Wednesday, December 16, 2009

Fragility of brand value

Brand valuation. The very phrase makes some clients weak in the knees. "You can tell me how much my brand is worth in US dollars?" Yes. Weakness spreads from knees to hips to throat.

Or so I am told. That never happens to my clients. Because I have never had a reliable way to value brands. In fact, I have always doubted and derided models that tell you how much a brand is worth. Remember the old line about McDonald's? Burn down every store around the world and the brand name alone would be worth billions. That's a pretty rough way to treat a client in order to get at brand value.

My beef against purported means to value brands is that brands themselves are fragile and evanescent. A name like Enron or Arthur Andersen might seem to be worth billions one day and then, poof, with one damaging revelation, be worth less than an empty Dr. Pepper bottle. What kind of "value" is that?

Or take Tiger (and you can, now). A month ago his biggest branding problem was that Nike owned the TW logomark and his brand portfolio was a mess. Just the kind of problems that highly paid brand consultants love to tackle. Then a couple of weeks ago, he has a little spat with his wife, and poof. Suddenly Tiger's brand inhabits empty-Dr.Pepper-bottle-dom.

Oh, we can define a brand as an "intangible asset," sure. As such it should yield to a method of numerical valuation. But how lasting or useful is such a number? For me, a brand is a fragile little flower petal in the meaty hands of a tow-truck driver. One slip and poof, down goes your value.

Our Chase CEO Bill Butcher used to say, "Today's peacock is tomorrow's feather duster." A perfect scenario for a highly valued brand heading for trouble. Cock-a-doodle-do... then poof.

brandsinger

5 comments:

warren said...

Seems to me that the value of a brand relies more on the public's belief - that is, it's a trust relationship. Lose the trust and you lose the brand.

Maybe expressing it in that way could help clear up some of the confusion.

brandsinger said...

Nicely stated, Warren. Trust is key -- and very hard to measure, I would think.
As you may know, the Edelman PR people have a "trust barometer" -- which gauges sentiment related to trust. You can check it out here: http://www.edelman.com/trust/2009/

All the best from
brandsinger

warren said...

I didn't know about Edelman's effort; thanks for the reference. I'm glad someone's trying to measure this.

Shelby said...

Oh, how we Americans love to build up celebrity brands and then knock them down (or drive them into a tree?) Tiger is now a great example of the risk associated with a masterbrand.

But in the same way that Martha Stewart's branded empire recovered from her prison spell, don't you suspect the Tiger brand will bounce back?

brandsinger said...

Hi Shelby - Thanks for your comment - Yes, even champions are mortal... and a brand built on a champion's mystique is vulnerable.

Will Tiger be able to come back and be redeemed? Of course. But he'll need a thick skin... and a more open heart.

Stay warm!