Recently, branding behemoth Interbrand released its Best Global Brands 2010, an annual report that quixotically tries to figure out exactly how much the world’s biggest brands are worth and how they’ve changed over time.
You can see the full list here, but these infographics are a much nicer way to soak in the findings. To wit, they’ve taken two slices from the data. One is a chart of the year’s big movers in brand value:
And the other is a chart of which industries, taken as a whole, are building on their brand strength:
Now, you might be wondering: How the hell does Interbrand quantify something as fuzzy as brand value? Answer: A magic black box, of course!
The formula for brand value first involves financial profits, multiplied by an index purporting to show the role of the brand in those profits. That produces “branded earnings” for a single year. Then, the number crunchers add a discount rate — a rough gauge of how long a brand might stick around, pulling in its present amounts of cash. (Note that this is analogous to how corporate valuations are priced, as a multiple of earnings.)
That methodology sounds about right, the problem lies in the quantification. Both the role of a brand in profits and the discount rate (which is composed of 10 components) ultimately come down to judgment calls on the part of the study’s authors. Not to say it isn’t interesting — the overall framework makes a lot of sense — but the end result can smell a bit fishy. Dollar amounts and percentage changes give an illusion of solidity — but it would be a lot more telling to see, for example, fine-grained quantitative stuff such as media mentions and how those respond to actual news announcements. And, come to think of, how the authors actually arrived at their quantifications.