The intriguing thing about brands is that they are mostly intangible. You generally won’t find the brand value of a company on its balance sheet. As an example, the $90 billion that Coca-Cola has spent on advertising in its history has no value that is shown on Coca-Cola’s balance sheet. Nonetheless, the brand value clearly is there. The market value of Coca-Cola’s common stock is ten times that of the stated book value of the equity.
So how do we value a brand? The problem with a task like trying to value a brand is that there will always be some form of circular logic in this kind of exercise.
Is Coca-Cola such a strong business because it is built around such a strong brand, or is Coca-Cola such a strong brand because it is built around such a strong business?Tweet
Where is the boundary where the value from the business model stops and value add from the brand begins? Is it even possible to separate those two things from each other? Brands are contextual. If you could buy the brand out of Coca-Cola, Inc and pivot it to sell Coca-Cola branded furniture, value would most definitely be destroyed.
Brand Valuation Frameworks
As it turns out, ISO – the International Organization of Standards – has formulated a standard on Brand Valuation. You can even find an old version of the standard online.
Interbrand we the first company to get a certification for standard ISO 10668, the standard for Brand Valuation. Interbrand publishes an annual list of the most valuable brands in the world. You can read more about the Interbrand brand valuation methodology here.
Brand Valuation Resources
- Overview of ISO 10668: Brand Valuation (BrandFinance.com)
- Measuring Brand Value – How Much Are Brands Worth? (B2BInternational.com)
Something more to add? Let us know in the comments section!