In Media Metrics: Hate to Burst Your Bubble, John Gerzema discusses the erosion of the power of branding. In the process he makes an interesting observation: many companies have capitalized their brands, and they carry them on their books at considerable values. If these brands are in fact not worth anything close to the value they’ve been assigned, then there’s another financial crisis on the horizon.

Gerzema is writing from his perspective as “Chief Insights Officer” at Young & Rubicam. As soon as I stop chuckling at this utterly ludicrous title, the observation is that as a member of the industry that has created and perpetuated the myth of brand value, his take is bound to be somewhat biased. This is the industry that has for decades convinced otherwise rational executives to spend stupid amounts of money on an intangible concept while simultaneously convincing them that the result is a capital asset.

Now certainly it can be argued that a brand has some value. Awareness of a product is linked to the selection of a product for purchase, without question. But the brand itself is still intangible. The value of a brand should be measured as the cost of changing it. As an example, let’s say Pepsi decided to rebrand itself as “Foo”. There would be considerable cost and significant time involved in doing this, but it’s possible. With some tired brands (Levis comes to mind), it might even be advisable. This cost of rebranding is the true value of the asset. My bet is that the actual cost is considerably less than the asset value on many balance sheets. In his article, Gerzma asserts that “brands account for 30 percent of the market capitalization of the S&P 500, or almost $4 trillion dollars” (without citation). That’s one heck of a bubble.

In discussing the extent of the bubble, Gerzma writes “Further signs of this worrying disconnect emerged as we examined the extent of the gap between business and consumer perceptions of brand value”. What’s funniest there is the phrase “worrying disconnect”. To me it seems like a “reconnect” between consumers and reality that can only be worrying to big advertising agencies and to CFO’s with overvalued brands.

All that money companies have poured into ineffective marketing efforts — driven by “gut feel”, and marked by a complete inability to measure performance in any truly analytical way — is money thrown away. It’s lost, it’s gone. We have tools that measure the effectiveness of most of these things now in hard numbers, and the brand game is up, it’s done.

Still someone with a “CxO” title at a major agency has a responsibility to evangelize for his industry, be he right or wrong. He applauds the performance of brands who are “innovating beyond advertising”, such as in product development, corporate social responsibility and sustainability”. I hate to break it to him, but in these cases the brand is just an identifier that links a consumer to an enterprise that is doing these real, tangible things such as producing good products in a responsible way. Now there’s an insight!

Gerzma wraps up his weak argument that big agencies somehow still have a purpose with “today, everything is marketing and only creativity matters if a brand is to hold its value in this rapidly transforming and unforgiving marketplace.” This is a complete and utter contradiction of the reality that he has observed but still cannot accept: good products and good service are everything, and marketing is in large part the process of communicating the good things you do through various channels. Worse, some channels cannot be controlled, such as social media.

The days of managing a message through monolithic media are long gone. Now it’s about doing a excellent job and getting people to talk about what your organization does in a genuine way. Social media can be influenced, but ham-handed attempts to “manage” it are almost certainly destined to end badly. If I was involved in a big advertising agency, that’s the bubble I would be most worried about. That and keeping my resume up to date.