On this Cyber Monday, I’m left wondering, will we ever have a day when the metrics and automated tools available are so accurate and reliable that intangible assets like brands (and trademarks) regularly will be valued, bought, and sold online?
At rock bottom, a brand’s value is at least what another — in an arm’s length transaction — is willing to pay for it.
At least, because at any given moment, there may be no buyers willing to pay the brand owner’s lowest price, so in that instance, the owner values it more than others and keeps it, at least for the time being, until a buyer emerges who shares the same value determination.
The far more difficult question to answer is to put an actual number on the value of a brand, explaining exactly what factors must be considered to determine value.
No doubt, accountants play an important role in deciding, but they cannot and should not do so in a vacuum without collaboration from other relevant disciplines.
To that point, just last week, Branding Strategy Insider published an interesting piece on Brand Equity and the Center of Value. Last month Brad VanAuken also wrote at BSI about brand value: “Ultimately, brand value is a perception. It is a perception of the ratio between benefits and cost.”
Yet, Seth Godin appears to be skeptical of many beliefs about brand value:
“The vast majority of products that are sold are treated as generic by just about everyone except the naive producer, who believes he has a brand of value.”
“If we (the user or the observer) can’t tell who made it, then there’s no brand. That’s the distinction between generic and specific…”
Actually, that is one more place where trademark types might differ, because in our world, knowing who puts out a product under a certain trademark is not required to own the legal right to exclude others. Trademarks exist even when their owner is anonymous or unknown.
And, while the value of an underlying trademark is not necessarily coextensive with the brand’s overall value, it must be considered, as one of the important intangible assets forming the ultimate value of a brand.
As Brad Walz articulated here earlier this month, a trademark strength analysis is an important consideration to determining a brand’s value. Part of trademark strength would be the legal ability to expand the use of a brand name and should be considered too.
In addition, the extent and validity of registered rights must be considered. For example, if a brand owner has begun to expand with sales and distribution overseas, and it has laid the legal foundation for not being excluded from using the brand name in those countries (by winning the race to the trademark office in those countries), these valuable legal rights must be considered in the overall value of a brand.
At a minimum, it seems to me, marketing types, trademark types, and other intellectual property types, must be part of the team to determine a brand’s value.
Who else must be represented at the accountant’s table to arrive at an accurate and reliable number for a brand’s value?