How do you measure the value of a brand?

Jim Misener, chief executive officer at global brand consultancy and creative agency 50,000feet, discusses his agency’s strategies for measuring a brand’s value and how understanding this metric can help businesses.

At a time when the Standard & Poor’s 500 has hit an all-time high, largely driven by intangibles such as intellectual property and brand, the method for evaluating a brand’s value remains elusive. While the S&P measures the present-day market value of a business, understanding the influence of a brand on its market value remains a challenge. 

When businesses grasp the significance of their brand on their market standing, they gain greater control over their market value and establish a more enduring measure of their impact on all stakeholders—investors and beyond. This knowledge can inform every decision a company makes.

Comprehending brand value starts with recognising what a brand is—that powerful and intangible emotional connection that a stakeholder (customers, employees, business partners and investors) has with a business. From there, a business can apply specific approaches to realise greater value. At 50,000feet, we recommend a three-tiered approach.

The macro level

We know that the businesses that invest in their brands outperform their peers as research from Kantar demonstrates. This and similar measures provide a business a macro view for justifying brand investment, but brands need to dig deeper.

The KPI level

Things become more complicated when we study how valuable brands create company-wide outcomes such as building better products and strengthening consumer loyalty. This level needs to examine those intangibles as well.

The intangibles, especially the emotional connection between a brand and its stakeholders, are at the heart of measuring brand value. Apple and Nike are modern-day success stories because their customers feel an emotional connection to the brands. Nike loyalists have been known to get tattoos of the company’s famous Swoosh logo. 

The good news is that tools exist to measure the intangibles. Businesses can know the strength of their reputations practically in real-time by using AI-powered tools that monitor social sentiment (unstructured data proliferating in the wild). When a business weds real-time social monitoring alongside structured data that exists behind the firewall, such as formal surveys, the business gains a fuller understanding of sentiment. Brands can measure sentiment among every stakeholder, too. While surveys have long been an effective approach, analysing survey results with real-time sentiment delivers a more comprehensive assessment. 

The stakeholder level

The radically altered job market throughout the past few years underlines the reality that businesses need to invest in all facets of brand, such as employer branding, or the relationship they have with their employees and recruiting candidates. Doing that can attract top talent, improve retention and engage employees to contribute their best work, which results in greater productivity which in turn drives business performance and growth. Defining brand value and impact in the context of every stakeholder ranging from employees to shareholders helps a business understand more drivers of its market value. For instance, consider these potential outcomes of brand investment.

Customers/consumers

• Brand perception: Net Promoter Score (NPS), sentiment analysis and tracking brand associations

• Customer lifetime value (CLV): how much revenue each customer brings throughout their relationship with the brand

Employees

• Employee Net Promoter Score (eNPS): how likely employees are to recommend your company as a good place to work

• Employer brand attractiveness: number of qualified job applicants, especially in comparison to competitors

• Employee retention: strong brands inspire loyalty and see lower employee attrition.

Investors

• Brand equity: the total financial value of the brand as a separate asset (there are complex models for measuring this—here’s an example)

• Price premium: a brand’s ability to command higher prices compared to competitors

• Market share growth: a key indicator of future revenue potential

• Stock performance: strong brands often correlate with better stock returns

Business Partners

• Co-branding opportunities: interest from other brands in joint ventures signals positive partner perception (as Qualtrics points out, one of the most straightforward methods of measuring brand value is to ask other companies what they would pay for the rights to your brand)

• Ease of negotiation: strong brands often have more leverage in partnerships or supply chain agreements

• Partner satisfaction surveys: directly measure how partners view a brand

At 50,000feet, we believe the metrics above offer a robust and more comprehensive view of a brand’s value while there are many others that add helpful context. The measure of a brand’s value should capture a broader mosaic of metrics.  

Understanding brand value puts a company in a far better position to connect brand investment with every business decision. Businesses typically consider investing in their brands at important inflection points such as M&A activity, courting a new audience, entering a market, or adapting to a change in their audience’s perception or needs. All those events force a brand to ask, “How does this affect the meaning of what we stand for?” A more holistic, 360-degree snapshot of brand value provides an effective lens to move forward and upward with confidence.