Recycled Brand Is an Asset with Equity

In a recent seminar I presented to the DC Chapter of the American Marketing Association, I gave the attendees my perspective on the defining characteristics of a brand:

1. A Promise
2. An Identity
3. The Customer or Stakeholder Experience
4. An Asset with Equity

I cited the Interbrand study published in a 2007 Business Week magazine article that rated Coca Cola as the world’s number one brand with an estimated brand value of $65 billion. I also noted that guru investor Warren Buffet recently invested $6.5 billion for confectionery brands Mars and Wrigley.

For further proof that a brand is an asset with equity, I suggest you check out the June 26, 2008 Wall Street Journal article where it was reported that a brand that had fallen into bankruptcy and was thought to be dead, was resurrected by someone willing to spend millions of dollars on it.

The retailer Sharper Image was revived from its demise to become a “virtual brand” name with its moniker rented to other retailers. Hilco and Gordon Brothers paid about $49 million with about $33 million of this amount attributed to the Sharper Image brand name.

The buyers intend to pursue a brand-licensing investment strategy by selling the rights to use the brand name on products that will be manufactured and sold by other companies. James Salter, Hilco Consumer Capital Chief Executive, envisions Sharper Image products being sold via infomercials, websites and catalogs to consumers around the world.

It seems a branding company can earn royalties in the range of 2% to 3% of the brand revenues. It all adds up to a nice piece of change for a recycled brand!

Investing in Brand Leaders

Warren Buffett is the leader of that new category of investors--a brand investor. Strong brands drive his portfolio.

This savvy investor's strategy reflects a strong penchant for stocks with a verifiable brand identity--those household brands with value not sensitive to swings in the economy and free to increase prices to keep profits up.

Buffett supports companies that stand behind and deliver on their brand promise. And the results...well, check their marketplace position. A well-regarded brand--that intangible corporate asset with business value and economic impact that influences the behavior of customers and stakeholders--delivers in the marketplace.

Buffett owns Coca Cola, for example, the world's #1 brand as ranked by Interbrand in a 2007 Business Week magazine article when Coca Cola was determined to have a brand value of $65 billion. This brand value was determined by taking the company's outstanding stock value and then subtracting the value of its existing physical assets listed its annual report.

Brand investors focus on strong brand leaders that leverage their brand equity, which includes their cadre of loyal customers, name recognition, and their dominance in the field.

While not a perfect and error free model for investing, brand investing fits the patient investor who is comfortable with a long term-investment that uses brand power as a tail wind.

If brand can indeed be valued on a balance sheet and is used as a financial performance indicator that affects investor activity, it behooves any organization to focus on effective management of their brand assets.

Brand valuation can help companies, government agencies, and non-profits refocus their "business" and ensure that marketing and branding efforts do not drain the kitty, but create returns.

While a brand provides a unique long-term competitive advantage and has obvious commercial importance, it is important to mention that current accounting regulations are deficient in the treatment of intangible assets. That is changing as the large number of mergers and acquisitions has forced a second look at how to report brand value on the balance sheet.

Branding in the Federal Sector - AMA Event

Brand development is no longer the sole domain of consumer marketing. Government organizations and non-profits are reaping the benefits of a strong brand, creating awareness for their causes, and moving people to action.

At the June 25 American Marketing Association - DC Chapter luncheon seminar, "Branding in the Federal Sector," Len Johnson and Joanne Giordano, former USAID Deputy Assistant Administrator for Public Affairs will each present a high-profile federal agency branding case study.

DHS - Len will present the process used to create the employer recruitment brand developed under a contract with OPM for the Department of Homeland Security. He will discuss the research and design process used to develop key messages, taglines, and collateral materials to attract new employees to DHS.

USAID - Joanne will discuss challenges and ultimate success of USAID's global branding campaign to brand U.S. foreign assistance as “from the American people.”

Held at the Herman Miller Design Center, 600 14th Street NW, Suite 700, Washington, DC 20005 (Near Metro Center station on the Red, Orange and Blue lines), the luncheon seminar costs $20 for members and $35 for non-members. A $10 surcharge will be added for onsite registrations.

RSVP deadline: Monday, June 23, 2008 C.O.B.
Registration: www.amadc.org or 703-683-4883