Advent Blog

What’s In A Name?

What is value? Consider this: Brands and Branding points out that in mid-2002 the book value of The Coca-Cola Company was $10.5 billion. At the same time the stock market value was around $136 billion. How do you explain a staggering difference of over $125 billion? Assets like contracts, recipes, and networks make up a portion of the enormous gap. But, independent estimates ascribe over half of the company’s intangible value, an almost $70 billion dollar price tag, to the Coca-Cola brand name alone. For some companies, up to 70% of their market value is attributed to the brand.

A study by Interbrand found that brands account for more than one-third of shareholder value. To give some added perspective, in 2007 the combined GDP of Croatia and Vietnam was around $121 billion (see the list). The combined value of the Coca-Cola and Microsoft brand names was 124 billion.

A brand is more than a name, more than a logo, and more than most people realize. Rita Clifton, former CEO, author, and consultant calls a brand the “most important and sustainable asset of any organization.” And she does mean any organization. Branding is not just for the mega-multinational corporations. Recent years have seen the triumphant ascension of brands and branding. The presidential race is heating up and “republicans are trying to again make the GOP brand mean ‘small government’ and ‘fiscal responsibility’” (Read the usnews.com article). Likewise, athletic teams, charitable organizations, and even individuals are encouraged to see themselves as a brand.

Unfortunately, ethically irresponsible behemoths like Enron who have invested heavily in branding have sullied the brand reputation. At its worst, a brand is deceptive — an illegitimate unrepresentative façade. But the Red Cross and UNICEF use the super-power of branding for the forces of good. Brands offer enormous advantages. In an age when a socially conscious public has access to news that is transmitted instantaneously and dispersed widely it behooves companies to behave.

Take a look at Wal-Mart. The Bentonville, Arkansas based giant has been hounded by socially conscious watchdogs for everything from discrimination and sub par healthcare to environmentalism and sustainability. CNN’s Fortune magazine reports that Wal-Mart has answered earnestly with sweeping changes and that their responsiveness is paying off at the checkout counters (Read the article). Its stock has risen 38% since September. Branding promotes accountability for services, quality products, and socially responsibly practices. A brand offers a carrot to fulfill promises and a stick to those who do not. To chance flushing your company’s single largest asset would be a foolish and risky endeavor.

An equally foolish move would be to never even start building brand equity. Patrick Barwise, professor of management and marketing and chairman of the Future Media Research Programme at London Business School, suggests including a metrics system to determine your most effective marketing activities. He notes a gradual steady flow of resources away from traditional media advertising towards marketing that is direct and interactive. Experiential marketing posts measurable results on the metric dashboards and CEOs are revving up their efforts.

McDonald’s is moving up up and away from traditional advertising. After taking a hit to its flabby gut after the movie Super Size Me, McDonald’s has repositioned itself; its stock is up over 45% in the last year and it earned a no. 8 on BusinessWeek’s Best Global Brands list. McDonald’s is finding new ways to connect with customers. In a BusinessWeek interview, Chief Marketing Officer, Mary Dillon, says, “Everybody is living in a multiscreen world, from computers to television to cinema, and it’s not a one-way street. We need to make our messaging more like a dialogue, and not a monologue” (Read the article). McDonald’s success is also attributed to snazzed up restaurants to create brand spaces that allow a more pleasurable dining environment. Interactive marketing that provides customers with a memorable experience is a current trend in advertising and an effective brand building tactic.

Tom Blackett, a leading expert on brands, advises not to treat your brand as a cost, but as an investment. In mature markets it is often a company’s largest overhead cost. Though it is difficult to see the returns on a spread sheet, the value created by successful brand management is enormous. Blackett offers particularly relevant advice in these current turbulent economic waters: a strong brand will keep a company afloat during difficult times. This highlights the importance of brand maintenance. Clearly, a brand is more than a name. Investing in external and internal branding promotes ethical behavior, adds stability, and increases a company’s value.

Advent thrives at the forefront of the cutting edge experiential marketing industry and for 20 years has helped rapidly growing companies develop their brand through interactive exhibits, events, and office environments. Based in Nashville, the company is a creative industry leader with Fortune 500 clients like VF Corp and Mars, International. For more information, visit www.adventresults.com.

Clifton, Simmons, et al. eds. Brands and Branding. New York: Bloomberg Press, 2004. (buy it)