Please make the brand valuation humiliation stop

I went to see my doctor last week and he told me I had contracted a venereal disease. Somewhat taken aback, I visited a different doctor for a second opinion. He ran a series of tests and came back with mixed news. I was free from any sexually transmitted diseases but, unfortunately, his tests showed that I was in the late stages of dengue fever and had only six weeks to live. With my head in a spin I spoke to a good friend who is a GP. He ran me through a battery of tests and then pronounced me in amazing health for someone in their 40s, with absolutely nothing to worry about.


Okay, I made all that up, but if these consultations had actually happened you might imagine I’d be feeling pretty confused. The three wildly different diagnoses would leave me none the wiser about my general health, but provide certainty that the medical profession was utterly unreliable.

That’s pretty much how the world of business must now be thinking about brand valuation. Last week Interbrand published its seminal 2012 league table of the top 100 most valuable brands. I used to look at this ranking, along with the competing valuations published by Millward Brown’s BrandZ ranking and that of Brand Finance, but it is becoming clear the whole business of ranking brands by their financial brand equity is becoming a disaster.

If you look across the three valuation tables you see an absence of uniformity in a number of cases.

For example, take Intel. It’s hardly a new company and, thanks to its component brand nature, possibly one of the easiest to put a value on. And yet despite that, the world’s best regarded brand valuation firms variously rate Intel as the 8th, 20th and 49th biggest brand. The estimated value of Intel’s brand equity is either $15bn (BrandZ), $22bn (Brand Finance) or $39bn (Interbrand). See what I mean? One thinks Intel’s brand is worth more than twice what another has calculated. How can that be right?

Even more striking is Hermès, the French luxury brand. Depending on who you listen to Hermès is either the 32nd, 63rd or 321st biggest brand in the world. You can choose from a valuation of $3bn, $6bn or $19bn. Eh? $16bn is a big difference of opinion.

All this is a great shame because these league tables are pretty much the only thing a lot of influential finance and senior executives ever see of branding. The minute they look at two league tables, executives will, like the hapless patient in the hypothetical medical case above, conclude the whole business of branding is a load of old bollocks and remain completely in the dark with respect to which brands are more valuable.

There’s a reason most C Suite executives think marketers are fluffy. It’s because we are. And our league tables of brand valuation prove the point.

Dumb marketers keep banging on about getting “marketing into the boardroom”. Are they insane? We can’t even agree within a HUNDRED BILLION DOLLARS what the value of the world’s biggest brand is. BrandZ says Apple is worth $182bn, while Interbrand claims it’s only worth $76bn. Clearly, there will always be differences in valuation caused by methodology or base assumptions. But ONE HUNDRED BILLION DOLLARS? Come on! It’s a joke.

So here’s my two-point plan for fixing this public and important aberration that brings shame on anyone who believes in brand management. First, never look at anything by Superbrands ever again. I think this ranking is crazy and every time I see one of its league tables a little piece of me dies inside. In its

latest Consumer Superbrands league table, it has Royal Doulton as being “more super” than Apple. Fuck me. This nonsense makes all of us involved in brand management look bad. No more pain, please.

Second, we need the marketing equivalent of a cage fight to work out who is the most accurate valuation firm. You’ll note that I am being deliberately ambivalent about all three big valuation firms because maybe one of them is much more accurate than the other two. Perhaps they look inaccurate because the other two are way off. The only way to find out which is more on the money is to wait for an actual acquisition to take place and then compare the price paid with the one predicted by the firms.

Third, if this does not happen (or, more likely, if the value of the brand equity is not revealed publicly in the purchase price), we should arbitrarily select one of the three firms and strangle the other two. Pick the famous one - Interbrand. Pick the one with all the consumer data - BrandZ. Or the one with the accounting credentials - Brand Finance. Just don’t continue the pain of these divergent, hugely embarrassing valuations any more.

Because the only value I’m certain about these days is the amount of damage that these wildly different reports are doing to the profession of brand management.

Readers' comments (20)

  • Very good point. If it was a medical opinion, I would chose the with the medical credentials. For a valuation, I would chose the one with the financial credentials.
    I am biased. But aren't we all?

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  • Forget the value of brand equity. It doesn't matter. It's not important. The only corporate value that matters is the current share price multiplied by the number of shares. Simples!

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  • Hear hear!!

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  • Meanwhile, back in the real world of SMEs where things like making profit actually matter, we measure stuff like how much £ is coming in the door. Anything else is utter academic, meaningless and inconsequential drivel, promoted by folk who can't do a proper job. Well said as ever Ritson.

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  • Bravo. Valuation in its current form is obsolete and increasingly laughable. Time for a new model.

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  • People have widely varying perceptions of the value of a certain stock (think analyst target prices which can range massively), why is this any different?

    The biggest error in trying to understand valuation is assuming there can only be one correct answer. Any valuation needs to be understood in the context of the assumptions being made in the valuation. For example if you believe a company is going to grow more than someone else then your value for that company will be higher than theirs (assuming other things like risk, life span etc. remain equal).

    Therefore 3 differing values for one brand doesn't alarm me, but one needs to understand what is driving those values so you can form an opinion on which one you agree with (if any). Alternatively do your own valuation.

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  • Dear Mark,

    As you rightly point out there will always be differences in the valuations depending on the methodology and base assumptions used, which is indeed confusing and does bring the discipline of brand valuation into disrepute.

    However your comments are very damaging to the industry and following your comments in last year's Marketing Week article it seems that we are going around in circles. Brand Finance responded directly to your points raised with the launch of its Campaign for Independent Brand Valuations, which looks in detail and objectively at why the numbers are so different. We welcome your views on this in order to shed some light on the issue.

    For anyone that is interested in learning more about the different brand valuation methodologies you can read the article here

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  • If the notions of brand valuation is all non sense anyway, then how come some chaebols/conglomerates/keiretsu's are still committed to spend millions $$$ every year. Why don't you just write to the CEOs directly? Good luck in convincing him or her! You might probably end up landing a job as the CMO.. Share with us your success story and view then.

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  • Dear Mark,

    Brand values are no different to valuations of any other asset class, be it company shares, property, or fine art, where valuation opinions can also differ widely.

    Faced with differences in opinion and methodologies, it is crucial to establish the purpose of the valuation and select the approach that will best deliver against those needs.

    For valuations to inform strategic brand management, for example, we would suggest consideration of the following factors:

    - A method recognised as compliant with international brand valuation standards

    - A forward-looking approach that lets you know what to do next rather than a ‘rear view mirror’ measurement of past performance

    - Consideration of the strength of the brand inside the organisation (with management and employees) as well as outside with customers

    - Capacity to build engagement and a sense of responsibility for the brand across your organization

    - Depth of experience and credentials

    Of course the number matters, and we should be sure that it is robustly calculated and cross-checked against the total value of the business, but many of the benefits of conducting a brand valuation come from the insight generated during the valuation exercise.

    Via the attached link you will find a whitepaper and video explaining our approach and applications for brand valuation (

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  • I wouldn't pay 78bn dollars for Coca-Cola brand - that's just a trade-mark of sugared water in a category destined to be dominated by private labels. Soft drinks consumption occassions are limited and category doesn't have much importance among consumers. I wouldn't pay tens of billions dollars for say Vodafone - what exactly would I buy in this case? Imagine services and tariffs are the same among all mobile companies (well, they are in fact), what exactly is Vodafone brand? How exactly will it sustain customer loyalty? How exactly will it help to recruit new customers? In other words, what exactly Interbrand suggests I am buying here? I definitely agree with Mark - never look at the those rankings.

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