The man in this photo is repeating a vital truth about branding. Try saying it aloud a few times, yourself. Your brand, unlike your tangible assets, will never depreciate. Your brand, unlike your patents, will never expire. Your brand, unlike your trademarks or copyrights, will never pass into the public domain. Your brand is yours to keep and grow – forever. If you are the owner or manager of a brand asset, it is your job to define your true brand promise, to communicate it to every corner of your market, and to empower your employees to deliver on it. Do this, and your brand will grow like wild vines. Fail to do it and your brand will wither and, possibly, even die. You owe it to yourself and everyone who counts on your organization to do everything possible to drive up the monetary value of your brand.
In the US, a mature corporate brand can represent up to 70% of a business’s overall value. Put another way, if the CEO mishandles the organization’s brand, he or she will have squandered up to 70% of the organization’s potential market value. I tell our CEO clients, only half-jokingly, that if their brand can represent up to 70% of the value of their business, they should be spending 70% of their time working on their brand.
Some readers may find it hard to believe that brand value can add so much to the overall market worth of a company. But international brand valuation firm, Brand Finance, Plc, conducts an annual worldwide study that shows intangible assets account for between 60% and 80% of a company’s capitalization. See chart* below.
In the US, the study is performed on the Standard and Poor 500, and reveals that, year after year, on average, brand value represents 68% of the total worth of the average S&P 500 company. Other kinds of intangible assets, like patents, trademarks, licensing agreements, etc., represented 10% of overall value.
It’s true that B2B businesses may not enjoy the same high brand valuations. For example, General Electric, estimated by Forbes Magazine to be the 10th most valuable brand in the world, has a brand value that’s only 13% of the entire company valuation. But, readers, that’s still 37 billion dollars! GE has a relentless focus on brand-building because they understand how their brand drives awareness, interest, demand and, ultimately, revenue. And it’s nice to have that extra $37 billion on the books.
So, readers, how much is your brand worth? How much more valuable would it be if, like GE, you understood your true brand promise and worked diligently to deliver on it every day? Financial markets regard a strong brand as a premium asset. They reward organizations that integrate a clear brand vision into their everyday business operations. Those who neglect to invest in effective branding strategies leave money on the table – again, as much as 70% – when it comes time to merge or sell.
*Study on the S&P 500, IBEX 35, S&P ASX200, AEX and TSX223 – Reproduced by permission of Brand Finance, Plc.
Best Branding Reads – Week of July 25, 2016
How Do Wildfires Get Their Names? The National Park Service Explains
My home is currently menaced by the Sand Fire in California. So I was thinking about this.
Verizon Announces $4.8 Billion Deal for Yahoo’s Internet Business
Has Yahoo’s stopped the decline of its valuation? I’m guessing probably not.
The Impact of Brexit on Brand Britain
More on Brexit. A British brand strategist reflects on her nation’s new branding challenges.
Brand Loyalty Versus Brand Convenience
I believe the relationship between a business and its market is the very definition of a brand.
Along for the Ride: How Driverless Cars Can Become Commonplace
How well with old automotive brands embrace the new technology?
Who Will Lead Fox News in the Post-Ailes Era?
The Fox News brand is bound to change. But what kind of change will it be?
Starbucks Shakes Up Top Execs—and Employees in Green Aprons
Changes that Starbucks needed to make, apparently, to get the really cool hipsters to work for them.