Enterprise Innovation Podcast: Top success strategies behind the world’s most valuable brands with Brand Finance CEO, David Haigh

Key takeouts from this episode

• Why brand valuation was historically considered ‘hocus pocus’ by finance and why it’s clearly far from that
• Brand Finance’s methodology behind listing the global Top500 most valuable brands
• A key reason why relatively new brands such as YouTube, Uber and Facebook have made it to the Top500 list
• What the global Top 20 brands have in common
• Why Amazon is the most valuable brand globally
• Why Chinese brands are topping the list, and predictions for this trend to continue in the next 10 year
• Why luxury brand employees (such as those from Ferrari, Gucci and Chanel) are at the core of brand success
• What consulting firms, such as PwC and Deloitte, have taught other firms in the professional services space about turning employees into brand ambassadors

Building strong brand value is more than good marketing – smart investment and dedicated employees are also vital. In this episode of the Enterprise Innovation podcast, special guest David Haigh explains the key traits that make some brands more valuable (and more successful) than others.

Brand valuation was once viewed as a bit of a joke – a made up, mystical value that had no real substance. In fact, many accountants wouldn’t view brands as an asset ignoring the ROI on branding, and refused to consider them when valuing a company.

Yet when companies are bought by others, there has always been a premium paid over the net value. This was once written off as “good will”. But as premiums grew, the international accounting standards board decided they needed a more concrete explanation. In 2004 they finally stated it was obligatory to break down the values of the assets in this “good will” figure. And one of the most tangible assets in this breakdown was brand.

Special guest David Haigh, CEO and founder of the brand valuation consultancy Brand Finance, shares his experience with some of the top companies in the world. Read on to get a sneak peek into his expertise – and check out the full podcast on maximizing brand value to learn more (link at end).

Measuring brand equity and evaluating the strength of brands

To evaluate the top 500 brands in business today you need industry knowledge and top market research. In this podcast episode, David gives a detailed explanation of Brand Finance’s formula for scoring the value of a brand.

First, they pull data from Bloomberg on the top 10,000 companies worldwide. Second, they split larger brands (such as Unilever or Coca-Cola) into their smaller brand components. Third, they take a cut of the top 1000 brands, and evaluate them in sectors to create a score based on how valuable the brand is. A basic breakdown of this brand strength score includes:

• From an investor’s perspective, 25% is based on inputs. They investigate how the company advertises, whether their social media presence is strong or whether the brand has good distribution and brand awareness.
• The next 25% is based on the building blocks of the brand – the outputs. This includes the company’s prices, if they produce higher margins, or how quickly they are growing.
• Finally, the last 50% is based on brand equity – how the consumer (or stakeholder) feels about the brand. Based on market research, they evaluate whether stakeholders know the brand, like it, prefer it, buy it often, or do business with it more frequently.

The higher the score, the more likely a company will perform well in the future.