The next generation of brand measurement

Abstract

This paper summarises key points made in the debate on brand valuation, critiques progress to date, and looks ahead to the next generation of brand measurement.

It concludes that the debate remains over-narrow, with too much emphasis on the visible aspects of branding (such as name, price and communication), and too little on those invisible elements which often drive brand success (such as operations, distribution, and employees' competencies). The Branding Iceberg is proposed as a device for illustrating key inputs to brand equity. It views successful brands as the visible manifestation of a distinctive business system.

The classification of brands exclusively as intangible assets is artificial, since their ability to generate value may derive from superior or distinctive tangible assets like prime property or unique plant (eg Tesco or Mars). Attempts to separate the brand trade mark from the assets and competencies which generate its value are also impractical.

Kaplan and Norton's ‘The Balanced Score-card’ is fundamentally changing the measurement of corporate performance, and provides a mainstream umbrella for incorporating brand measurement at Board level.

Valuation of existing (as opposed to acquired) brands on the balance sheet seems unlikely ever to be feasible. Valuing current brand strength will always be an approximate exercise, and valuing future potential is highly judgmental. Marketers should concentrate on developing the exciting potential of internal brand valuation, raise its profile at Board level, and prove its feasibility in volatile categories and people-based companies.

Misplaced past focus on brands on balance sheets should be replaced by campaigning for obligatory disclosure data on brand health, which would be valuable to shareholders and favour brand development.