The Trouble with Current Views of Brand Valuation
Hint: It’s Not About the Number!
Over the last 24 months, the frequency and intensity of conversations about brand valuation among an ever-more-diverse group of brand leaders has been a pleasant surprise among practitioners who have long been touting its merits. Efforts toward process standardization and ISO certification have propelled the topic into new types of boardrooms as non-profits, business to business brands, and sales organizations have started to look more critically at the topic. Many have joined their more consumer-oriented colleagues in using valuation as an ingredient in their understanding of brand success.
The problem is that the all-out sprint toward this approach is focused on the wrong idea. Brand valuation is a methodology built on robust, scientifically informed analysis that, among many other outcomes, establishes a value for an organization’s most important asset, its brand. The issue is that the ultimate value means nothing on its own.
Brand Valuation: What Creates Value for an Organization
What are you going to do once you know that your brand is worth $1.3 billion? The answer, if you were to ask many of the practitioners that help you get to that value, is nothing. And this is the problem for those selling and those buying the approach. Brand valuation should be focused less on the value itself and more on the illumination of what creates value for an organization. That way, the results become a tool for guiding marketing decision-making rather than simply a snapshot of the current state. When done correctly and with the appropriate level of rigor, the methodology establishes a snapshot of what levers lead to value creation and where action can be taken to increase that value. A speedy, poorly thought out, superficial approach does not deliver this depth of insight. As a result, those leaping on to the valuation bandwagon will be sorely disappointed by the outcomes when they try to determine what to do next.
The energy around this approach is thrilling, especially in industries like healthcare, oil and gas, telecommunications, and retail, where the concept is shiny and new. We’re just disappointed at the deflation many clients feel when they leap into the approach without the rigor that leads to its long-term success as a business intelligence and strategy tool for their organizations.