The impact of brand health on customer equity

•Customer equity modelled in three industries (dept. store, banking and airline).•Mediating effect of brand health on customer equity measured over 12 years.•Advertising has a direct and indirect impact through brand health on customer equity.•New objective long-term oriented measure of brand health was applied.•Long-term effects of advertising on customer equity and brand health demonstrated.

This paper aims at studying the interactions between brand and customer assets over the long-term. Through the application of a new behavioural measure called the brand health index (BHI) we examine the impact of brand health on customer equity, and its mediating impact on the advertising-customer equity relationship. Three services industries, department stores, airlines, and banking, were studied from 2001 to 2012. The results show that brand health has a positive impact on customer equity, although the magnitude of the BHI impact varies across different industries. Moreover it was demonstrated that brand health mediates the impact of advertising on customer equity.