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We wrote this long-read for Assets, the magazine for members of the Institute of Asset Management.
We’ve been project managing, editing, designing and publishing Assets since 2009, and we’ve picked up a few insights into the asset management profession along the way. This kind of asset management – not to be confused with the financial services kind – is all about realising the greatest possible value from your organisation’s assets, including its brand.
We saw a chance to combine our brand insights with our understanding of asset management, helping both Redhouse and the IAM to realise even more value from Assets. And now you can realise value from our combined insights too. Just read on…
Brands are today where infrastructure and other physical assets were before asset management moved things to a new level: valued purely on the balance sheet, if at all. There’s a clear opportunity for asset management thinking to help organisations in every industry realise more value from their brands.
The value of an organisation’s brand is easy to acknowledge, if difficult to quantify. Some form of brand, however basic, is part of the price of doing business. A brand that stands out to the right target audience makes an organisation more competitive. A consistent and memorable brand guides potential customers smoothly from awareness of the organisation to engagement with its products and services. A brand that represents its organisation’s vision and purpose brings alignment to different business activities, from high level strategy to everyday communication, improving efficiency by giving teams throughout the organisation a set of shared values and priorities to pull towards. That is, it provides a form of ‘line of sight’, a key asset management concept.
But how much of a given organisation’s competitiveness is attributable to its brand? How many potential customers would abandon their journey before engaging, if not for its brand? How much less efficient would the organisation be without the clear vision and shared purpose imparted by its brand? The intangibility of the brand makes it hard to determine how much value is being realised from the brand alone.
This poses an issue for brand and marketing people, and for agencies like us. Finance directors and other executives can be reluctant to invest in their organisation’s brand, because the return on investment is expressed in holistic rather than purely financial terms.
As a result, there has been a concerted effort over the past decade and a half to get brand on the balance sheet.
Until 2005, brands did not meet the International Financial Reporting Standards’ (IFRS) definition of an “intangible asset”, and could not be recorded on balance sheets. IFRS3, issued on 1 January 2015, changed the rules so that companies were required to add brands they acquired to their balance sheets. So for instance, when Microsoft bought LinkedIn, it added the LinkedIn brand to its balance sheet – but still could not add its own Microsoft brand.
Still, this provided one way to determine the value of a brand to the organisation that owns it: purchase price. With this method, the value of a brand is the price the owner could expect to sell it for, or the price it paid to acquire it. This method treats a brand just like physical assets were treated before the adoption of whole-life cost analysis and other asset management approaches: it goes on the balance sheet at the price the organisation paid for it, and depreciates over time.
Comparing sales of similar organisations can give us an idea of the value brand contributes, over and above the worth of the organisation’s more tangible assets. Take the UK mobile phone providers Orange and One2One as an example. Both companies started up and received their operating licences at the same time, both operated in the same regulatory environment, neither had a particular technological advantage over the other, and both were sold to German firms in 1999.
The main point of differentiation between these otherwise very similar companies lay in their brands. Orange’s brand had become associated with reliable network coverage, simple pricing, compensation for poor service, and other customer-focused policies. Mannesmann bought Orange for £19.8 billion, while Deutsche Telekom bought One2One for a comparatively paltry £8.4 billion. The strength of Orange’s brand made it more than twice as valuable as its close competitor.
This method of measuring brand value has significant limitations. The purchase price of a brand can only be realised when the brand is sold, so this method does not account for the ongoing value the organisation realises while it still owns the brand. And while the method functions well enough for consumer product brands, which can be bought and sold relatively easily by holding companies, not all brands are suitable for sale. Government departments, industrial firms and infrastructure companies, for example, are highly unlikely to sell their brands, and would struggle to find a market if they tried.
Academic approach
More recently, researchers have designed experiments to determine the value of brands. Participants in these experiments are shown mocked-up ads and asked how much they would pay for that product. The product is the same for all participants, but half are shown a branded version and half are shown a generic version. If, on average, people are willing to pay more for the branded product than the generic one, then that increase indicates the value the company is realising from its brand.
One such experiment, published in 2011, used Gateway computers. Part of Gateway’s brand was a distinctive black and white cowhide pattern. Every Gateway computer came in a box decorated with this pattern. In the experiment, university students were shown two different computer ads: one showing a plain box, and one showing a box with a black and white cowhide pattern. The ads were otherwise identical. The study reported that students who were shown the ad with the patterned box valued the computer at about $130 more, on average, than the students who were shown the ad with the plain box.
Based on this study, it could be said that Gateway realised about $130 of value from its brand every time someone bought one of its computers.
This method does a better job of accounting for the ongoing value an organisation can realise from its brand. However, it is still best suited to businesses selling to consumers.
The same experiment would be much less reliable if it asked participants to value something they would never normally consider paying for themselves, like a shipment of airline fuel, the upkeep of a major road, or the management of a power station. This makes it difficult for industrial companies, utilities or government departments, for example, to use this method to accurately estimate the value of their brand.
There is a clear need for something like a whole-lifecycle cost model for brands of all kinds. Asset management has changed industry’s understanding of the value of physical assets, taking into account the costs associated with operations, maintenance, downtime, revenue income, upfront purchase, replacement and disposal. Our understanding of the value of brands needs to change in similar ways, to account for factors like the complexity of applying the brand consistently (the equivalent of a physical asset’s operating costs), the regularity of brand refreshes (preventive maintenance) and the cost of a complete rebrand (refurbishment or renewal).
Applying asset management thinking to this ubiquitous intangible asset could introduce even more sectors to asset management. And asset management thinking would provide the rigour needed to convince executives of the value their organisations could realise by investing in a distinctive and coherent brand. So far, branding is largely unexplored territory for asset management professionals. But for how much longer?
Matt Boothman
Writer — Strategist
“We can’t design brands”, according to John Spencer from Offthetopofmyhead, writing in Design Week. We could hardly let that go unanswered, could we?
Spencer argues that because your brand is your audience’s perception of your organisation, and perceptions only exist in people’s minds, you can’t design your brand – and should stop wasting time trying.
We’re on board as far as his definition of brand goes, as you’ll know if you’ve ever worked with us. We’re particularly fond of the way Jeff Bezos puts it: “Your brand is what people say about you when you’re not in the room.”
But just because we’re not in the room, does that mean we’re not responsible for what people say about us? We don’t think so. Every organisation has an ideal impression of itself; every interaction with the organisation contributes to an impression in the audience’s head; and designing the organisation’s brand is the process of designing each interaction to align the audience’s impression with the organisation’s.
Design for the brand you want
As creative director and author Dave Trott writes in Campaign: “The public look at our product, what it is, how it behaves. The public then decides what the brand is based on that behaviour.” Who designs the product? We do. Who designs how it behaves? We do. And the impression we want to give the audience informs those designs. Repeat for logos, written content, online user experiences, staff training and more. Piece by piece, we create the brand in people’s minds.
When we first got started 30 years ago, this was hard going, because of organisational silos. Sales, marketing, internal communications, strategy, web and brand were often considered separate functions and didn’t necessarily collaborate. As silos break down and different functions understand their part in maintaining the brand, it becomes possible to create the kind of seamless audience experience that builds a cohesive impression in people’s minds.
It’s this dismantling of silos that Spencer seems to be reacting against. “I design logos and identities,” he writes. “I don’t claim to design brands.” But like it or not, nowadays the people designing logos and identities are part of the wider effort to design and maintain the brand. And if they don’t see themselves as such, there’s a danger they’ll do their work in a vacuum, damaging the overall cohesion of the brand, and undermining the impression being built in people’s minds.
Tell people a story
A creative director claiming to design logos, not brands, is like a novelist claiming to write sentences, not stories. The novelist can’t control precisely how each individual reader will imagine the action she describes, but that doesn’t mean she isn’t telling a story.
Every webpage, push notification, leaflet, customer service call and news item about your organisation is another sentence in your brand story. We can design brands; it’s just not as simple as designing a logo.
Read more about the importance of maintaining a cohesive brand.
From issue 1 of the Brand Report
Cohesion is the aspect that can make or break your brand. Strength in other areas can be undermined by a lack of cohesion.
Your offer could be crystal clear, but if it’s not consistently expressed everywhere your brand is present, that clarity will become muddied.
Your brand could be unique among all its competitors, but if those unique qualities don’t come across in design, messaging and behaviour, they won’t provide the edge they should.
Your visual identity can be contemporary and compelling, but if it doesn’t reflect the brand’s offer and personality, then it’s sending the wrong message.
And you can build engaged audiences in each of your brand’s channels – but that engagement won’t translate to value unless people can move seamlessly from one channel to the next.
Whether your brand is cohesive is down to the audience’s experience. As your target audience goes from first hearing about your brand to visiting your website, engaging with your content, getting in contact, buying your products and services, and eventually becoming advocates for your brand, does their experience feel like one exhilarating journey? Does it feel like they’ve been interacting with a single organisation, the whole way through?
Every element of the brand can contribute to this cohesive audience experience.
Clarity around your vision, purpose and offer provides a consistent message and a consistent goal. By referring back to these core goals and messages whenever you produce a new expression of the brand, you can ensure everything’s pulling in the same direction.
Differentiation from your competition ensures your audience always knows who they’re dealing with, and reinforces at every touch point why they should continue their journey with your brand and no one else’s. Your brand should always be communicating what makes it special; differentiation shouldn’t only come across in a direct comparison with other brands.
A strong visual identity acts as a system of signposts, pointing your audience back towards your brand if they ever break their journey, and reassuring them that they’re back in familiar territory.
And active engagement with your audience, wherever they expect to be able to engage, can help them feel like their journey with your brand is one smooth, unbroken interaction, not a series of stepping stones with different teams or silos.
This level of cohesion requires everyone to work together behind the scenes in a highly coordinated way. Conveniently, a cohesive brand with a clear vision and purpose makes exactly this kind of collaboration possible. When everyone communicating on behalf of the brand is pulling in the same direction, the experience for those interacting with the brand becomes intuitive and seamless.
This article is from issue 1 of the Brand Report. For more insights and action points to strengthen your brand, download the complete report now.
What does a great brand have in common with The Mousetrap in the West End? They both tell a great story. But unlike The Mousetrap, whose ending is the best kept secret in theatre, brand storytelling works better the more you give away.
As someone who studied theatre, I regularly get attacks of guilt that I don’t see more on the stage. When that happens, I go browsing theatre websites, account details in hand, ready to book the first thing that sounds appealing.
I dive head first down the sales funnel, in other words. But you’d be surprised how often the funnel spits me back out again. Here’s one of the plot synopses I ran into last time this happened:
An unexpected meeting at an airport leads to an intense, passionate, head-over-heels relationship. Before long they begin to settle down, buy a house, juggle careers, have kids – theirs is an ordinary family. But then their world starts to unravel and things take a disturbing turn.
This might not be a bad synopsis, technically. It might accurately describe the plot of the show. I wouldn’t know; I didn’t book. Because it avoids specifics so carefully that it might well describe the plot of any number of other shows, as well. Countless plays deal with relationships unravelling, and this doesn’t say what makes this story different.
By trying to make the story of the show sound universal, this teaser copy leaves out anything distinctive – making the story sound generic instead.
And because it’s trying not to give too much away about what happens, it doesn’t give the audience enough information to decide whether the show is for them.
Brands make these mistakes in their storytelling too.
There are no universal stories
At the early stages of brand definition research, companies sometimes try to tell us their target audience is “the public”, or better yet, “everyone”.
It never turns out to actually be true – and that’s a good thing. Audiences don’t want to hear what your brand can do for everyone; they want to hear what you can do for them, specifically. For some audiences, that’s “nothing”, or “nothing right now” – and there’s nothing wrong with that.
Any brand can try to tell a universal story. Your brand should aspire to tell a story no one else can tell – one based on your unique strengths and capabilities.
“Spoilers” don’t spoil brand stories
More and more brands are using storytelling to articulate their personality and purpose in the world. These big-picture narratives help audiences understand which brands share their values and worldview – but that’s only the start of the story.
Unlike The Mousetrap, your brand story doesn’t depend on a surprise twist ending to deliver value for your audience. So there’s no need to be coy with the details. As well as why you’re here, your brand story needs to tell audiences clearly what your organisation will do for them.
You’d be surprised how often this crucial chapter gets left out of the brand story. Sometimes businesses are worried that specifying what they do is like admitting there are other things they don’t, or worse, can’t. Others think of their actual core business activity as being separate from their brand. You can see this thinking in action on any company website where “About us” and “Our services” are separate sections.
When your audience engages with your organisation, your brand story becomes about them as well. They’re more likely to engage if they know the story ends well for them. So don’t leave them hanging; when telling your brand story, make sure it’s the whole story, ending and all.
Matt Boothman
Writer – Strategist
