About Brand Finance
Brand Finance is a leading brand valuation consultancy, bridging the gap between marketing and finance. The company assesses brand strength and quantifies financial value, assisting organizations in making strategic decisions.
With its headquarters in London, Brand Finance operates in over 25 countries and conducts more than 6,000 brand valuations annually. These valuations are supported by original market research and result in over 100 reports which rank brands across numerous sectors and regions.
Global Brand Equity Monitor
Brand Finance operates the Global Brand Equity Monitor, conducting original market research annually on 6,000 brands. This research involves surveying over 175,000 respondents across 41 countries and 31 industry sectors. By combining the Global Brand Equity Monitor data with its extensive valuation database—the world’s largest brand value database—Brand Finance equips brand leaders with the necessary data, analytics, and strategic guidance to enhance brand and business value.
Brand Strength Assessment
In addition to calculating brand value, Brand Finance also determines the relative strength of brands. This is achieved through a balanced scorecard of metrics that evaluate marketing investment, stakeholder equity, and business performance, adhering to ISO 20671.
Standards and Compliance
Brand Finance is a regulated accountancy firm and is committed to standardizing the brand valuation industry. It was the first to obtain independent auditor certification for compliance with both ISO 10668 and ISO 20671. The company has also received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Definition of a Brand
A brand is defined as a marketing-related intangible asset encompassing names, terms, signs, symbols, logos, and designs. These elements are intended to identify goods, services, or entities, establishing distinctive images and associations in the minds of stakeholders and thereby generating economic benefits.
Brand Strength
Brand strength is the efficacy of a brand’s performance on measures that are not tangible, compared to those of its competitors. Brand Finance evaluates brand strength according to ISO 20671, assessing marketing investment, stakeholder equity, and their impact on business performance. Data is derived from Brand Finance’s proprietary market research and publicly available sources. Each brand is assigned a Brand Strength Index (BSI) score out of 100, used in the brand value calculation. The BSI score is correlated to a corresponding Brand Rating, up to AAA+.
Brand Valuation Approach
Brand Finance uses the Royalty Relief approach to calculate brand values, compliant with ISO 10668 standards. This approach involves estimating future revenues attributable to a brand. It does so by calculating a royalty rate that would be charged for its usage. This leads to a ‘brand value’ that represents the net economic benefit a brand owner would realize by licensing the brand in the marketplace. The process includes these steps:
- Calculate brand strength: Utilizing a balanced scorecard that measures marketing investment, stakeholder equity, and business performance, resulting in a Brand Strength Index (BSI) score from 0 to 100.
- Determine royalty range: Establish by industry, reflecting brand importance to purchasing decisions. The range is higher in luxury goods, and lower in commoditized industries like extractives. This uses data from comparable licensing agreements in Brand Finance’s database.
- Calculate royalty rate: Apply the BSI score to the royalty range to determine the royalty rate. For example, if a sector’s royalty range is 0-5%, and a brand has a BSI score of 80/100, the royalty rate for the brand would be 4%.
- Determine brand-specific revenues: Estimate a proportion of the parent company’s revenues attributable to the brand.
- Determine forecast revenues: Using a function of historical revenues, equity analyst forecasts, and economic growth rates.
- Apply the royalty rate: This is applied to the forecast revenues to derive brand revenues.
- Discount post-tax brand revenues: This is done to a net present value, which equals the brand value.
Disclaimer
Brand Finance has produced this study using an independent and unbiased analysis. The values and opinions expressed in this study are based on publicly accessible information and certain assumptions made by Brand Finance when data were deficient or unclear. Brand Finance accepts no liability if the publicly available information used is subsequently found to be inaccurate. The opinions and financial analyses in the study are not to be viewed as investment or business advice. Brand Finance does not intend for the study to be relied upon for any reason and excludes all liability to any body, government, or organization. The data in this study forms part of Brand Finance’s proprietary database and is provided for media use only. It cannot be used for any commercial or technical purpose without the written permission of Brand Finance.
