Why bother? 'Strong brands influence customer choice, and create loyalty, attract, retain and motivate talent and lower the cost of financing,' says Mike Rocha, global director, brand valuation at Interbrand.
What's it for? There are four reasons for valuing brands, says Joanna Seddon, president of New York-based consultancy OgilvyRED. The first is during an acquisition when you need to know how much goodwill to put on the balance sheet. Second is to understand how much your brand contributes to incremental revenues and profits. Third is to decide how much to invest in the brand. And fourth is to track how successful your management and investment has been.
Call in the experts. 'If you're doing this for compliance, for example, in an acquisition, it's fine to get accountants to do it,' says Seddon. If your goal is more strategic, you need someone with marketing expertise, she says. 'It will have more credibility if you bring in an outside expert.'
Keep up standards. A new standard, ISO 10668, should put everyone on a level playing field. 'To be compliant, the valuer must meet strict rules and demonstrate independence,' says David Haigh, chief executive of Brand Finance. And don't hide your methods in a 'black box'. ISO's standard requires that you show all your assumptions, workings and data sources.
Sound out the market. Explore how much other bidders would pay for your brand. Or look at similar brands recently sold.
Tot up your costs. Another valuation method is to work out how much you have invested in marketing and advertising your brand. The snag is cost doesn't necessarily equate to value.
What's the added value? Economic use – looking at the extra profits or revenues the brand creates – is the third option. 'If you want to use your valuation strategically to improve your marketing investment, this is the only valid approach,' says Seddon. Bring in research to understand what part the brand plays in making customers choose your product over others.
Repeat at regular intervals. 'A valuation is done at a point in time for a particular purpose,' says Haigh. 'It probably remains valid for no more than one to three months.'
Do say: 'We have built a powerful case for investment in this brand, using a valuation method based on discounted cashflow'
Don't say: '£50m for a logo? You've got to be joking!'