The Financial Value of Your Brand

When I hear marketers talk about their companys’ branding, they generally speak to the subject with bragging rights.  They consider their brand valuable, and they know they need to continue to promote their brand with the right messaging.  However, they rarely speak of their brand value in accounting terms, and yet this is one of the largest assets owned by a company.

One of the most important concepts in branding practice is to understand the relationship of the brand to a company’s financial performance and asset position.  While there are several ways to view this, I like to use the following valuation for a simple perspective on the subject.

The average book value of a company can be around 31% of its CAP value, depending on the current stock market conditions.  Market capitalization represents the public consensus on the value of a company.  The other 69% or so of CAP value, therefore, represents the intangible but real value that comes from patents, trademarks and, oh yes, the brand.

In 2000, the book value for all Fortune 500 companies was only 29.4% of the average market cap value.  The remaining 70.6% came from “intangible assets.”

Some sources claim that the brand accounts for between 35% and 45% of the intangible asset value of a company; others suggest this is more like 50%.  The actual number doesn’t really matter, since even the conservative end of this spectrum should cause CEOs and CFOs to sit up and pay attention.  

Let’s take a look at Google.  At the end of 2008, Google’s market cap was reported at $89 billion.  Yet, it reported assets of $31.8 billion and $21.8 billion in sales.  Equity was reported at $28.2 billion, which is only 32% of the overall market cap.  The remaining 68% is intangible asset value, or $60.5 billion.  If only 35% is attributed to the brand value, that would be $21.2 billion!

Developing and caring for a good brand (aka, brand management) is time and money well spent when companies can achieve real market value like this.  A good practice to follow is to maintain ongoing measurement of your company’s brand value, so you can track its movement.  This value can then be correlated to the company’s brand studies and various financial metrics – market share, sales, equity, market cap, etc.  A good Branding Agency should be able to guide you through this process.


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