Another brand evaluator - just what the world needs?

LONDON - The BSI is contributing to the development of an international standard for the 'black art' of brand valuation.

Putting a price on a brand, which to a certain extent is an intangible asset, is a major industry in itself. Superbrands, Interbrand and WPP with its BrandZ list are among the companies that have attempted this.

 

This latest effort, however, headed up by the International Organization for Standardization with UK input from the BSI, differs, as it comes from an internationally respected organisation outside of the marketing industry.

 

The draft standard specifies three approaches to brand valuation. The first is the income approach, which measures the value of the brand by reference to the present value of its economic benefits. The others are based on what other purchasers in the market have paid for similar assets and the value of the brand based on the cost invested in it.

 

David Haigh, chief executive officer of valuation consultancy Brand Finance, welcomed the standard as an attempt to 'create a consensus on how brands should be valued'.

 

‘Brands are the largest single source of intangible assets, yet historically, brand valuation has been viewed as opaque, subjective and unreliable - and a bit of a black art,' he says.

 

Nick Fleming, the BSI sector manager, says the aim is to produce a ‘consistent, reliable and transparent' approach to valuing a brand.

 

‘There is no commonly agreed method for performing evaluation,' he adds. 'The new standard will try to debunk myths and scepticism.' Fleming points out that the ISO has created a raft of committees comprising industry experts in several markets, including the UK, to compile the draft standard.

 

He says that it will be useful for brand evaluation consultants, but could also be used for companies reviewing their brand portfolios ahead of a sell-off.

 

Although the development of the standard was not an attempt to move in on the brand valuation industry, Fleming admitted that it could be used to create the type of lists that have grown more popular in recent years.

 

Operators in the brand evaluation have greeted the news with mixed views. Stephen Cheliotis, chief executive of The Centre of Brand Analysis and the chairman of the Superbrands Council, believes it to be too subjective an area for the ISO to become involved in.

 

‘Developing a standard for whether a plastic is up to certain scrutiny is very easy to do,' he said. 'It becomes a little bit more tricky with brands,' said Cheliotis.

 

However, Joanna Seddon, the chief executive of Millward Brown Optimor, which creates BrandZ, is more supportive.

 

‘In principle I think it's good,' she says. ‘The more that brand valuation is accepted by standards bodies, the more likely it is to be used.'

 

‘There is also some rather sloppy brand valuation work out there, especially by some accountancy firms,' she adds.

 

The BSI is looking for comments on the standard, and expects to publish a final draft next summer.

 

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