brand valuation

Marketers have long bemoaned the lack of representation on the main boards of businesses. Part of the problem has been that marketing is viewed as a cost which is discretionary rather than an investment which is mandatory to ensure the future prosperity of the business. The other part of the problem has been that marketers have rarely been able to prove the return on their investment in a language that the board understands.

When the investment is in marketing and the returns measured financially it is no wonder that marketers and the rest of the businesses fail to communicate. Understanding the value of brands in hard dollars arms the marketer with fact based evidence to counter some of the criticisms that have traditionally been levelled at them. Understanding the value of brands provides a common language with the rest of the business.

Robust Brand valuation techniques are now widely recognised by regulatory bodies such as accounting standards setters, high courts and tax authorities. Equilibrium has pioneered techniques which are endorsed by accounting standards boards in the UK, US and the International Accounting Standards Committee.

Brand Valuation is broadly used for financial transaction purposes and for better strategic decision making. There are times when the actual value is material, usually where a financial transaction is dependent upon a dollar value. Often, the process of arriving at a brand’s value delivers incisive intelligence and the value of the brand is simply the means by which we keep score to help make better decisions. In that context it is not just how valuable your brand is that is important but how your brand is valuable that is important.

What can Brand Valuation do for you?

Corporate Strategy

Understand where and how the brand creates value by market, by customer segment, by product and by channel to market
Establish strategies for brand portfolios for investment, divestment and rationalisation
Use brand valuation analysis to determine the optimal value based brand architecture
Assess the value at risk before corporate or product brand name changes

Marketing, Brand and Advertising Strategy

Provide a common language between marketers and the Board by assessing the contribution of the brand to the overall value of the business
Establish strategies for optimising brand investment & return on brand investment
Establish appropriate budget allocation by brand, geographic market, customer segment, product type or channel to market
Establish a system for the accountability of the marketing function
Establish reward systems for the Board and the Marketing function and advertising agencies based on brand value generation

Investor Relations

Conduct brand valuations for balance sheet purposes by reporting unit and in aggregate at a point in time
Communicate the value added by the brand on an ongoing basis to the investment community
Understand brand equity and how to track this over time

Mergers, Acquisitions and Joint Ventures

Conduct marketing due diligence to establish the power of the brand(s) acquired to secure the customer franchise
Establish an appropriate price on acquisition or disposal
Establish the financial contribution of the brand in joint ventures and alliances
Separate the value of the brand from goodwill and the rest of the business

Transaction Support

Establish the value of the brand to facilitate collateralised lending
Establish the brand value at risk for insurance purposes
Establish the potential brand value creation from brand extension into new markets, new products or new channels
Establish appropriate royalty rates for brand licensing to third parties
Establish internal royalty rates for the use of the brand within groups of companies

For more information on brand valuation please contact us.