challenge that most startups face is in figuring out how the smaller, everyday investments that overlap with one another are doing at improving brand. 

As Osman sees it, there are four main challenges brands face in trying to measure the impact of brand. The first is coming up for a uniform definition of it within the company. Then, measuring changes in brand over time, attributing those changes to specific activities, and valuing those changes in brand. 

Osman said that it’s the third challenge — attributing changes to specific activities — that he feels like is the biggest thing his company is grappling with right now. 

Hypothetically, if a company like Mockingbird sees an improvement in brand one quarter, the company’s organic marketing team might say that investing more in public relations and community-building programs was what did the trick. Or, the tech team might point to a new website as the driving factor. 

“It’s not because anyone’s like, worried about fighting over credit, the challenge is more, ‘what do we do about it?’” Osman said. 

For founders like Osman, the question of how to define brand and how to measure it is a never-ending consideration — despite the efforts of VCs to come up with a more standard definition of brand.

“As much as we can try to measure these [brand metrics] precisely and consistently, there’s plenty of gut and subjectivity involved here too,” Osman said. But he thinks that so long as his team is thinking more consistently and critically about how to define brand, and experimenting with ways to measure it, “I think it produces really valuable alignment as a team, and helps you prioritize the critical activities in service of strengthening your brand that can otherwise often fall to the bottom of the list.”

Still, the allure to come up with something that’s measurable and repeatable is strong for DTC startups that have grown up on growth marketing.

“The whole point is when you see a positive moment, you want to say, let’s invest even more in the thing that worked last quarter, next quarter,” Osman said. “And that’s where that’s where it gets really challenging to make those prioritization and strategy decisions.”

What I’m reading

  • Running shoe startup On opened a new store in Williamsburg, Brooklyn its fourth in the U.S. 
  • DTC startups like Pair Eyewear, Boxt and Graza are investing more in affiliate marketing
  • Naadam’s Matt Scanlan is officially out as CEO of Something Navy, the clothing brand of influencer Arielle Charnas. 

What we’ve covered 

  • DTC sleepwear startup Lunya has filed for Chapter 11 bankruptcy under the subchapter V provision. The company’s revenue declined to $35 million in 2022, after peaking at just over $50 million in 2020 and 2021.
  • How startups like Chamberlain Coffee and Primal Kitchen are trying to get creative with out-of-home campaigns this summer
  • Aperitif startup Haus has been resurrected by new owners The Naked Market.