How will the S&P affect the McGraw-Hill brand?

August 10, 2011

On August 8, 2011 I lay awake at 01:00 GMT anxious to hear how Asian markets would respond to Standard and Poor’s historic downgrading the credit worthiness of the United States of America. Beyond my personal concerns, my professional interest turned to the McGraw-Hill brand, the corporate owner of Standard and Poor’s. How would these events affect them? Is their brand immune to short-term factors and a public crisis? Can their brand be measured, even in this volatile and unprecedented market? In a word, yes.

McGraw-Hill is a storied brand with a heritage of greatness. Their publishing empire and textbooks practically educated our entire nation. Their (former) business publication, Business Week was a must read for almost two generations of corporate leaders and defined great business journalism. Their ratings agency, Standard and Poor’s, ruled supreme and, while a bit tarnished during the derivatives maelstrom, managed to climb out of crisis by basing decisions on integrity and legitimacy.

Sadly, McGraw-Hill financials tell a different story. Over the last four years McGraw Hill has lost almost 60% of their market cap (near $70 per share in June ’07, to $38 and heading south as this is written).

These numbers are consistent with CoreBrand’s Brand Power Rankings. In looking at our propriety data covering 800 companies across 49 industries, we see that McGraw-Hill has lost two-thirds of their brand Familiarity over two decades.

But like all great brands with history, quality products and honest intentions, the future of the McGraw-Hill brand and the effect of the corporate brand on market cap can be managed. But, it’s going to take an enormous undertaking — starting with a strategic platform that is relevant and differentiating. And followed by consistently high quality products and a message that is believable behind a level of spending that can make a difference.

We have seen brands suffer worse. Some have gone out of business or been absorbed. That would be a shame for a company like McGraw-Hill, who has created such a positive impact on the world. But, they will need to act soon, and forcefully if they are to weather this storm — the winds of which they may have, unfortunately fanned a bit on their own.

We would love to see them succeed.

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