Building Valuable Brands Through Trust and Transparency

Brand Academy
y
2013
Building valuable brands

Giles C
Gil Crown, Lewis Silkin
L i Silki

INTRODUCTION

Dec. 10, 2008
Jan. 14, 2009
Feb. 18, 2009
March 23, 2009
April 24, 2009
May 28, 2009
June 30, 2009
Aug. 3, 2009
Sept. 3, 2009
Oct. 7, 2009
Nov. 9, 2009
Dec. 11, 2009
Jan. 15, 2010
Feb. 19, 2010
March 24, 2010
April 27, 2010
May 28, 2010
July 1, 2010
Aug. 4, 2010
Sept. 7, 2010
Oct. 8, 2010
Nov. 10, 2010
Dec. 14, 2010
Jan. 18, 2011
Feb. 18, 2011
March 24, 2011
April 27, 2011
May 31, 2011
July 1, 2011
Aug. 4, 2011
Sept. 7, 2011
Oct. 10, 2011
Nov. 10, 2011
Dec. 14, 2011
Jan. 19, 2012
Feb. 22, 2012
March 26, 2012
April 27, 2012
May 31, 2012
July 3, 2012
Aug. 6, 2012
Sept. 7, 2012
Oct. 10, 2012
Nov. 14, 2012
Dec. 18, 2012
Jan. 23, 2013
Feb. 26, 2013
April 1, 2013
May 2, 2013
June 5, 2013
July 9, 2013
Aug. 9, 2013
Sept. 12, 2013
Oct. 15, 2013
Nov. 15, 2013

Apple Market Cap

Ycharts - Morningstar NASDAQ data

Apple Brand Value

Interbrand data

Enduring brand value?

$700,000 M

$600,000 M

$500,000 M
$500 000

$400,000 M

$300,000 M

$200,000 M

$
$100,000 M
,

$M

Aug. 27, 2009
Jan. 6, 2011
Nov. 30, 2011
Dec. 14, 2011
Dec. 29, 2011
Jan. 13, 2012
Jan. 30, 2012
Feb. 13, 2012
Feb. 28, 2012
March 13, 2012
March 27, 2012
April 11, 2012
April 25, 2012
May 9, 2012
May 23, 2012
June 7, 2012
June 21, 2012
July 6, 2012
July 20, 2012
Aug. 3, 2012
Aug. 17, 2012
Aug. 31, 2012
Sept. 19, 2012
Oct. 3, 2012
Oct. 18, 2012
Nov. 5, 2012
Nov. 19, 2012
Dec. 4, 2012
Dec. 18, 2012
Jan. 3, 2013
Jan. 17, 2013
Feb. 1, 2013
Feb. 15, 2013
March 4, 2013
March 18, 2013
April 2, 2013
April 16, 2013
April 30, 2013
May 14, 2013
May 29, 2013
June 12, 2013
June 26, 2013
July 11, 2013
July 25, 2013
Aug. 8, 2013
Aug. 22, 2013
Sept. 6, 2013
Sept. 20, 2013
Oct. 4, 2013
Oct. 18, 2013
Nov. 1, 2013
Nov. 15, 2013

Samsung Market Cap

Ycharts - Morningstar OTC Markets data

Samsung Brand Value

Interbrand data

Profit before brand?

$250,000 M

$200,000 M

$150,000 M

$100,000 M

$50,000 M

$M

Dec. 19, 2008
Jan. 27, 2009
March 3, 2009
April 6, 2009
May 11, 2009
June 15, 2009
July 20, 2009
Aug. 21, 2009
Sept. 25, 2009
Oct. 29, 2009
Dec. 3, 2009
Jan. 8, 2010
Feb. 12, 2010
March 19, 2010
April 23, 2010
May 27, 2010
July 1, 2010
Aug. 5, 2010
Sept. 9, 2010
Oct. 13, 2010
Nov. 16, 2010
Dec. 21, 2010
Jan. 26, 2011
March 2, 2011
April 5, 2011
May 10, 2011
June 14, 2011
July 19, 2011
Aug. 22, 2011
Sept. 26, 2011
Oct. 28, 2011
Dec. 2, 2011
Jan. 9, 2012
Feb. 13, 2012
March 19, 2012
April 23, 2012
May 25, 2012
June 29, 2012
Aug. 3, 2012
Sept. 7, 2012
Oct. 11, 2012
Nov. 16, 2012
Dec. 21, 2012
Jan. 29, 2013
March 5, 2013
April 9, 2013
May 13, 2013
April 5, 2013
May 9, 2013
June 13, 2013
July 18, 2013
Aug. 21, 2013
Sept. 25, 2013
Oct. 29, 2013

Dell Market Cap

Ycharts - Morningstar NASDAQ data

A lost brand?

Dell Brand Value

Interbrand data
$40,000 M

$35,000 M

$30,000 M

$25,000 M

$20,000 M

$15,000 M

$10,000 M

$5,000 M

$M

Dec. 10, 2008
Jan. 14, 2009
Feb. 18, 2009
March 23, 2009
April 24, 2009
May 28, 2009
June 30, 2009
Aug. 3, 2009
Sept. 3, 2009
Oct. 7, 2009
Nov. 9, 2009
Dec. 11, 2009
Jan. 15, 2010
Feb. 19, 2010
March 24, 2010
April 27, 2010
May 28, 2010
July 1, 2010
Aug. 4, 2010
Sept. 7, 2010
Oct. 8, 2010
Nov. 10, 2010
Dec. 14, 2010
Jan. 18, 2011
Feb. 18, 2011
March 24, 2011
April 27, 2011
May 31, 2011
July 1, 2011
Aug. 4, 2011
Sept. 7, 2011
Oct. 10, 2011
Nov. 10, 2011
Dec. 14, 2011
Jan. 19, 2012
Feb. 22, 2012
March 26, 2012
April 27, 2012
May 31, 2012
July 3, 2012
Aug. 6, 2012
Sept. 7, 2012
Oct. 10, 2012
Nov. 14, 2012
Dec. 18, 2012
Jan. 23, 2013
Feb. 26, 2013
April 1, 2013
May 2, 2013
June 5, 2013
July 9, 2013
Aug. 9, 2013
Sept. 12, 2013
Oct. 15, 2013
Nov. 15, 2013

Nokia Market Cap

Ycharts - Morningstar NYSE data

Nokia Brand Value

Interbrand data

A brand left behind?

$70,000 M

$60,000 M

$50,000 M
$50 000

$40,000 M

$30,000 M

$20,000 M

$10,000
$10 000 M

$M

Intellectual
p y
Property
Innovation

Product

Heritage

Valuable
brand
Consumer
engagement

Trust &
Transparency

Profit

Reputation

Allure

Mike R h Interbrand
Mik Rocha, I t b
d

BEST GLOBAL BRANDS 2013

@mikerocha73

www mobro co/
www.mobro.co/
mikerocha

Agenda
1. Best Global Brands 2013 overview
2. Methodology and applications
3. How can you be a brand leader?

Best Global Brands
2013 overview
i

1

Top 10 Brands

McDonald’s
+5%
41,992 $m

IBM
+4%

78 808 $m
78,808

Samsung
+20%
39,610 $m

Google
+34%
93,291 $m

Microsoft
+3%
59,546 $m

Apple
+28%

98,316 $m
Intel
–5%

37,257 $m

Toyota
y
+17%

35,346 $m

Coca-Cola
79,213
+2%
79 213 $m

GE
+7%

46,947 $m

Methodology and
applications
li
i

2

Interbrand brand valuation methodology

Brand Strength

Authenticity

Clarity

Relevance

Commitment
C
it
t
INTERNAL
FACTORS

Protection

Responsiveness

Differentiation
Diff
ti ti
EXTERNAL
FACTORS

Consistency

Presence

Understanding

Brand valuation applications

Brand
Management

How can we
grow the
value of our
brand?

Strategy/
Business
Case

Which
strategy will
deliver the
best return?

Financial

What is our
brand worth
today?
y

How can you be a
brand l d ?
b
d leader?

3

HAVE CONVICTION

NURTURE YOUR
CULTURE

SURRENDER
CONTROL

DELIVER AN
EXPERIENCE

Trust

Speed

Working

Purpose

HAVE
CONVICTION

22 | Best Global Brands 2013 | Amsterdam | #BGB2013

Thought leadership platforms

Trust

Speed

Working

Purpose

Currently, Smarter Planet acts as a unifying
belief and innovations platform for the business
• Positions IBM as ‘chief problem solver
chief
solver’
• Bigger than the company
• A unifying idea

IBM has reinvented itself many times.
But through it all, its DNA, its soul
remained i t t IBM's most
i d intact... IBM'
t
important innovation wasn't a
technology or management system. Its
revolutionary idea was to define and
run a company by a set of strongly
held beliefs.
Sam Palmisano, Former Chairman & CEO
.

Trust

Speed

Working

Bigger
Purpose

HAVE
CONVICTION


NURTURE
YOUR CULTURE


Google culture

Nurturing the people in your
organization doesn’t require
expensive perks or touchy-feely
gimmicks. It’s about motivating,
engaging and listening – and it can
work for anybody

You don't need a lot of money to do
what Google has done. If you give
people freedom, they will amaze you.

Laszlo Bock, Google’s SVP of People Operations

2.5m
2 5m

NURTURE
YOUR CULTURE


Are you an IBM’er?

6 years

Its genius lies in fostering
innovation through cocreation with its employees,
i
i hi
l
suppliers, partners and
customers.
Mark Fidelman, Forbes

Surrender control – co-creation

DELIVER AN
EXPERIENCE


Apple’s obsessive attention to detail is a unique
brand s
hallmark of their brand’s experience
• Product – setting the tone for the brand experience
• Details matter

I love the process of unpacking
something. You design a ritual of
unpacking to make the product feel
special. P k i
i l Packaging can be theatre, it
b h
i
can create a story.

Sir Jony Ive, Senior VP of Design, Apple

Attention to detail has been applied to all touch
points, particularly retail
• Early reliance on big box
computer and electronics stores
• Poorly trained staff and illill
maintained Mac sections
• Needed to get closer to
customers
• A l ’ disruptive i
Apple’s di
ti
innovation i
ti
in
retail programme was to focus on
the brand-led experience

Ambassadors needed clear guidelines on how to
deliver a brand led service
brand-led
Appears seamless but Apple’s behaviour requires:
• Internally codified behaviours
• Rigorous training
• Not externally communicated

Genius Principles

Approach
Probe
Present
Listen
End

Thank you!
www.mobro.co/
mikerocha
Mike Rocha
Global Director, Brand Valuation
Mike.Rocha@Interbrand.com

Anthony Mullen, Forrester Research

TRUST & TRANSPARENCY –
THE UPCOMING CHALLENGE

Trust & Transparency – the
i
h ll
upcoming challenge
Anthony Mullen, Senior A l t
A th
M ll
S i Analyst
21st Nov 2013
@ant_mull

Please tweet us your questions:

Trust takes years to earn but it can be
destroyed in seconds

1991 - "How can you sell this for
How
such a low price?", I say, "because
it's total crap."

© 2012 Forrester Research, Inc. Reproduction Prohibited

2009 - Worst Family Brand
2011 - Worst UK Airline
2012 - Worst European Short-Haul Airline

41

Be Real or Be Rejected
THE ERA OF CONSEQUENCES

After 30 years of indulgence, consumers, businesses
and governments are rebuilding the marketplace on a
ﬁrmer foundation
foundation.
Trust has become a cornerstone value.
The prevalent skepticism that makes trust difﬁcult to
achieve and maintain also makes its achievement more
powerful.
Brands face a choice – be real or be rejected.


42

The Window of Opportunity
‘Covert’
Advertising –
no real public
awareness

pre
2009

Maturing
Public
Awareness

Legislation
& Privacy
2.0

2009 2011

2013 2015

Greater
Automation
&
Transparency

2016+

3 killer use cases
Show me everything
Delete everything
Move everything

Risk Profiles – 3 responses to the
ePrivacy Directive


44

New tools give consumers more power to
track and control their data
Personal Identity Management
•

Digital Identity Managers

•

Reputation and Data Removal
Management

•

Personal Data Aggregators
gg g

•

Specialized Data Vaults

•

Privacy & arbitration tools

•

Sco g
Scoring / Trust / Value
us
a ue
Mechanisms

•

Preference Management

•

Quantification of self

>45 sites !


45

Consumers don t trust advertising
don’t


46

STAFF

WEBSITE
APPLICATION

ADVERTISERS

PUBLISHER

GOVERNMENT

BRAND
AGENCY
CONSUMERS

SERVICE

HARDWARE

Within given context a recipient TRUSTS a provider for
performing an action and realizing the result that
corresponds to a recipients goal

47

It s
It’s possible to come back from being
‘crap’ but it takes honesty


48

Brands have tools for managing
reputation and trust


49

Digital and social activities provide an
audit trail of behavior from both
consumers and brands

Sharing Economy


Social Platforms

50

Allowing for richer models than
reputation


51


52

The Window of Opportunity
Greater
Automation
&
Transparency

Legislation
& Privacy
2.0

2013 2015

use technology to really
UNDERSTAND and SERVE the
customer and do so in a
RESPONSIBLE way that engenders
TRUST and LOYALTY

?

2016+

Thank you
Anthony Mullen
amullen@forrester.com
ll @f
t
+44 (0)207 323 7733
@ant_mull
@ant mull

Marcus Taylor, Venture Harbour

BUILDING BRAND VALUE WITH
DIGITAL MEDIA

Building Brand Value
With Digital Media

Why do we care about building “brand value”?

“Brand Building”
Brand Building
“Branding”
“Build Brand Equity”
Build
Equity
“Brand Enhancement”

= “Improving our reputation”

Your reputation precedes you
ou eputat o p ecedes
If it’s positive, much of your work is done for you.

Why build brand value using digital media?

It s
It’s where the eyeballs are

It’s where conversations & buying decisions
are taking place.

don t
If we don’t our competitors will

Long Term

Colleagues

Friends & Family

Professional

Intimate

Brands

One Night Stands
Short Term
Credit: Mat Clayton

Those we trust the most...
are recommending (through likes,
tweets, and other social signals)…

Long Term

Friends & Family

Professional

Intimate
I i

Brands
…Those we trust the least
Th
t t th l t

Short Term
Credit: Mat Clayton

H
ff ti l ?
How d we d it effectively?
do
do

“If one cannot increase the supply of a resource, one must
increase its yield” – Peter Drucker

Lower Your
Budget,
The Lo er Yo r Marketing B dget the
Smarter Your Digital Strategy Must Be.

Lower budgets can be a blessing in
disguise. They force you to think about
1:many (viral) marketing opposed to
marketing,
the easier 1:1 marketing options.

Quality x Quantity
Red Bull own a media company with 135 staff producing branded content.
Their official video content has been viewed over 700,000,000 times.

Create conversions around the brand, not
necessarily about the brand.

Emerging opportunities & innovation

Mobile advertising is
Currently ~1/3rd of the cost
of desktop advertising.
p
g
Huge opportunity for cost
Effective content distribution.

Buzz + Advocacy
Most brands are great at building buzz online, but struggle with advocacy

What are you doing to ensure your brand is getting
involved in conversations around your
products / services – and is it enough?

Kelvin King, Valuation Consulting Co

INDEPENDENCE,
INDEPENDENCE INNOVATION
AND TRANSPARENCY

INDEPENDENCE,
INDEPENDENCE INNOVATION
TRANSPARENCY
KELVIN KING, MANAGING DIRECTOR
KELVIN@VALUATIONCONSULTINGCO.COM
WWW.VALUATIONCONSULTINGCO.COM

STRUCTURE PLANNING & VALUATION


Privileges of ownership



What is being transferred, definition and identification



Transfer part of rights



Lowest defendable scenarios



Valuations for exit



Licensing from IP HoldCo

STARTING AT THE TOP AND TRYING TO BUILD DOWN
BRAND VALUATION
THE LAWS OF PHYSICS AND VALUATION SUGGEST THAT THIS IS
NOT POSSIBLE
Awareness, perceptual attributes, attitude, loyalty, strategies and
,p
p
,
, y y,
g
management; just a few of the due diligence areas of examination
alongside financial and economic
g

ACCOUNTING STANDARDS
The US FASB has created a list of what it considers to be a firms intangibles:
Market‐related
 Trademarks, trade names, service marks, trade dress, newspaper mastheads, internet domain
names.
Customer‐related


Customer lists, customer contracts, customer relationships, customer agreements.

Artistic related


Ballets, books, plays, articles, other literary works, musical words, opera, pictures, photographs,
video and audio‐visual material.

Contract‐based


Licensing agreements, advertising or service contracts, lease agreements, construction permits,
operating and broadcast rights, employment contracts.

Technology‐based


Patented technology, computer software, unpatented technology, databases, trade secrets,
secret formulae

OCCASIONS FOR VALUING BRANDS


Mergers & Acquisitions



Portfolio review and risk assessment



Arrange a loan – securitisation



Tax purposes



Licensing



Balance Sheet



Joint Ventures and Technology Transfer



Pension deficits



Selling your IP



Distress

WHY ARE WE VALUING?


Tax Valuation and Open Market Value



Fair Value



Fair Market Value
F i M k V l



Commercial Value



Investment Value



Owner Value

TOOLS
How much? The determinants for discounted cashflow models
How much? The determinants for discounted cashflow models



Gross Profit Differential – Premium Prices/Premium Profits
/



Excess Profits



Relief from Royalty

USEFUL LIFE
How long for (time periods)?
How long for (time periods)?



Physical Life
y



Functional Life



Technological Life



Economic Life



Legal Life

LICENSING
 Many factors affect licensing and royalty rate advice
 Deal structure (term, cash, profit etc)
 Exclusivity
 Relative risks
 Investment rates of return
 Commercial relationship between parties (fair value is not fair market value and neither is
open market value)
 Arms length requirements – HMRC and Transfer Pricing

THE LICENSEE/PURCHASER & LICENSOR/VENDOR

Four Calculations or Steps – 'can Kelvin count'
1.
2.

Intrinsic value of Vendor or Licensor
Intrinsic value of Purchaser or Licensee

PLUS
1.
2.

Intrinsic value of Vendor or Licensor
Intrinsic value of Purchaser or Licensee

The capital values calculated are an essential step to calculate royalty rate or valuation

Karl Bygrave, L h F
K lB
Lush Fresh H d d C
h Handmade Cosmetics
ti

DO ETHICS ADD TO OR SUBTRACT
FROM THE VALUE OF A BRAND?

LUSH

FRESH HANDMADE COSMETICS
Do ethics add
to or subtract
from the value
of a brand?
Karl Bygrave, Director,
Lush Fresh Handmade Cosmetics

The original Body Shop team
(clockwise): Mark Constantine
Constantine,
Anita Roddick, Deb McCormick

© 2013 Lush Fresh Handmade Cosmetics

The 10 Company Rules:
1. Value people before profit
1
2. Develop & promote talent from within: 'opportunity hangs in the air’
3.
3 Take responsibility for our environment
4. Value and serve our customers
5. Benefit from the use of new technology
6. Increase creativity and sales opportunities
7. Create a balanced and profitable business
8. Contain staff and space additions
9. Behave ethically
10. Communicate effectively: 'We need to care about each other and help
others'


What are ‘ethics’ for Lush?
ethics


How do we have an opinion?


Charity Pot
•
•
•

We have donated over £1.3m since 2007
I 2012 we d
d £343,895, 37%
In
donated £343 895 +37% on 2011
In the last 12 months we have donated to 133
groups

“…Makes
“ M k me feel great inside and out k
f l
t i id
d t knowing th t
i that
I’m helping others while helping myself ” online
customer review

Buying/ Slush Fund

Our Ethical
Buying team:

94


Transport Policy
•
•

•

We aim to air-freight less than 5% in weight of the raw
materials we import.
p
From February 2009 we asked our staff not to take any
UK mainland domestic flights. We have gone from 122
return flights a year to zero.
We tax ourselves on flying – for every tonne of CO2
y g
y
emitted when we fly, we pay £50.

More than just campaigning
•

95

Our first all female shop opened in
Jeddah in March this year


Does everyone believe in
everything?


Are we doing this to build the
business?


Why do the public know about our ethics?


Do we upset more people than
we appeal to?


Do ethics add to or subtract from
the value of a brand?


Thank You


Building Valuable Brands Through Trust and Transparency

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