The International Writers Magazine: What's Your Brand Worth?
Your Brand Worth Billions?
your brand valuation worth a billion dollars today? Maybe yes
or maybe no, but it surely is worth something pretty big. At the
end of the day, all the work you have put in pushing your name
identity and your range of products and services in your marketplace
adds up in an abstract space of the consumer's mind, where it
acquires some great value.
This equity can
be measured as a real, soft asset. It can have a monetary value like
that of a certain type of goodwill or particular reputation. Brand identity
is something you might not use to pay the bills but can surely use to
negotiate a better price in an M&A or sale of the company.
To measure the value, there are many rules, mostly according to the
sales volume and how it has increased over the years, monies spent in
promotion and advertising, and how the brand has climbed and at what
rate. There also are many other factors, like financial performance,
customer perceptions and actual market share.
Most valuations are in billions of dollars; otherwise they don't get
media attention. Most top brands of any country are often valued in
tens of billions of dollars, and unless you gather a team of forensic
accountants, there is no way to prove it wrong or to challenge how a
US$50 billion brand value slipped to $25 billion and vice versa.
Most high-profile valuations are done without any input from the management
and the owners of the brands, as it is done from published figures.
Sometimes brand owners get pretty upset as they are moved seemingly
arbitrarily up and down the scale against their competitors.
Normally, year after year, Coke, IBM, Microsoft, Disney, Toyota and
Gillette are given a combined value of close to half a trillion dollars.
Most people would think that if Coke were to restart its entire branding
history, it would easily cost a trillion dollars, as the company marshaled
a global country-by-country marketing and branding launch in a bid to
repeat its branding success. The brand valuation of Coke is over $50
billion or so, but somehow the total stock value of Coke is still about
$40 billion. Strange math.
Let's explore reality.
Brand Name Dilution
A globally protected unique brand with a unique name identity and steady
sales growth can be valued by multiplying annual sales a few times,
adding in all the advertising and promotional costs spent on that brand
from its inception, and adding in expected sales and the value of each
client spread over years. From that, subtract some key things, like
competition, lawsuits and other risks, such as possibly losing ownership
claim to the brand name and so on. The bottom line is that you might
easily end up with a billion dollar number.
Certain things are very tangible and black and white, such as the brand
name and its ownership; simply put, either you own this name outright
or you don't. Most managers try hard to convince themselves that their
single trademark filed in the country of origin is sufficient. They
ignore the global e-commerce reality. Most CEOs are simply shy to check
the dilution of their brand names on Google.Because less than 1 percent
of names are globally protected, the chance is that the entire evaluation
is on shaky ground. During any M&A, a price is established on hard
and soft assets. Brand valuation is really a soft asset, as opposed
to trademarks and intellectual property, which are hard assets.
Imagine, Amazon without its globally protected name identity and URL
is just a warehouse with books. E-trade is just an office. What about
EBay or Google? The message should be pretty clear.
Management should formulate a small committee and take a quick inventory
of issues to calculate some brand value numbers. As long as the resulting
valuations are a few times over total stock value, you are doing OK.
However, if for some reason it is way less than total assets, then you
need to figure out all about your branding and the real issues surrounding
the ownership of the brands, names, trademarks and URLs, etc.
Today, branding correctly with the right image and a universal name
identity is still a very easy thing to do. All it requires is the right
skills. However, the old mass-advertising model is dead. Now, one-to-one
marketing offers extremely unique opportunities to become a viable brand
with the smallest budget in the shortest time. Apply the correct expertise
and correct methodologies. Old models are dead.
If for some reason your brand is not worth a billion dollars, start
the right image development process today. It won't take long. Just
go for the new rules and new laws of creating billion dollar brand name
identities. It is very easy.
© Naseem Javed June 2005
Naseem Javed, author
of Naming for Power and Domain Wars, is recognized as a world authority
on Global Name Identities, Image, Cyber-Branding and Domain Issues.
He introduced The Laws of Corporate Naming in the 80's and also founded
ABC Namebank, a consultancy established in
New York and Toronto a quarter century ago. Naseem also conducts executive
workshops and conferences on global image and name identities issues www.azna.com/ceo.htm
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