NEWS & UPDATES

June 12, 2008 In By Advent

Brand: Your Most Valuable Asset

What′s In A Name?

What is value? Con­sider this: Brands and Brand­ing points out that in mid-2002 the book value of The Coca-Cola Com­pany was $10.5 bil­lion. At the same time the stock mar­ket value was around $136 bil­lion. How do you explain a stag­ger­ing dif­fer­ence of over $125 bil­lion? Assets like con­tracts, recipes, and net­works make up a por­tion of the enor­mous gap. But, inde­pen­dent esti­mates ascribe over half of the company′s intan­gi­ble value, an almost $70 bil­lion dol­lar price tag, to the Coca-Cola brand name alone. For some com­pa­nies, up to 70% of their mar­ket value is attrib­uted to the brand.

A study by Inter­brand found that brands account for more than one-third of share­holder value. To give some added per­spec­tive, in 2007 the com­bined GDP of Croa­tia and Viet­nam was around $121 bil­lion (see the list). The com­bined value of the Coca-Cola and Microsoft brand names was 124 billion.

A brand is more than a name, more than a logo, and more than most peo­ple real­ize. Rita Clifton, for­mer CEO, author, and con­sul­tant calls a brand the “most impor­tant and sus­tain­able asset of any orga­ni­za­tion.” And she does mean any orga­ni­za­tion. Brand­ing is not just for the mega-multinational cor­po­ra­tions. Recent years have seen the tri­umphant ascen­sion of brands and brand­ing. The pres­i­den­tial race is heat­ing up and “repub­li­cans are try­ing to again make the GOP brand mean ′small gov­ern­ment′ and ′fis­cal respon­si­bil­ity′” (Read the usnews.com arti­cle). Like­wise, ath­letic teams, char­i­ta­ble orga­ni­za­tions, and even indi­vid­u­als are encour­aged to see them­selves as a brand.

Unfor­tu­nately, eth­i­cally irre­spon­si­ble behe­moths like Enron who have invested heav­ily in brand­ing have sul­lied the brand rep­u­ta­tion. At its worst, a brand is decep­tive — an ille­git­i­mate unrep­re­sen­ta­tive façade. But the Red Cross and UNICEF use the super-power of brand­ing for the forces of good. Brands offer enor­mous advan­tages. In an age when a socially con­scious pub­lic has access to news that is trans­mit­ted instan­ta­neously and dis­persed widely it behooves com­pa­nies to behave.

Take a look at Wal-Mart. The Ben­tonville, Arkansas based giant has been hounded by socially con­scious watch­dogs for every­thing from dis­crim­i­na­tion and sub par health­care to envi­ron­men­tal­ism and sus­tain­abil­ity. CNN′s For­tune mag­a­zine reports that Wal-Mart has answered earnestly with sweep­ing changes and that their respon­sive­ness is pay­ing off at the check­out coun­ters (Read the arti­cle). Its stock has risen 38% since Sep­tem­ber. Brand­ing pro­motes account­abil­ity for ser­vices, qual­ity prod­ucts, and socially respon­si­bly prac­tices. A brand offers a car­rot to ful­fill promises and a stick to those who do not. To chance flush­ing your company′s sin­gle largest asset would be a fool­ish and risky endeavor.

An equally fool­ish move would be to never even start build­ing brand equity. Patrick Bar­wise, pro­fes­sor of man­age­ment and mar­ket­ing and chair­man of the Future Media Research Pro­gramme at Lon­don Busi­ness School, sug­gests includ­ing a met­rics sys­tem to deter­mine your most effec­tive mar­ket­ing activ­i­ties. He notes a grad­ual steady flow of resources away from tra­di­tional media adver­tis­ing towards mar­ket­ing that is direct and inter­ac­tive. Expe­ri­en­tial mar­ket­ing posts mea­sur­able results on the met­ric dash­boards and CEOs are revving up their efforts.

McDonald′s is mov­ing up up and away from tra­di­tional adver­tis­ing. After tak­ing a hit to its flabby gut after the movie Super Size Me, McDonald′s has repo­si­tioned itself; its stock is up over 45% in the last year and it earned a no. 8 on BusinessWeek′s Best Global Brands list. McDonald′s is find­ing new ways to con­nect with cus­tomers. In a Busi­ness­Week inter­view, Chief Mar­ket­ing Offi­cer, Mary Dil­lon, says, “Every­body is liv­ing in a mul­ti­screen world, from com­put­ers to tele­vi­sion to cin­ema, and it′s not a one-way street. We need to make our mes­sag­ing more like a dia­logue, and not a mono­logue” (Read the arti­cle). McDonald′s suc­cess is also attrib­uted to snazzed up restau­rants to cre­ate brand spaces that allow a more plea­sur­able din­ing envi­ron­ment. Inter­ac­tive mar­ket­ing that pro­vides cus­tomers with a mem­o­rable expe­ri­ence is a cur­rent trend in adver­tis­ing and an effec­tive brand build­ing tactic.

Tom Black­ett, a lead­ing expert on brands, advises not to treat your brand as a cost, but as an invest­ment. In mature mar­kets it is often a company′s largest over­head cost. Though it is dif­fi­cult to see the returns on a spread sheet, the value cre­ated by suc­cess­ful brand man­age­ment is enor­mous. Black­ett offers par­tic­u­larly rel­e­vant advice in these cur­rent tur­bu­lent eco­nomic waters: a strong brand will keep a com­pany afloat dur­ing dif­fi­cult times. This high­lights the impor­tance of brand main­te­nance. Clearly, a brand is more than a name. Invest­ing in exter­nal and inter­nal brand­ing pro­motes eth­i­cal behav­ior, adds sta­bil­ity, and increases a company′s value.

Advent thrives at the fore­front of the cut­ting edge expe­ri­en­tial mar­ket­ing indus­try and for 20 years has helped rapidly grow­ing com­pa­nies develop their brand through inter­ac­tive exhibits, events, and office envi­ron­ments. Based in Nashville, the com­pany is a cre­ative indus­try leader with For­tune 500 clients like VF Corp and Mars, Inter­na­tional. For more infor­ma­tion, visit www.adventresults.com.

Clifton, Sim­mons, et al. eds. Brands and Brand­ing. New York: Bloomberg Press, 2004. (buy it)

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