I delivered a webinar earlier today on the topic of “Frameworks for Brand Valuation” as part of the ANA’s marketing accountability series. The series culminates in next week’s marketing accountability conference in New York.
It was a well attended session, reflecting the ongoing hope in the marketing community that there is a “silver bullet” out there that can definitively prove the value of marketing.
These were my conclusions for how marketers should think about the topic of brand valuation:
- It is very important for marketers to be able to explain how marketing is adding to the overall value of a business
- Brand valuation appears to offer the promise of providing definitive proof of the value of marketing – but this is, sadly, an illusion
- Brand valuation is a valuable tool when it is necessary to calculate a financial value for the brand as an independent asset
- However, it rarely makes sense to treat the brand as an independent asset for marketing evaluation purposes as this inevitably leads to conflict about the definition of brand and the extent of impact that brand has on the customer purchase decision
- It is more productive to think of brands as having a magnifying effect on the underlying performance of the business (the value of the brand is therefore contingent on the quality of the business it supports)
- The extent of magnification should be measured in terms of the three key drivers of business value – profit, growth and risk
- The differential impact of branding on any one of these three variables is definitive proof of how branding is enhancing the value of the business
Based on feedback so far, the material was well received. But I am left with the sense that I have “rained on the parade” by revealing some of the practical problems with brand valuation.
