From football clubs to commercial banks; luxury fashion houses to countries, Brand Finance measures the strength and value of brands throughout the world.
Upon joining the IVSC as a corporate member this month, we spoke to CEO and founder, David Haigh, to find out more about their work and the growing importance of brand in assessing and driving business value.
How have you seen businesses change the way they think about brand as a strategic asset over the last decade?
In the past there has been a tendency to think of brands simply as logos and of marketing as a necessary cost. Increasingly, businesses are noticing that branding and marketing can be used as a differentiator to build volume, price, and numerous other benefits to businesses.
They also note that with the emergence of big databases and much cheaper market research, it is easier to find out what works in building value. Coupled with the fact that many businesses are having to confront this for financial reporting and tax reasons, businesses are getting on board with the idea that brands and other intangibles can and should be valued.
How has brand valuation been advanced in recent years? What developments have supported enhanced accuracy in determining brand values?
When Sir David Tweedie valued the Smirnoff brand in 1987 and other brands were put on balance sheets for the first time in the late 1980s, it caused an uproar because the concept was new, with many claiming it was creative accounting. Following that, financial reporting bodies worked to update accounting standards that everyone could agree on.
In 2003, IFRS 3 (Business Combinations), IAS 38 (Intangible Assets), and IAS 36 (Impairment Reviews) were all created to overcome the issues, and most local GAAPs followed suit with similar standards and rules. IFRS 3 mandated that the value of an acquired business should be split between all assets – tangible and intangible – plus general goodwill; IAS 38 defined intangible assets; IAS 36 stated that the value of all of these identified assets should be reviewed for impairment every year. These standards – while stopping short of allowing internally generated intangibles being put on the balance sheet – formally endorsed the idea that intangible assets have value and can be valued accurately.
The Brand Finance Global 500 league table will be familiar to many eNews subscribers. What trends have you identified in recent years and what interesting insights can you give us from the latest data?
Every year, Brand Finance values around 5,000 brands. The world's 500 most valuable brands are included in the annual Brand Finance Global 500 report, which this year was launched at the World Economic Forum in Davos. Then throughout the year, we roll out around 80 rankings of the most valuable and strongest brands in all sectors and countries.
This year, Amazon defended its position as the world’s most valuable brand following 25% growth to US$187.9 billion, with Apple and Google placed 2nd and 3rd. With tech brands dominating the ranking, Microsoft made a comeback to top 5 with 47% brand value growth, but Facebook saw its brand strength tarnished by scandals.
Looking at regional trends, brands from China continued to climb up the ranking as the country’s total brand value in the Brand Finance Global 500 broke US$1 trillion for the first time. Interestingly, the fastest growing brand in 2019 is...
Click here to read the full interview on the IVSC website