Page 40 - BrandZ Top 100 Most Valuable Global Brands 2014

Section 03 | Thought Leadership

SEVEN KEY

Innovation, once a reliable source of competitive 3. Make it diagnostic
advantage, is growing less and less secure as markets
We need to break free from the inancial bias that has
become more global and communication becomes aflicted brand valuation. If it is to have practical
instantaneous and universal. Now, brand has become the application in marketing, brand valuation must be
only remaining source of reliable, defendable
PRINCIPLES
differentiation, making it more important than ever before. diagnostic. We are no longer interested in recording
And yet, brands are still not taken seriously. Their power is a value to achieve some accounting gain but rather in
identifying what actions we can take to increase the value
underestimated and misunderstood, and the failure to put of the brand and business. A brand valuation must look
the case for investment in them on the sound inancial inside the business to identify where brand value is
footing expected by CFOs, CEOs and boards is depriving
marketing of credibility, holding brand back from taking created, determine how good a job the brand is doing at
its rightful place in the boardroom.
each touch point, and identify opportunities to do better.
FOR A MORE
4. Run scenarios to identify the best opportunities
To change this, a more dynamic approach to brand
valuation is required, one that stands traditional valuation Brand driver analysis can be used to identify opportunities
on its head. This new brand valuation can link marketing for brand improvement. We can identify where the gaps in
decisions to money, transform the way marketing is brand performance are compared to competitors.
viewed, and catapult it from a corporate communications

USEFUL
role to leadership of growth and innovation.
5. Take a holistic approach
Brand valuation needs to take a more holistic approach.
Unfortunately, brand valuation’s role in marketing today
is largely the same as its role in accounting. Today’s brand We can measure how a brand creates value across the
valuation gives only point-in-time values, and as a result whole customer experience, including both tangible touch
points (products, customer service, and the retail
the major use of brand valuation is benchmarking.
experience) as well as intangible touch points (marketing
BRAND
communications). This requires more imaginative use of
For brand valuation to progress beyond benchmarking,
it must inally be considered in conjunction with marketing. research data – one that unites the areas usually split
Instead of being just a number, it must become
between brand tracking and customer satisfaction studies.
a diagnostic tool. In order to achieve that, we at Ogilvy
6. Look at many measures
& Mather have strong opinions on the principles that
should be used and the steps that should be followed To become strategic, brand valuation must encompass
VALUATION
when valuing a brand. Here are our seven key principles:
many measures, not just one. It is easy to become ixated
on “the number,” but this is just the starting point, not the
1. Start with how the brand creates value and drive the end point. More meaningful and actionable measures need

methodology from there
to be added. These metrics should be easy to understand,
The whole point of brand valuation is that brands make easily replicated, and forward-looking leading indicators of
brand value creation. They must include a linkage between
money for their owners. To exploit the full potential of brand and share price – the indispensable condition for
brand valuation, we must begin by understanding what getting brand into the boardroom.
brands are and how they make money. Without an
understanding of the sources of value, brand valuation
Joanna Seddon
is limited to being an exercise to produce a point-in-time 7. Look over time – the new brand tracking

President, Global Brand Consulting number. Brands impact the demand side of the business To be truly useful, brand valuation must shift from a
OgilvyRed, Ogilvy & Mather (revenues and margins) and the supply side (employees, point-in-time measurement to measurement over time.
Joanna.Seddon@ogilvy.com
suppliers, regulators, and investors). They create value Conducting brand valuation once is a “nice-to-have.” If it
across the business value chain, to an extent that few is diagnostic, it can provide important input to strategy
companies fully understand, or leverage. Understanding development. But the real ROI on brand valuation comes
how a brand creates value is hugely important – it can when the company’s progress in creating brand value is

unlock the secret of creating future value.
tracked, measured, managed and acted upon over time.

2.Conduct a robust brand driver analysis
Brand valuation can become the foundation for brand and
marketing decisions, which will have a transformative
Brand valuations generally have two kinds of inputs – effect on marketing. Exploiting valuation’s power to link
inancial data and brand analysis. As we have seen,
the second input is where most brand valuation brand to money can change the corporate perspective on
methodologies fall down. The secret to making brand brand and marketing. A sound inancial underpinning for
requests for money puts marketing on the same footing as
valuation useful lies in making the brand analysis as robust other functions in the corporation and gives marketing far
as possible. There are statistical methods that can be
greater credibility. It also improves the quality of brand
used to isolate the inancial contribution of the brand.
We recommend using a quantitative brand driver analysis and marketing decisions, enhancing the effectiveness of
to determine the brand’s contribution to value.
strategies, driving greater business growth, and pushing
share prices upwards.

BrandZM adheres to many of the brand valuation principles
Ogilvy & Mather is one of the largest marketing communications we hold most dear, making it, in our opinion, the best
companies in the world. The company is comprised of industry
leading units in the following disciplines: advertising; public brand benchmarking practice. BrandZM examines these
relations and public affairs; branding and identity; shopper and principles at a high level across many brands. In doing so,
the practice shows each individual brand how crucial these
retail marketing; health care communications; direct, digital, seven ideas are. BrandZM makes an important contribution
promotion and relationship marketing; consulting, research and to raising the proile of marketing leaders, leaving no one
analytics; branded content and entertainment; and specialist
communications. For more information, visit www.ogilvy.com.
in doubt that they are managers of one of the
corporation’s most valuable assets – the brand.

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