Branding Strategy Insider helps marketing oriented leaders and professionals like you build strong brands. BSI readers know, we regularly answer questions from marketers everywhere. Today we hear from Robert a CEO from Dallas, Texas who has this question about the measures of brand value.
What are the measures of brand value (in dollar terms) – is it the same across the board or are there different ways of developing this number?
Robert, happy to help. I assume that you are asking about measuring the financial value of a brand as an asset. Brand valuation has been made possible by the following financial approaches – Activity Based Costing (ABC), Discounted Cash Flow (DCF), and Economic Value Added (EVA) and by several other more recent customer purchase tracking techniques, especially online. Interbrand is best known for its depth of experience in brand valuation, which leads to its list of Best Global Brands published by Businessweek each year. Don E. Schultz, Ph.D., professor of integrated marketing communications at Northwestern University and president of Angora, Inc. also has studied and applied the concepts of brand valuation and return on marketing investment. David Aaker, in his book, Managing Brand Equity covers the following approaches to brand valuation: price premiums generated by the brand name, brand name and customer preference, replacement cost, brand value based upon stock price movements and brand value based on future earnings. Another resource worth investigating is Millward Brown’s process and BrandZ report on the financial power of brands. It’s considered by some as the new standard of brand valuation.
We hope this is helpful Robert.
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3 comments
Brandon R Allen
February 13, 2009 at 10:40 am
Enjoyed the post. It seems that people have been talking a lot about branding. Particularly in the “is it worth spending money on” sense. Having ways to assess and track how your brand is doing is critical.
Armstrong Camilla
February 14, 2009 at 4:23 am
Being able to measure the contribution of the brand to the bottom line is so important.
I just thought I’d add to this article and say that another Brand Valuation consultancy to look out for is Brand Finance they have recently published a study into the 500 most valuable banking brands in the world with the FT’s Banker Magazine. They use a more direct method to Interbrand and Millward Brown called the royalty relief methodology. One last thing on viewing their website it turns out that the mark comms guru Don Schultz is in fact their chairman in USA.
Ryan Colder
February 20, 2009 at 4:47 am
Another brand valuation consultancy which seems to do this for a broader range of purposes is Intangible Business (www.intangiblebusiness.com) There are quite a few articles explaining how to value brands and other intangible assets as well as the usual league tables, but by sector. Worth a read.
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