It’s the economy stupid! … Thinking about brand valuation

Bill

I begin with a phrase that Bill Clinton said in a debate to George Bush … “It’s the economy, stupid!”And so it seems … Since the’90s, the brand valuation was something that started to grow rapidly. Possibly this had much to see with the rankings made by Interbrand and presented annually in Newsweek. It is clear that these rankings are done with public information and therefore have their limitations. They are not all they are and the value is an approximation. Only that!In a meeting that took place a couple of years ago, with companies that value their brands and that are within the Fortune 500, the next question was done: What decisions have been taken now that you know the value of your brands? … And the answer was: “No”.
moneyIn recent years, having directed more than a hundred brand valuations, I dare say that the outcome serves for a little… mainly to a transaction in which the brand is involved. Moreover, there are at least two risky situations:
  • It must be done many assumptions that have to be maintained over time so that the results are comparable
  • Part of the calculation uses variables that are beyond the control of the company (and with a brand experience that “per se” is a chaos to continue adding uncontroled factors… you know!)

 

The value of the brand gives us an idea about the value of the relational capital of the company, part of its intangible assets, and therefore, part of the total value of the company. It is a part of the whole explanation.

What is interesting in terms of branding is that the best results of this kind of assessment are byproducts of the process and not the result itself.

For several reasons, I do not go into the valuation models (which are less than what it’s said):

  • I am not an economist
  • It is not the point of debate
  • It’s more boring than what I’m writing here and now

In any case, returning to the process, we can decide which actions to take to generate greater demand on my key customer segments, or what elements should be improved in order to strengthen our brand (reducing risks) against my competitors … And in all this, the value isn’t necesary!

So the questions are:

  • For what do we value the brands?
  • To establish a common language in the company (with the risk that if others understand me, I would give more tools to discuss what I do and I don’t)?
  • Is it necessary or is merely a matter of fashion?
  • Would not it be better to think of models like the balanced scorecard that allows us to make decisions? (speak of it in the coming days … promise!)

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<a href="https://allegro234.net/author/cristian/" target="_self">Cristian Saracco</a>

Cristian Saracco

About the author

Founding Partner | Allegro234 Founding Member | The Flow Collective Full Member | Medinge Group Member Editorial Committee | Branders Magazine
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Sep 26, 2008

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