What’s your brand worth?
Recent research suggests that Apple owns the most valuable brand in the world, worth nearly $117 billion. Google comes a close second at $107 billion and IBM third at $76 billion.
The research reinforces that brands have the potential to be the most valuable things that a company owns.
However, all this value sounds incredibly impressive for these enormous corporations but since changes to international accounting rules have prohibited brand equity from being on the balance sheet as it is considered to be an ‘intangible’ in the same way that a customer database would be, the question many business owners, particularly those of SME’s may be thinking “how is this relevant to me?” and “what’s the point?”
Brand equity as an idea has been around since the 1980’s and can be defined as “the set of brand assets and liabilities linked to the brand – it’s name and symbols – that add value to, or subtract from, a product or service.”
At the point of sale or investment, if a business has a strong brand and the potential buyer/ investor sees the brand as differentiating with relevance and engages effectively with its audience, they see it as a stronger investment and vehicle to do business from. Therefore brand equity can be a critical factor in the actual value attached to a business.
Building brand equity does however have many facets that go beyond simply the transactional value a brand may or may not have. For example increased brand equity helps a company to: