Barbara Niemann Fadani debunks the myth about brand valuation and tells you why it is important for a businesses to not only know, but also regularly monitor the value of its brand.
Amazon, Apple and Google are known to be the most valuable brands in the world. Business owners and brand specialists always watch eagerly as the latest global brand rankings are published every year.
Some business owners are well aware of what their own brand is worth, others have unrealistic hopes. When we step out of the realm of famous companies, they often have a rather unclear idea, especially when the business is young or operating in a field that is less driven by publicity or image. The big question is therefore:
Is it difficult to know the value of a brand?
The reason why businesses cannot put a number to the value of their brand is often that brand valuation is simply not yet part of a yearly business routine – either because it is considered being very expensive or because businesses don’t see the necessity. Brand Valuations are usually only performed when they become part of a mandatory process, such as M&A deals, tax planning or insolvencies. In this context, they are offered by big accounting and auditing firms and can easily come with a six-figure bill.
Why do businesses need to value and monitor the value of their brands? There are a number of reasons, though, why brand valuations should be conducted regularly and why the brand value should be monitored on a yearly basis. The value of intangible assets is very often underestimated or not even considered in the accounts for some businesses. While employees, sales agents, creatives and customers understand the emotional value or the commercial function of a brand, they find it harder to understand its monetary value and consequently don’t always act in a way that would contribute to an increase in the value of the brand.
Business decisions regarding brand infringements, the co-existence of similar brands, negative comments on social media, random and uncontrolled use of the brand, court proceedings or a modification of the brand are all important factors that influence the value of the brand. Such decisions are mostly made based on costs without considering the effect on the brand value.
As intangible assets are increasingly valuable in modern businesses, especially in those that are technology driven, the investment in intangible assets becomes increasingly important. However it can be difficult to justify such investments without having concrete numbers that prove the return on it. When valuations are only performed as event-driven, a business is never in a position to make proportionate decisions on investment and the inability to justify expenditure on intangible assets, limits the management, growth of value and reputation of a brand.
Regular monitoring of the impact business decisions have throughout the year on the brands value, will help to increase the management’s understanding of the interdependence between their decisions and the brand value.
When knowing the value of your brand and being aware of the factors that impact and influence that value, the management can include this in the decision making process and make informed, consistent and good decisions, and deliberately take action, resulting in a steady increase of brand value. The management can then pass this on to everyone involved in the business creating a successful team, who work collaboratively, to protect and increase the brands value.
This is why we have developed a new and affordable approach to brand valuation that enables our clients to make brand valuation a constant part of their intangible asset management.
Please get in touch if you are interested to know more or come back to our blog where we will continue to write about this topic.
Please contact Stobbs IAM (iamstobbs.com) on +44 (0)1223435240 or Valuation Consulting (valuationconsulting.com) at firstname.lastname@example.org or at +44 (0)2039280000 for further advice and assistance on the valuation of intangible assets and brands.