Marketers can use brand valuation to monetize and protect their brand investments
The return to growth in mergers and acquisitions, and the surge of new partnerships and co-branding efforts across many industries, has brought the topic of how to account for brand―its value, usage and management―into much sharp focus. The demand for accountability and brand-based business cases has created new pressures for marketing leaders faced with having to build brand business cases that answer questions such as:
- How much is my brand worth?
- Which partnerships should I pursue?
- How do I ensure that I account for brand in negotiations?
- How do I justify these brand investments?
As the need for marketing accountability and strategic asset management has increased, many CMOs have turned to brand valuation as a way of demonstrating the total impact activities and departmental decision-making have on a brand. Brand valuation league tables have become ubiquitous, and the topic of whether a global brand has made it into the top 100 is a constant inside the CMOs office, and even the boardroom, elevating the awareness of brand as a strategic asset.
In addition, CFOs and other dealmakers have become more cognisant of the multiples that companies command in transactions, because of the goodwill value attributed to intangibles such as brand. This is a clear recognition that managing your brand as a financial asset can increase the overall enterprise value of your company.
One of the most important recent developments that has helped push the discipline of brand valuation forward has been the adoption of the common international standard ISO 10668:20101. The implication is that we now have a worldwide standard for quantifying brand value that all practitioners, and most importantly, clients can point to. But, standardization does not a capability make. In fact, brand valuation is frequently misused by organizations around the world.
While it is useful to use brand valuation as an overall measure of value creation, the practical marketer uses the process to understand how his brand creates value in order to make better investment decisions. It is the insight behind the number and what you do with it that should be your focus, rather than the brand value figure itself. Clients and practitioners must therefore reorient themselves from a discussion of “the value” to one focused on the business questions that the approach can help you tackle.
Gaining a heightened level of business intelligence that improves both the marketing discipline and the education of your team is a benefit, but it is not sufficient. As you assess your needs and the applicability of a brand valuation for your business it is key to define the key business objective that you are solving for.
Brand Valuation Considerations:
- Increase leverage in partnerships, co-marketing, licensing and sponsorship negotiations
- Ensure that our brand is accounted for as a valuable asset and not given away
- Provide context against key competitors
- Enable a more intelligent discussion with brand savvy organizations
- Allow marketing managers to assess competing opportunities based on potential for increasing brand value
- Help internal stakeholders map brand activities to financial performance
Remember, focus on the drivers of value creation and not the value itself. In a volatile marketplace, as your own capabilities are growing, brand valuation can empower and inform both your marketing prowess as well as the impact that you make among the audiences you serve.
Justin Wartell is Monigle’s Managing Director and self-proclaimed analytics nerd having measured and valued some of the world’s leading brands. Although he may deny it, his personal brand and intangible goodwill value are unquantifiable.
1. ISO, Brand Valuation: Requirements for monetary brand valuation. 2010. https://www.iso.org/iso/catalogue_detail?csnumber=46032
Click on the link to learn more about Monigle’s Brand Valuation and Analytics Practice: https://www.monigle.com/branding/brandresearch