Question

Topic: Branding

Estimating Future Brand Value

Posted by Anonymous on 7/21/2008 at 12:54 PM ET 50 Points
I am trying to figure out how to come up with some figures that will give me and my employer an idea of the future revenue that will be generated by my branding efforts. Our new brand will not roll out for several months but I am trying to figure out some numbers now. I must admit I am kind of lost and wish I had more points to assign this question.

I guess part of what I am looking for is information on customer loyalty/retention that can be attributed to successful branding. If I can figure out some % increase in customer loyalty then I should be able to calculate some rough financial numbers.

A helpful figure would be something like; A successful brand launch can expect to increase customer loyalty/retention by 10% in its first year.

I feel that particular example may be just to specific, but I am not 100% sure on how to calculate the financial numbers to be associated with the brand. I just know that my boss wants some figures to put in his 5 year plan.

Thanks for the help in advance!
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RESPONSES

  • Posted by ilan on 7/21/2008 at 1:14 PM Member
    All you can do is look at successful companies and the achievements they had after investing in branding.
    Of course you'll have to look at your category and not compare any brand to yours.
    Even with that kind of an effort, you will never be able to predict the future...after all that's what you are trying to do.
  • Posted on 7/21/2008 at 1:21 PM Author
    I wouldn't go as far as saying I am trying to predict the future, I am merely trying to come up with a "rough estimate" of how an optimal (but not overly optimal) future could look...

    I would like to look at some industry figures, but I do not know where to find them. Also I am in a very niche industry and I not sure if there are any competitors who have done the branding that I am doing.
  • Posted on 7/21/2008 at 3:20 PM Author
    Thanks Phil, I like your thinking on this. Lets say I do come up with some optimistic and pessimistic results, how would you recommend I come up with the most likely results? I certainly do not want to take the easiest way out and give him an average number.
  • Posted by SteveByrneMarketing on 7/21/2008 at 7:29 PM Accepted
    Maybe this info from BW's brand study will help:

    "BUSINESSWEEK CHOSE Interbrand's methodology because it evaluates brands much the way analysts value other assets: on the basis of how much they're likely to earn in the future. The projected profits are then discounted to a present value, taking into account the likelihood that those earnings will actually materialize.

    THE FIRST STEP IS figuring out what percentage of a company's revenues can be credited to a brand. (The brand may be almost the entire company, as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes, and a charge for the capital employed to arrive at the intangible earnings. The company strips out intangibles such as patents and management strength to assess what portion of those earnings can be attributed to the brand.

    FINALLY, THE BRAND'S strength is assessed to determine the risk profile of those earnings forecasts. Considerations include market leadership, stability, and global reach—or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value. BusinessWeek and Interbrand believe this figure comes closest to representing a brand's true economic worth."

    https://bwnt.businessweek.com/brand/2006/
  • Posted by Jay Hamilton-Roth on 7/22/2008 at 9:04 AM Accepted
    More resources:
    https://www.interbrand.ch/e/pdf/IBZL_Brand_Valuation_e.pdf
    https://www.brandingtaiwan.org/en/StandardsCriteria.asp
    https://tinyurl.com/6329ou
    https://www.marketingnpv.com/articles/bylined/341_0709261131-152
    https://www.valueyourbrand.com/defining_brand_value.html
    https://www.gfkcr-ww.com/seiten/seiten_pdf/67/gfk_pwc_brand_valuation_paper...
  • Posted on 7/22/2008 at 3:15 PM Author
    Thank you Steve, Marcus and Jay. Your responses occupied the majority of my morning and I feel that I have a greater understanding of that I am trying to do... and how complicated(maybe I am over complicating it in my head) it will be.

    After reading your comments and the links posted I am starting to feel like a key component in brand valuation is being able to calculate current brand value(is my assumption correct). This is where I feel a disconnect.

    My company is sort of "reformatting" itself. In Q1 2009 all of our websites will have been redesigned, we will have new and radically different database, our products will have been redesigned and we will have a brand. Currently we have a fairly useless database, old web sites and no brand. I just spoke with my CEO and he said the way I should approach this is as if we are starting from scratch. So let me change my original question to something that is more appropriate:

    My company has a set of websites and products that it plans on taking live in Q1 2009. We will have a functional database that will allow us to track our customers. We will be fully integrated with Google e-commerce so we will be able to track where our revenue comes from. We have a 5 year plan that includes revenue. How do I go about attempting to assign a value to this new, never seen before brand?

    I hope that question/circumstance is easier to understand.


    *sorry for taking this question in a different direction, I really do appreciate all the answers given so far. I guess I will just have to start participating in these forums more in my off time to I can build up points to just start new questions"
  • Posted on 7/25/2008 at 10:51 AM Author
    Well I am going to go ahead and close this question since interest in it has weened slightly. Thanks everyone for the answers. Thanks again Marcus, I appreciate your follow up answer.
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