Don’t brand your fin­gers

Do lists of top brands re­ally have any value?

Finweek English Edition - - Advertising & Marketing -

LET’S TAKE an un­likely sce­nario: You’ve raised a few bucks and Coca-Cola is ready to sell you its brand name – its most valu­able as­set. How much should you pay? Well, it’s no good adding up the value of all the bot­tling plants and dis­tri­bu­tion trucks – or even its se­cret for­mula – be­cause that’s not where the brand re­sides. You could buy all of them and still not ac­quire the brand’s true value.

The brand – a mys­te­ri­ous amal­gam of opin­ion, per­cep­tion and rep­u­ta­tion sur­round­ing the brand name – is to be found in the minds of con­sumers. To value that, you have to go to a brand eval­u­a­tion ex­pert such as In­ter­brand, Mill­ward Brown or Brand- Fi­nance, to name but three. But they all put vastly dif­fer­ent fig­ures on the Coke brand. As a buyer, your best bet is BrandFi­nance, which val­ues Coke at US$42bn. But Coke it­self will no doubt hold out for In­ter­brand, which puts a fig­ure of $67bn on a deal.

That dif­fer­ence is quite sig­nif­i­cant. At cur­rent ex­change rates $25bn would buy you all of MTN and its tan­gi­ble and in­tan­gi­ble as­sets (based on mar­ket cap­i­tal­i­sa­tion), with a few cents to spare, or a cou­ple of our lead­ing banks.

But per­haps the key ques­tion is what’s the value of brand val­u­a­tion when the prac­ti­tion­ers can’t come even close to agree­ment? They don’t agree on which brand is

the most valu­able, or the or­der in which to rank the top 10.

In­ter­brand puts Google 10th, while Mill­ward Brown puts it first. BrandFi­nance rates Wal­Mart first, while the other two can’t find a place for it in the top 10.

They don’t even agree on which brands make up the top 10, though there are some com­mon­al­i­ties. Six brands are found on all three lists: Coke, IBM, Microsoft, GE, Nokia and Google. And on one thing they all agree: Microsoft is third.

The dif­fer­ences are ex­plained by the dif­fer­ent method­olo­gies and ex­clu­sions adopted by each brand val­uer. It’s too con­fus­ing to ex­plain here, but each sys­tem has its own logic and no doubt claims to be the best.

Tim­ing also has some role in ex­plain­ing the dif­fer­ences. Mill­ward Brown’s BrandZ rank­ing was con­ducted in April, In­ter­brand’s in Septem­ber. The in­ter­ven­ing pe­riod saw the global fi­nan­cial mar­ket melt­down. BrandFi­nance went so far as to pro­duce two lists, one be­fore (in March) and one af­ter. Ac­cord­ing to that, the re­sults of the fi­nan­cial cri­sis pushed Wal­Mart from four to one and Coca-Cola from one to two.

So you’re left won­der­ing: What real use are such lists of top brands? At one level the an­swer has less to do with the com­pa­nies on the list and ev­ery­thing to do with the com­pil­ers. The value of the lists is to pro­vide pub­lic­ity for the com­pil­ers. It’s a PR ex­er­cise.

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