About Brand Finance
Brand Finance is a leading global brand valuation consultancy, bridging the gap between marketing and finance. The firm assesses brand strength and quantifies financial value to inform strategic decisions for organizations worldwide.
Media Contact
For media inquiries, please contact:
Penny Erricker Senior Communications Executive Brand Finance T: +44 207 389 9400 [email protected]
Expertise and Scope
Headquartered in London, Brand Finance operates in over 25 countries and conducts over 6,000 brand valuations annually. These valuations are supported by original market research and result in over 100 published reports, which rank brands across various sectors and countries. The company also operates the Global Brand Equity Monitor.
Global Brand Equity Monitor
The Global Brand Equity Monitor is a comprehensive research program that conducts original market research annually, surveying 6,000 brands and over 175,000 respondents across 41 countries and 31 industry sectors. By combining perceptual data from the monitor with financial data from its valuation database, Brand Finance provides data analysis and strategic guidance to enhance brand and business value.
Brand Strength Evaluation
In addition to brand value calculation, Brand Finance assesses relative brand strength through a balanced scorecard. This scorecard considers metrics such as marketing investment, stakeholder equity, and business performance, complying with ISO 20671 standards. Brand Finance is a regulated accountancy firm, and a leader in the standardization of brand valuation.
Industry Standards & Compliance
Brand Finance was among the first to be certified by independent auditors as compliant with ISO 10668 and ISO 20671. The firm has also received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Defining the Brand
Brand Finance defines a “brand” as a marketing-related intangible asset that includes names, terms, signs, symbols, logos, and designs. These elements are all intended to identify goods, services, or entities and create distinctive images and associations in the stakeholders’ minds, thereby generating economic benefits.
Assessing Brand Strength
Brand strength measures a brand’s performance relative to its competitors, as perceived by stakeholders. Brand Finance evaluates brand strength using a process compliant with ISO 20671. The process evaluates marketing investment, stakeholder equity, and their impact on business performance. Data is sourced from the Brand Finance’s market research and publicly available data. Each brand receives a Brand Strength Index (BSI) score out of 100, impacting the brand value calculation. The score determines a Brand Rating, with a maximum of AAA+.
Brand Valuation Methodology: Royalty Relief
Brand Finance uses the Royalty Relief approach to calculate brand values, following the standards set in ISO 10668. This method estimates future revenues attributable to a brand. It determines a royalty rate that would be charged for the brand’s use. This results in a ‘brand value’ understood as the net economic benefit a brand owner would achieve by licensing the brand in the open market.
Royalty Relief Steps
The valuation process includes these steps:
- Calculate Brand Strength: Using a balanced scorecard of metrics that assess Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
- Determine Royalty Range: Establishing a royalty range for each industry, reflecting the importance of the brand for purchasing decisions. For example, luxury goods have larger royalty rates. In contrast, extractive industries have lower royalty rates. This is determined by reviewing comparable licensing agreements sourced from Brand Finance’s database.
- Calculate Royalty Rate: The BSI score is applied to the royalty range to determine a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, a 4% royalty rate could be used.
- Determine Brand-Specific Revenues: Estimate the proportion of parent company revenues attributable to a brand.
- Determine Forecast Revenues: Use a function of historic revenues, equity analyst forecasts, and economic growth rates.
- Apply the Royalty Rate: to the forecast revenues to derive brand revenues.
- Discount Post-Tax Revenues: to arrive at a net present value, which equals the brand value.
Disclaimer
Brand Finance has produced this study with an independent and unbiased analysis. The values and opinions within this study are based on publicly available information and certain assumptions used by Brand Finance when data was deficient or unclear. Brand Finance is not responsible for the accuracy of publicly available information relied upon. The opinions and financial analysis expressed in the study are not investment or business advice. Brand Finance does not intend for this study to be relied upon for any reason and excludes all liability to any body, government, or organization. The data in this study is part of Brand Finance’s proprietary database. It is provided for media use only and is not for commercial or technical use without written permission.
