The brand value is coming to the forefront of marketing experts, M&A consultants, banks and lately even accountants. In the meantime, there are dozens of methods for the calculation. We have been giving it our attention for years. For us, the value of a brand is of such importance because we make an adequate interest calculation part of each product-cost accounting and because we are of the opinion that market investments can only be evaluated correctly if the return on the value of the brand is included in the profit and loss account.

Institutes, and lately even advertising agencies, are publishing at regular intervals brand value ratings with the value of popular brands, mostly those whose owners can be found in the list of stocks in the daily press. However, these rankings have little to do with the reality of brand evaluation.

How unsound these rankings are is shown on a list recently published by the Handelsblatt (6./7. & 8.8.2004). On this list, just to show how little substance is behind it, DaimlerChrysler is shown in position one for 2003 and position 3 for 2004. And that even though the company increased its business volume in their own 8-year summary by only 36%, upped their capital resources by 50%, however reduced them since 2000 by 20%, the accounts payable tripled in 8 years, the operating profit was 6 bill. Euro in 1996, 5 bill. Euro in 2003. Nowhere in the annual report is there a mention of brand value return. If the brand value of a company is leading the list of German values with such numbers and in 2004 is still ranked in the third position, then there should be no doubt about the quality of the ranking. Similar results could be depicted with more than half of the 30 named values. It can therefore be assumed that the people who have calculated these values tried their best to do it correctly. The problem is, for brand value evaluation, each case has to be worked separately, so knowledge of the company data, the company life and the company culture of the brand owner and the corresponding brand performance, the position in the market, the prospects for the future, just to name a few of the important criteria, is required to finally assess a legitimate brand value. In the end, it is also crucial that there be proof that the ascertained value is reflected in the brand value added where a return of the brand value can be verified.

A brand value without verifiable return is no value. And the value has to be tradable, meaning it has to be purchasable and saleable. The values specified in the mentioned list are, in practice, not for sale. For that reason alone, the entire thing does not make much sense.

Brand values and brand value return account for basically very different situations than those customary today, namely where the brand is underrated, buried as hidden assets within the company. Brands should be, such as an array of globally operating companies are already doing, excluded and embedded within a company for the commercial exploitation of brands, which is professionally working on brand utilization, profitability and therefore the brand return. Just the same as real estate, fleets of cars, data processing and other activity units are being managed independently.

We serve, with our knowledge as consultants, for the evaluation of solid brand values and the development of strategies, how brand values can be used so that the required expenditures and investments are showing profit and, in the event of the sale of a business or a brand, that appropriate proceeds can be achieved.

As of January 1st, 2005 brand values are to be listed as intangible assets on the financial statement of the buyer. This innovation should be impulse to all companies for a reorganisation of the brand character, if this has not yet taken place; even if neither a business nor a brand is being sold. We consult in this area in connection with our longstanding experience with brands.