THE CATEGORY SPILLOVER COEFFICIENT (γ)

Marketing teams LOVE to say:

 “We invested in our brand, and look, pipeline went up!”

 Every time I hear that, my brain quietly whispers:

 “…or did the Category Leader just open the dam?”

 Here’s the uncomfortable truth nobody wants to acknowledge:

 Most “brand-driven” pipeline increases are actually category-driven increases.

 Not because your brand is ineffective, but because brand lives downstream of causality.

 Once you see this, you’ll never look at brand metrics the same way again.

1. Brand Lives on the Correlation Map

Brand is not causal. Brand is:

• sentiment

• recall

• familiarity

• emotional resonance

• preference

• recognition

• narrative texture

These are correlative signals. Brand correlates with revenue after the category exists and is healthy. But brand does not create demand; it captures demand.
Brand harvests. Category creates and grows. Brand amplifies. Category defines. Brand decorates. Category causes.

This distinction is EVERYTHING.

2. Category Lives on the Causal Arc

 Category is the upstream engine that controls:

• market meaning

• what buyers believe is valuable

• which problems are “worthy”

• where budget flows

• what success looks like

• who gets to win – meaning who is defining the causal trajectory?

Category = the market’s definition of reality. If the category rises, everyone rises. If the category collapses, everyone collapses.

You can be the strongest brand in the world, but if the category shifts, your brand becomes irrelevant instantly. Just ask taxis, Blockbuster, BlackBerry, or Hertz.

Brand ≠ protection. Category = gravity. Gravity wins.

3. The Dam Effect: How Category Leaders Lift Everyone

When the Category Leader invests in:

• POV

• education

• events

• analyst evangelism

• problem definition

• language creation

 …they open the dam.

 Demand floods the entire ecosystem. Suddenly EVERY company downstream sees:

• more inbound

• more engagement

• more curiosity

• more pipeline

And what do brand folks say?

“See?! Our brand campaign is working!”

Hehehehehe.

Sweetie… you’re holding a bucket under a waterfall someone else created.

You didn’t make it rain. You just caught a little water.

 4. The Category Spillover Coefficient (γ)

A hidden variable drives more pipeline than your entire brand budget, and every attribution dashboard ignores it. Let’s name it:

γC = The Category Leader’s Investment in the Category

 Think:

• category POV

• analyst evangelism

• re-educating the market

• owning the language

• shifting consciousness

• And continuous category evangelisation

This creates Category Drafting. Just like a race car reduces drag by drafting behind the leader,

brand-led companies accelerate because the Category Leader is pushing the air out of the way.

When the drafter catches speed, they look at their dashboard and shout:

 “Our brand is working!”

No, you’re experiencing zero wind resistance because the Leader is breaking the airstream open for you. Your brand didn’t defy physics. You were riding the wake.

 5. The Math Behind the Magic

 (Or: Why Your Dashboard Forces You to Lie to Yourself)

 Every GTM attribution system misses one critical variable:

 Category Investment (C)

 So the model only sees:

• brand spend

• traffic

• pipeline lift

And because C is invisible, the model over-credits the only variable it can see:

Brand Spend (B)

This produces the economics phenomenon:

Omitted Variable Bias

When you omit a relevant variable, your model exaggerates the impact of the variable you keep.

Here’s the clean formulation:

Brand-guru model:

ΔPᵢ = β·ΔBᵢ (pipeline comes from brand)

Wrong.

Real model:

 ΔPᵢ = β·ΔBᵢ + γ·ΔC + error

And in real SaaS markets?

γ ≫ β

Most of your lift came from the category tide, not your brand drop in the ocean.

6. The Table (Simplified Example)

 Your dashboard only sees:

• brand spend

• pipeline change

 So it concludes:

“Brand campaign worked!”

But the truth:

70–90% Category
10–30% Brand

Brand captured some of the water. Category created the waterfall.

7. Why Fast Followers Win (γ Is Free for Them)

This also explains why fast followers often outperform slower category creators:

• Webex created the “video conferencing” category. Zoom rode γ.

• MySpace created social networking. Facebook used γ to win.

• Salesforce created SaaS CRM. Everyone else harvested spillover.

• Airbnb built home-sharing. Vrbo surfs the wake.

The Category Leader pays the Category Tax. Followers get Category Drafting for free.

Brand doesn’t create the wave. Brand surfs the wave.

Surfing is efficient. Wave-making is expensive.

Category is the ocean. Brand is the surfboard.

8. There Is No Category Of One
Why Your Brand Spend Funds the Category Leader

There is no such thing as a category of one.

The moment you enter a category, whether you like it or not, your actions contribute to a shared meaning system that the market interprets as category validation.

The Category Pirates famously proved that Category Kings capture 76% of the value. But here is the physics of how they get that capital: It’s not just their revenue. It’s your brand spend being converted into their gravity.

And here’s the uncomfortable physics:

 When non-leaders spend on brand, they strengthen the category,

not their brand.

 And when the category strengthens, the category leader captures most of the upside.

 This is the second-order effect no attribution model can see:

 Brand Spend (Follower) → Category Lift → Leader Dominance

 You think you’re promoting:

• your awareness

• your brand equity

• your differentiators

But the market sees:

increased confidence in the category itself.

And what do investors do with increased category confidence?

They don’t distribute belief evenly.

They pile it onto the category leader.

Not because the leader is morally deserving, but because leaders represent:

• the lowest perceived risk,

• the highest share of voice,

• the most robust ecosystem,

• the most validated momentum.

This creates a macro-spillover effect:

 γ (Category Spillover) → λ (Leader Acceleration)

Your brand campaigns create category noise.

Category noise creates market belief.

Market belief creates capital flow.

Capital flow creates leader dominance.

Leader dominance increases gravity.

Gravity increases your dependency on category meaning.

It is trickle-down economics, but without the PR.

You think you’re building your brand.

But unless you are the category’s gravitational center, you’re also building someone else’s. If you are aware of this, it's a strategy. If you aren't, it's a donation.

This is why brands crumble when the category shifts. This is why leaders compound as followers decay.

This is why “brand building” without category control often accelerates the very company you are trying to outrun.

Brand is downstream.

Category is upstream.

And leadership?

Leadership captures the current.

Brand amplifies the category.

The category amplifies the leader.

Therefore brand amplifies the leader more than you.

 This is the law.

 There is no category of one.

There is only the river, and the direction the river flows.

 9. The Hard Truth

 Brand only works AFTER you own the causal arc.

 “Brand only works after you own the causal arc, if someone else moves the arc, your brand goes with them.”

Look at the fossil record:

 If brand were causal, dinosaurs, with 160 million years of brand equity, would have sidestepped the asteroid.

They didn’t. Because the category changed.

Mega-fauna → scarcity mode

Cold → warm-blooded survival

Reptiles → mammals

Brand became fossil fuel. The category evolved.

Same with every collapsed brand in business.

10. The Theory

 Your brand didn’t move the pipeline as much as you think it did.

 The Category Leader did.

They spent millions on POV, education, events, and analyst influence.

They shifted market meaning.

They moved the causal arc.

You saw water flowing into your bucket and assumed you made it rain.

 You didn’t. You were positioned downstream when the dam opened.

 That’s why brand looks like causation when it is actually correlation.

Brand is downstream.

Category is upstream.

Causal arcs determine the river.

 Everything else is just…the splash.