What is the Value of Your Brand?

As many of you may know, every year since 2001, multi-national branding agency Interbrand has released a ranking of the most valuable brands from around the globe. The results of this study are highlighted on every business news site and blog on the web, and even occasionally make it into the print world by gracing the pages of Time, Newsweek, or Business Week magazines. We in the branding world are always grateful for the attention it throws on us, but of the millions of people who click the link or glance over the list, very few stop and think about what it is they’re actually reading.

Interbrand's 2011 Top 10 Brands

The Interbrand ranking (here, for anyone who is curious) is a prime example of our insatiable desire to quantify what is inherently unquantifiable. I invite you to read their explanation of how they construct their list and make up your own mind, but I take issue with it both in concept and in practice.

I won’t argue that any of the companies on Interbrand’s top 100 list should be removed, because frankly they are all extremely successful, well-executed brands. But their success stems from the way in which they creatively respond to their own unique circumstances. No single brand can be proven to be better than any other, rather each must blaze its own trail, determining what works best for them along the way. Trying to mathematically determine which of two brands is superior, especially two brands in completely different industries, is no more feasible than trying to scientifically prove which is more delicious; an apple or an orange.

To say that Coca Cola is number one because their brand alone (not the company or their product) is worth $70.5 Billion and that IBM is still a good brand, but not quite as good because theirs is only worth $64.7 Billion, is absolute lunacy. One could certainly argue that Coca Cola is the number one brand in the world because of the emotional attachments and fierce loyalty they garner from their customers, but why bother to rank them at all? Coca Cola is the top soft drink in the world by sales volume. It’s recognized, understood, and appreciated by people all around the world, regardless of their race, language, or religion. Isn’t that enough proof that its brand has a great deal of inherent value?

And if one must place a dollar value on each brand’s name, there are an endless number of ways to do it, all of which would yield different results. Interbrand’s calculations are based almost entirely upon an opinion-based grading system invented by none other than Interbrand. ‘Scientifically’ proving or disproving anything (global warming, evolution, brand value etc.) is easy when you are the one supplying the data sets and inventing the processes by which they are compared. Like a teacher grading poetry or an art expert ranking the impressionist painters, no amount of rationalization or calculation can mask the fact that the entire list is subject to the interpretation of those assembling it.

But I don’t blame Interbrand for inventing this ranking, nor was the purpose of this article to give them a public flogging. In fact, I give them a lot of credit for seeing an opportunity that so many other consultancies missed. The business world is run on spreadsheets. It has long been understood that cultivating a desirable brand can add value to a company or product, but without being able to quantify that value, the picture of how much return a company is getting on their investment never quite comes into focus. The ‘100 Top Brands’ list is successful because it appeals to our cultural tendency to rank things, or determine which of a given group of options is best. But it also reinforces the idea that one’s brand should be able to be isolated and accounted for, a notion that we at Aura can’t help but disagree with.

Rather, we believe that the strength of a brand is its inability to be defined. Good branding taps into people’s emotions. It can make you laugh or cry, smile or frown, nod in approval or shake your head in disgust. Compelling brands, like compelling people, are opinionated. They have distinct personalities that give context to the products that they make and the services that they offer. Everything that a company says and does helps to define its brand, yet its brand defines everything that it says and does. To try to isolate and place a dollar value on a company’s brand is like trying to decide what percentage of a salesman’s income is due exclusively to his charming personality.

A brand’s value is reflected in a company’s long term success, not in its yearly productivity, and no company understands this better right now than GE. As the manufacturers largely of heavy industrial equipment, the company has seen little perceived need for a consumer-facing brand in the past. Yet over the past few years, and under new leadership, General Electric has invested heavily in positioning themselves as an eco-friendly corporation whose focus is on safe and responsible innovations that improve people’s lives. At face value this strategy makes little sense; GE has a consumer product division where they make refrigerators and microwaves, yet all of GE’s consumer facing advertising is talking about wind power, water desalination, and recycling. GE’s profit margins and revenues have remained relatively consistent, showcasing very little return on their massive branding investment, however what GE’s management knows, it that the real value of this program may not be seen for many years to come, and its success may not be instantly apparent.

GE has embarked on an effort to streamline who they are in the public consciousness, and they understand that it isn’t going to increase sales today, tomorrow, or even the day after that. Five years ago, the GE brand stood for something completely different in every industry they were involved in, but today, their ‘Ecomagination’ brand positioning is defining who the company is as a whole. If you believe the hype, GE is out to save the world, and even if you don’t, you still might perceive that GE oven to be slightly more environmentally friendly than its competitors. Is this brand worth $50.3 Billion as Interbrand says it is? Maybe. Or maybe its real value is that people smile a bit more than they used to when they think of the company. Maybe GE’s brand’s value is that ‘Ecomagination’ feels like just the thing we need right now, and only time will tell what that is really worth.

We encourage our clients to put down the spreadsheet themselves, and try to fundamentally understand how and why their brands are helping or hurting their businesses. It’s always tempting to spend a little less on printing, or packaging, or plastics, or pop up displays, and such acts can even be rewarded by increased short-term profit margins and happy shareholders. But ask yourselves, what will those decisions do to your long-term brand value? By committing yourself to a lower standard of quality, what type of message does that send about your company? If your profits drop steadily for the next two years, will you connect that decision with those results? And if you are willing to accept a lower standard of quality in one aspect of your business, what is stopping your customers from assuming that you are willing to accept a lower standard of quality in all aspects of your business?

In meeting with new clients, we often express the need to craft an identity for the company that is unique to their market perspective, but in many ways, branding is as much about commitment as it is about strategy and creativity. We urge you to have the courage to allow your brand to affect change over the long term, without succumbing to the desire to justify every penny spent along the way. Look past quarterly and yearly profits, and ignore the naysayers and disgruntled traditionalists because ultimately, the real validation of a brand’s value is not expressed in a chart or graph, but in the growth of a thriving business with happy, loyal customers.

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One Response to What is the Value of Your Brand?

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