Posts Tagged ‘Branding’

What’s the value of your brand?

March 30, 2017

Andy Warhol’s “Coca-Cola [3]”
Crystal Bridges Museum of American Art

The typical raw materials of valuation are numbers – and investor relations people get very comfortable working with metrics that feed investors’ calculations for growth, margins, cash flows, multiples of earnings and the like, and assorted more granular numbers.

But what value do you assign to your company’s brand? Your customer base? Your products or product lines? Valuing these seems open to as many interpretations as, say, a painting by Andy Warhol. Assigning a dollar value seems more like art than science.

So I find it interesting when brand gurus, from time to time, peg the best-known brands as having a monetary value. Recently I ran across the “Global 500 2017” – a list of the world’s most valuable brands – published by Brand Finance, a London consultancy in brand strategy.

The list itself is interesting to browse. No. 1 in 2017 is Google, nudging Apple to No. 2 from its place at the top last year. The iconic Coca-Cola, a favorite of old-school marketing profs (and Andy Warhol), has slipped to No. 27. Christian Dior is No. 500.

The directory is sortable by industry, country or year. If you sort for your industry or country, you’ll see the big names – maybe your company’s, if you rate. If not, it’s still interesting to see who did make the list. (Estimated dollar values are given for the top 100. Beyond that, the Brand Finance table is a teaser to draw you into buying their services or reports. Everyone’s got to make a living.)

So what makes the Google brand worth $109 billion, and Apple $107 billion, and Amazon $106 billion?

Poking around for Brand Finance’s Methodology page, you can pull back the curtain. When they talk about a brand, they mean the trademark – words, iconography and other intellectual property. The value, then, is an estimate of what you would have to pay to buy (or could gain by selling) global rights to that brand. Brand Finance estimates the future revenue that a brand will generate, applies a royalty rate, and does a net present value calculation. Along the way, the gurus mix things like a brand’s financial performance with its emotional connection and sustainability to score “brand strength” on a scale of 1 to 100. Then they multiply by a royalty rate based on deals in the relevant sector. And they apply that to forecasts of future revenues related to that brand. Stir, mix and – voila! – brand value.

In my mind, intangibles are best understood qualitatively. Saying the Starbucks brand is worth $25.615 billion seems less meaningful than talking about its actual financials, plus forecasts – or looking at today’s market cap. Investors should qualitatively understand those emotional connections, daily habits of customers, sales of other stuff under the Starbucks name, and so on. Separated from the organization, all the baristas and training, aromas in the stores, and whatever else goes into the “brand,” the value of the name could go way down. Sometimes it happens fast, when a big crisis overtakes a company. More often it is slow, as management loses its edge or people’s tastes change and leave the brand behind.

When it comes to assigning monetary values to brand, I must confess I feel more confident with, well, the numbers – in the sense of sales, margins, discounted cash flows.

But it’s still interesting to contemplate the value of your company’s brands (corporate and products). We should all analyze and talk with investors about the durability, customer loyalty, competitive strengths, and values that maintain and bring growth to our brands. Investors will factor this into their assessment of brand value – which is the one that counts in IR.

What do you think?

© 2017 Johnson Strategic Communications Inc.

 

 

IR webpage: connecting with investors

August 22, 2016

Mattel IR webpage

Looking at the IR page on Mattel’s website the other day, I saw something worthy of emulation. Not some fancy technology – the toy maker uses a standard back-end system with an automated feed. No beautiful graphics. Or even terribly unique content – just news releases, SEC filings, slide decks, stock quote … the basics seen on other IR sites.

What struck me was a brief introductory text. A welcome. Here it is:

INVESTORS

In addition to making great toys, the Mattel family of companies is proud to uphold our responsibility to investors and media by providing immediate access to the latest Mattel financial information and news. Delve into executive presentations, events, track stock history, and annual reports.

What I like is that this lead-in to the page makes a connection. Most IR webpages skip the pleasantries. Investors, after all, know what company they’re researching, and they can find links or tabs that lead to information they need. “Just the facts, ma’am” is the typical rule.

For me, Mattel’s little intro accomplishes three important things:

  1. Branding – reinforcing the feel-good identity of Mattel
  2. Bonding – expressing a commonality of interest that lets people know “We’re here to serve you”
  3. Calling to action – encouraging investors to use specific tools

At the bottom of Mattel’s IR webpage is the company’s boilerplate – reinforcing who the company is, in factual terms like names of its main toys and in feel-good terms like awards for ethics and corporate citizenship. And the page encourages linking to social media.

If a website is meant to be interactive – and it is – we ought to give more thought to how we connect with people. Maybe even tell them we are providing this information because we think they’re important.

© 2016 Johnson Strategic Communications Inc.

 

What’s your creation story?

February 11, 2014

As investor relations people, we often hear or talk about stocks that have a great “story” – by which we mean a memorable explanation of how the business generates value. Stockbrokers and the buy side like a good story.

So I was intrigued by “How to Tell Your Company’s Story” in Inc. magazine’s February 2014 issue, which highlights entrepreneurial CEOs and their corporate offpsring. Writer Adam Bluestein says:

Before it has investors, customers, profits, press coverage, or even a perfected product, every startup has at least one valuable asset: its story. So you might want to ask yourself: Who are you? Where did you come from? Why are you doing this? … your company’s origin story has more power than you might imagine.

Inc. focuses on the sizzle of young entrepreneurial stories, of course, but the power of how and why your business got started applies to corporate old-timers as well. Even decades into a company’s history – sometimes a century or more – the values, initiative and focus of a founder can influence the culture and brand appeal of a business:

The creation myth is not an asset just for startups. As those businesses grow into established firms and individual founders figure less prominently, the origin story can serve as both a road map and moral compass. Keeping that story alive, keeping it true, and keeping it relevant–these are the challenges more mature businesses must contend with.

What’s the significance for investor relations? Well, investing ultimately is a bet on a company, a group of people trying to accomplish something in the bigger world around us. In IR, we hope to connect with investors whose perspective extends beyond the current quarter.

If we can show that creativity and drive are embedded in a company’s DNA, that business is probably a good bet over the long haul. Think about great companies, and you’ll realize they are also great stocks.

What’s your creation story? Have you researched it, defined the distinguishing characteristics, set out the strategic essentials that fuel your business today and will continue to do so in the future?

© 2014 Johnson Strategic Communications Inc.

Memorable statements

November 16, 2013

Like many who were blessed to work in the robust culture that entrepreneur Ewing Kauffman built in a pharmaceutical company once called Marion Laboratories, I benefited from two core values: First, treat others as you would want to be treated, and, second, share the rewards of performance with those who contribute.

Eighteen years later, these simple rules still roll off my tongue easily. This came to mind recently when talking with a client who recited the mission of one of her former employers, in similar fashion – one, two.

Memorable. Brief. Simple.

These qualities, surely, are what make a great corporate mission, value statement or brand. So ad jingles and rhymes about cereals and sodas echo around in our heads decades later. We remember the guiding principles of our long-past employers. Colors and shapes call to our minds names of companies: Coca-Cola, Dow, BP.

And how about investor relations?

Do we give the market memorable, brief and simple messages?

Or do we describe our companies as a complicated matrix of market segments and product categories? A “portfolio” of services and technologies? A graphic collection of boxes crisscrossed with arrows?

And our business strategies: 18 points? Four categories with multiple strategies for each? Changing formulations quarter by quarter?

We should try to boil our companies down to a corporate brand – a few words that are memorable, brief and simple. A reason to invest. Can we capture the essence in two points, or one? A half-dozen words?

© 2013 Johnson Strategic Communications Inc.