Thursday, June 19, 2008

Brand Value

Brand marketers can learn about ways to drive the ROI and value of their brands by learning from other disciplines. For example, in the world of business acquisition and sale the factors that are used to analyze core business valuation can be used to assess the strength and potential ROI of an existing brand. Buyers and sellers will conduct a SWOT anaylsis of the business, just as brand marketers anlayze the competitive strength of brands. In the acquisition world, the multiple used against EBIDTA is generally larger for larger businesses than small businesses. So to, this general rule might be applied to evaluate the relative strength of a brand. Larger share brands are generally (although not always - strength in a key niche can be valuable) more valuable than lower share brands, and there has been sufficient research conducted to document the strenght and added value of being the share leader. Business valuations typically also look at the concentration among key customers. Too much business with a core customer may lower the overall valuation because of the increased risk. This holds true for brands - too much concetration with WalMart can be dangerous for the brand. Business valuations may be lower for business where the owner is sole rainmaker and future sales are at risk when a change in control occurs. For brands, brand value may be at greater risk when a brand spokesperson or long-term brand leader has too great a role in the personality of the brand. So,take a moment and see what you can learn by looking at your brandin the eyes of a potential buyer.

No comments: