Is Your Energy Brand Worth Billions?
Naseem Javed, CEO, ABC Namebank
Is your brand valuation worth a billion dollars today?
Maybe yes or maybe no, but it surely is worth something
pretty big. At the end of the day, all the work you
have put in pushing your name identity and your range
of products and services in your marketplace adds
up in an abstract space of the consumer's mind, where
it acquires some great value. This equity can be measured
as a real, soft asset. It can have a monetary value
like that of a certain type of goodwill or particular
reputation. Brand identity is something you might
not use to pay the bills but can surely use to negotiate
a better price in an M&A or sale of the company.
To measure the value, there are many rules, mostly
according to the sales volume and how it has increased
over the years, money spent in promotion and advertising,
and how the brand has climbed and at what rate. There
also are many other factors, like financial performance,
customer perceptions and actual market share.
Most valuations are in billions of dollars; otherwise
they don't get media attention. Most top brands of
any country are often valued in tens of billions of
dollars, and unless you gather a team of forensic
accountants, there is no way to prove it wrong or
to challenge how a US$50 billion brand value slipped
to $25 billion and vice versa.
Most high-profile valuations are done without any
input from the management and the owners of the brands,
as it is done from published figures. Sometimes brand
owners get pretty upset as they are moved seemingly
arbitrarily up and down the scale against their competitors.
Normally, year after year, Coke, IBM, Microsoft,
Disney, Toyota and Gillette are given a combined value
of close to half a trillion dollars.
Most people would think that if Coke were to restart
its entire branding history, it would easily cost
a trillion dollars, as the company marshaled a global
country-by-country marketing and branding launch in
a bid to repeat its branding success. The brand valuation
of Coke is over $50 billion or so, but somehow the
total stock value of Coke is still about $40 billion.
Let's explore reality.
Brand Name Dilution
A globally protected unique brand with a unique
name identity and steady sales growth can be valued
by multiplying annual sales a few times, adding in
all the advertising and promotional costs spent on
that brand from its inception, and adding in expected
sales and the value of each client spread over years.
From that, subtract some key things, like competition,
lawsuits and other risks, such as possibly losing
ownership claim to the brand name and so on. The bottom
line is that you might easily end up with a billion
Certain things are very tangible and black and white,
such as the brand name and its ownership; simply put,
either you own this name outright or you don't. Most
managers try hard to convince themselves that their
single trademark filed in the country of origin is
sufficient. They ignore the global e-commerce reality.
Most CEOs are simply shy to check the dilution of
their brand names on Google. Because less than 1 percent
of names are globally protected, the chance is that
the entire evaluation is on shaky ground. During any
M&A, a price is established on hard and soft assets.
Brand valuation is really a soft asset, as opposed
to trademarks and intellectual property, which are
Imagine, Amazon without its globally protected name
identity and URL is just a warehouse with books. E-trade
is just an office. What about EBay or Google? The
message should be pretty clear.
Management should formulate a small committee and
take a quick inventory of issues to calculate some
brand value numbers. As long as the resulting valuations
are a few times over total stock value, you are doing
OK. However, if for some reason it is way less than
total assets, then you need to figure out all about
your branding and the real issues surrounding the
ownership of the brands, names, trademarks and URLs,
Today, branding correctly with the right image and
a universal name identity is still a very easy thing
to do. All it requires is the right skills. However,
the old mass-advertising model is dead. Now, one-to-one
marketing offers extremely unique opportunities to
become a viable brand with the smallest budget in
the shortest time. Apply the correct expertise and
correct methodologies. Old models are dead.
If for some reason your brand is not worth a billion
dollars, start the right image development process
today. It won't take long. Just go for the new rules
and new laws of creating billion dollar brand name
identities. It is very easy.