Make Marketing History

The views of a marketing deviant.

Friday, April 27, 2007

What's Brand Valuation For?

Richard Huntington points out that the season of brand valuation is upon us again and that WPP and Millward Brown have determined the top 100 brands by mathematical methods. He outlines their arguments here and provides a link to the site (complete with its annoying oral explanations).

It all seems faintly ridiculous to me because valuations may go down as well as up and I'm not sure what you're meant to do with the valuation once you've assessed it. As ever, to this cynic, it reeks of trying to justify marketing efforts via recourse to the tools of the accountant and, in doing so, it is filled with assumptions that are entirely subjective.

Take the second stage of the valuation - whereby the proportion of intangible income that comes from the "most commited" consumers i.e. those not attracted by price or functional issues. I sort of see the logic (although I always thought price and function were key elements of any brand) but, even within their parameters, how do you determine the degree of commitment to the brand? Are early adopters commited to the brand or to the street cred of being the guy with the new stuff; are followers less commited or does the brand prove all important in tipping their purchase decision; and are heavy users commited to the brand or just heavy users who would move their heavy use to an alternate brand if it came along?

Ascribing financial values to non-financial attributes is faught with danger, so why not just focus on the existing financial data? Call me simplistic but total sales is a pretty good indicator of how much people are commited to the brand and gross margins indicate the premium those people are prepared to pay for that commitment. Real figures that give a good idea of how customers rather than branding experts value your brand.


Blogger Mario Vellandi said...

No doubt; Total Sales is a worthy indicator of brand equity.

Non-financial attributes are too subjective. If we wanted to measure potential, we could look at today's trade value of its stock.

Lastly, if we wanted to measure the level of brand hype/excitement...we could at its Price/Earnings ratio.

5:01 AM, April 27, 2007  
Blogger iScatterling said...

Oooarr! So this week choccie is good for you. Next week the emminent scientists will look in their cabinet of What's Good For The Crowd This Week and decide their algorithim was offkilter so choccie is not good for you but great as car wax.

Meaningless unless a consistent measurement methodology is used. Problem is - not all scientists or marketers and branders can agree on a formula. So it is all a load of tosh and we know what we think is best without some dour nerdie labcoat instructing us what is.

I'm off to the pub! To imbibe in the best old ale on this here little planet - Hooky's Best Bitter. Oooarr!

9:30 AM, April 27, 2007  

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