Business Benefits of Brand Valuation
Don E. Schultz and Heidi F. Schultz
and adapted from an upcoming book titled Kellogg on Branding,
you're a brand owner or brand steward, you've probably asked yourself:
is the importance of a brand valuation, especially given the high
cost and labor-intensive nature of most valuation projects? Increasingly,
we get this very same question from CFOs and the financial community.
are, in fact, several benefits of brand evaluation for the brand
The Buying Decision: If
the brand owner is planning to buy a brand, the knowledge of the
brands value is vitally important. We won't go into this
one much further, besides suggesting that there are at least three
primary methods of evaluating brands over time. Each method
has distinct goals and objectives. The challenge, of course, is
determining which one to use and when.
The Selling Decision: Same as 1. The brand seller must
quantify the business value of the brand before negotiations begin.
3. Optimizing Resource Allocation: Knowing the financial
value of the brand allows management to compare it against other
tangible and intangible assets and consider how to best apply
finite resources to create additional value. Typically, the brand
is one of the most valuable assets the firm owns, so it only seems
prudent for management have a clear idea of the brands financial
4. ROI: If the brand has definable financial value, then
the investments and returns against it can and should be measured.
A brand valuation provides a starting point for any determination
of whether investments being made in the brand are providing a
reasonable return to the firm.
5. Bargaining Power in Partnerships & Alliances: In
many cases, brands often enter into various types of licensing
arrangements, co-branding agreements, joint promotional programs,
and so on. Knowing the value of the brand provides an important
negotiating tool when working with other companies in developing
the terms of such arrangements.
6. Tracking Shareholder Value: Brand value is a key element
in shareholder value. If the value of the brand is increasing,
the value of the shareholders holdings in the firm is doubtless
increasing as well. Clearly, the value of the brand is a key element
in identifying shareholder value.
7. Building a Brand Perfomance Scorecard: Brand valuation
can provide the base for development of an ongoing brand
scorecard to track financial progress over time. Typically,
the scorecard pulls together attitudinal and market performance
elements. It also serves as a framework for focusing organizational
attention on the most important factors in the brand long-term
success. Properly developed and executed, a brand scorecard serves
as a valuable management tool to adjust and allocate scarce and
finite corporate resources to the best benefit of the brand and
This article has been excepted and adapted from an upcoming book
titled Kellogg on Branding published by John Wiley.
Schultz is professor of Integrated Marketing Communications
at the Medill School of Journalism, Northwestern University. He
is also president of the consulting firm, Agora, Inc. Don is the
author of thirteen books, including his latest “Brand Babble:
Sense and Nonsense about Brands and Branding.” Early in his career
Don worked at Tracy-Locke Advertising and Public Relations. He
received his B.A. from the University of Oklahoma and a Ph.D.
from Michigan State University. 28
Schultz is Executive Vice-President of Agora, Inc., a marketing
and branding consulting firm based in Evanston, IL, and a lecturer
in Northwestern University's Department of Integrated Marketing
Communications. Heidi received her Bachelors’ Degree fro m University
of Southern California School of Journalism and her Master’s Degree
from Northwestern University’s Kellogg School of Management. She
joined Agora in June 1995 after almost 10 years at Chicago, the
nation’s largest monthly city magazine. Schultz is the co-author,
along with her husband Don Schultz, of several articles and columns
on IMC, brands and branding. In 2003 the couple completed two
books, “IMC: The Next Generation” published by McGraw-Hill, and
“Brand Babble: Sense and Nonsense About Brands and Branding.”
published by South-Western/Thomson Publishing.