The corporate brand is probably the least understood asset in most companies, yet it can be one of the greatest tools to building value. Tracking brand health and understanding your brand’s contribution to financial performance are critical in uncovering opportunities for growth, understanding ROI, determining brand strategy, and focusing marketing investments.
Although it is classified as an intangible asset, the corporate brand can be consistently measured and valued and therefore should be held to the same demands of performance as any other business asset. Yet as hard as it can be to get budgets approved for brand and marketing activities, it can be even harder to get budgets for brand health measurement and tracking.
To help you build your case, here are five reasons brand valuation matters:
1. Identify competitive advantage and opportunity.
Understanding brand value relative to competitors can inspire change in growth strategies. It’s not enough to simply be different from other providers; you must stand out in ways that drive value to achieve business success. The only way to do this is to understand the full context of the market and how it impacts your organization. Identifying shifts and trends in your brand’s strengths uncovers opportunities to advance through product / service adjacencies, geographical growth, and M&A activity. The proper brand intelligence also gives you insight into where the market is going before your competitors do. When you ask the right questions and maintain a continuous pulse on the dynamics around you, you can predict market shifts and adjust accordingly.
2. Legitimize and optimize investments.
By understanding and defining the value brand creates, questions about brand-building investment change from whether to invest to how much to invest. If you have a solid benchmark of brand health, when you take on new activities such as sponsorship or social media – whether at the corporate or product level – you will be able to understand exactly the impact your efforts have on corporate value. You can model the impact of a projected lift in brand to determine expected financial results and compare outcomes with associated costs and identify optimal investment levels.
Companies that understand this manage their brand investment to maintain and maximize brand value. Coca-Cola, American Express and FedEx are consistently among the companies with the highest brand equity. They are each characterized as a company that communicates aggressively, shaping the landscape of its markets. This kind of presence has helped frame their markets to their own strengths and helped them reap the related benefits.
3. Enhance portfolio decisions.
Often businesses are managing a network of brands: enterprise brands, sub-brands, lines of business, and products / service brands. Consistently tracking and monitoring the health of each entity’s brand allows you to fully understand the entire ecosystem of your brand portfolio. You can understand the connections, influences and the “halo effect” that occurs between the master brand and sub-brands and vice-versa. Knowing this enables investment decisions that truly balance and streamline your portfolio.
4. Inform M&A, strategic alliances and licensing opportunities.
Understanding the value of all business assets informs negotiations in mergers, acquisitions and partnerships. M&A can be tricky, and emotional attachment to pre-existing entities can be strong. But by objectively assessing the value and dimension of all brands involved, leadership can strategically deploy those brands for maximum impact. Also, knowing the value your brand brings – and where its weaknesses may lie – helps identify opportunities for partnerships and acquisitions that may not have otherwise been obvious.
Tracking brand value can also open doors to turning your brand into a product itself. Knowing the brand’s value permits predictable revenue growth through licensing efforts. A brand on the move creates momentum that can be leveraged. Licensing is a great way to make significant income from the brand itself.
5. Validate the efforts of your team.
Measurement and metrics add science to the art of creative brand building. By utilizing a tangible measure of impact, leadership and marketing teams can be objectively evaluated for their stewardship and management of the brand asset over the long term. Creating a common vocabulary between brand and finance strengthens marketing’s position at the management table. Because the return for branding can be identified and tracked over time, the effort and results for all departments are visible. This permits all senior managers to work together for the optimum total return on investment throughout the company. When finance and marketing cooperate and work toward defined goals, everyone wins.