Why Brand Audits Are Vital For Business Value

I may be biased, but I don’t see marketing as an expense. I see it as an investment (and I hold that view for companies of all sizes).

Here’s why..

Successful marketing not only drives growth and reduces risk - it also creates long term value in the form of intangible assets. 

Globally, the value of intangible assets is reported to be US$61.9 trillion. To put the brevity of this number into perspective, total global GDP is about $101 trillion. 

Of course, positive cashflow is critical to the success of any business, that’s a given and requires strategy, planning and consistent execution. 

However, due to the complexities of placing the value of intangibles on a balance sheet, the accomplishments of marketers creating these assets are often overlooked or misunderstood.

What Are Intangible Assets?

Intangible assets are non-physical assets that help a company stay ahead of the competition, create new products, and have market presence, all of which are crucial for fair company acquisitions and ensuring thorough annual accounting practices.

They include anything from brand equity and intellectual property - to a great work culture, software, technology and customer relationships. 

Bridging the Gap Between Marketing & Accounting

Brands are significant financial assets for companies, estimated to generate between 10% and 50% (or more depending on the industry) of total market value, and are widely considered to be the most important intangible asset a company has.

While brand valuation is not an exact science, the value of intangible assets like brands has been soaring in recent years and could represent as much as 90% of the total market value of the S&P 500 (the stock market index that tracks 500 of the largest companies in the U.S.). 

In startups, these assets are even more critical, often making up the bulk of their value due to their lack of track record. 

Instagram - The Most Famed Intangible Asset Acquisition?

In 2012, Meta (formerly Facebook) purchased Instagram. 

At the time, it had 12 employees and no revenue. 

However, despite its financial position, it had a thriving user base, a rapidly growing brand presence, advertiser relationships and intellectual property – all which hold market value.

So instead of paying $0 for Instagram, Facebook purchased it for its intangible assets for US$1 billion. Twelve years on, Instagram is now worth US$70 billion.

Therefore, the quality of a company’s intangible assets is a critical indicator for investors of future value.

What This Means for Your Brand

The legal definition of a brand is a name or logo or other attribute that sets apart or distinguishes the goods and services of a business from its competitors' products. 

A "brand" can be as simple as a name used in commerce but more commonly will consist of elements or features used either alone or in combination to make up the identity of a product or service. 

In many instances a brand becomes  a “scorecard” for the sum of all of the company’s intangible assets (its product designs, its customer experience, its data, its content, its systems and processes etc). 

In short, as the strength of the underlying intangible assets grow, so does the value of the overarching brand. 

How Do You Increase the Value of Your Brand?

Brand value is the monetary worth of your brand, if you were to sell it.

However, the key to increasing the value of your brand is in it’s equity.

Brand equity relates to customer perceptions and how positive they are. Customers who prefer a brand to others and exhibit loyalty to that brand over time are contributing to brand equity. This can also facilitate talent recruitment and retention.

To increase brand equity - brands require work at two levels: 

1. The Internal Brand Culture (the purpose, vision setting, execution processes and inspiration of talent)

2. The Meaningful Experiences the brand provides to its audiences

In recent years, customers and employees are demanding authentic connection to brand values and ideals, driving a global market shift for companies to operate from purpose-driven models.

Why a Brand Audit is the Best Investment for Your Business

In general, brands accrue value through a combination of growth in revenues, market share gains, higher margins, and lower risks - this is all driven by strong brand equity. To increase brand equity  like all assets, this requires investment of time and maintenance. 

For example, if you owned a factory, you'd be required to conduct regular maintenance on  machinery to ensure its safety for workers, optimal operation and efficiency.

The same goes for your brand.

In today’s competitive market, a brand audit is crucial for yielding results and building brand equity, regardless of your business size.

While a brand audit can be conducted internally, many companies opt for an independent evaluation of a business’s marketing and brand effectiveness, assessing strategies against  goals and performance.

At Brand Clarity, we follow a specific framework and steps which leads to tangible outcomes to enhance brand strength and performance. 

A brand audit:

• guarantees consistency across all customer and stakeholder touch points

• aligns your marketing efforts with your brand

• strengthens brand equity 

• supports customer loyalty 

• reduces risk

• builds long term value.

By uncovering key strengths, pinpointing areas for improvement, and identifying new growth opportunities, we help you refine your messaging and enhance your marketing strategies for both immediate impact and sustained performance. 

Contact us to learn more about our brand audit framework, process and outcomes for your business today.

References:

https://www.qualtrics.com/en-au/experience-management/brand/value/#:~:text=Customer%20experience,-Providing%20great%20customer&text=As%20much%20as%20quality%20products,ve%20enjoyed%20a%20positive%20experience.

https://etonvs.com/valuation/intangible-asset-valuation/#:~:text=Intangible%20asset%20valuation%20is%20the,Brand%20recognition

https://media.licdn.com/dms/document/media/D4E1FAQG79uAEwsGgxQ/feedshare-document-pdf-analyzed/0/1725218124899?e=1726704000&v=beta&t=k-pl8moTdeNW3p7bGXF_jMUTkN8VYPb6KCoJgnY95xE

https://legalwiseseminars.com.au/insights/utilising-intangible-asset-valuations-as-a-tool-in-legal-disputes-qa-with-joel-hanrahan

 https://groves.com.au/valuations/intangible-asset-intellectual-property-valuations

 https://www.pilotpartners.com.au/services/business-intangible-asset-valuations/

 https://brandfinance.com/insights/why-marketing-leaders-should-care-about-brand-valuation

https://www.tagww.com/insights/innovation-in-your-inbox-13-how-purpose-led-brands-drive-value-led-decisions/#:~:text=Becoming%20a%20brand%20that%20leads,the%20brand%20upholds%20and%20represents.

 https://www.everedgeglobal.com/news/brand-valuation-the-ultimate-intangible-asset-scorecard/

 https://www.iso.org/obp/ui/en/#iso:std:iso:20671:-2:ed-1:v1:en

https://www.iso.org/obp/ui/#iso:std:iso:20671:-1:ed-1:v1:en

https://www.jumpassociates.com/the-payback-on-purpose-how-purpose-driven-companies-outperform-the-competition/

https://uk.practicallaw.thomsonreuters.com/w-014-8755?transitionType=Default&contextData=(sc.Default)&firstPage=true#:~:text=Brand-,Related%20Content,business%20from%20its%20competitors'%20products.

https://brandingstrategyinsider.com/6-ways-to-measure-the-value-of-brands/