Last month, Google became the world’s first $100 billion brand. Does that mean that its assets are valued at $100 billion? No. So does that mean its annual revenues total $100 billion? No. In fact, Google’s 2008 revenue was around $22 billion, and its 2008 total assets were valued at around $32 billion. Those two numbers combined don’t even get close to its brand value.
What does it mean then that Google is a $100 billion brand? Theoretically it means that if all of the Google servers in the world exploded, all of the employees resigned, and all of the Google Ads vanished, the Google owners could borrow against the company name and identity up to the amount of $100 billion to rebuild.
So where did this enormous brand valuation come from? Is this huge number just a big lie perpetuated by advertising and marketing companies so they can tell CEOs that their work matters? As it turns out, sort of.
Millward Brown Optimor calculates its BrandZ Top 100 brands by combining corporate earnings, branded earnings, branded intangible earnings, brand contribution (taken from a study of over 1 million users of a particular brand across more than 30 countries), and projected future earnings of a brand (read more about the BrandZ process here). So the calculation isn’t a lie (except maybe the projected future earnings), but I doubt that just anyone could replicate those results, and you certainly couldn’t apply them to just any brand off the street.
While I don’t completely understand the BrandZ valuation, I do know that brand value is as real as the sun is hot, and here’s where you can truly see its power: Imagine that you and a few of your friends are sitting at your house and you decide to order pizza. You remember that there’s a great new place down the road, but you can’t remember what it’s called. What do you do to find the restaurant? You Google it. You don’t “Yahoo!” it, or “Microsoft Live Search” it. You Google it. I don’t know if that’s worth $100 billion to you, but to me that’s priceless.
Yahoo! and Microsoft Live Search would probably find that pizza place down the street from you just as well as and maybe better than Google. But would you dare test those two search engines first? No way, because you trust that Google will give you exactly what you are searching for.
Another example of brand value in practice is my grandmother who swears she is more loyal to price than she is to any particular brand. She almost always buys low-cost generic options, and she is particularly loyal to her grocery and drug store brand, Hy-Vee.
The brilliance of branding is that my grandmother doesn’t think she is loyal to the Hy-Vee brand, only to the low prices. So I asked her how often she purchased products from Country Fare, another generic brand in her grocery store that is slightly cheaper than the Hy-Vee products. “Rarely,” she admitted. “I almost always buy the Hy-Vee brand.”
So no, brand value isn’t a lie, in fact it’s very real. Brand value is a measure of the trust consumers have in a particular brand delivering on its promise (i.e., Google finds exactly what you need, Hy-Vee provides low-cost yet high-quality goods). How can we accurately measure this trust, especially for smaller brands?
Any good marketer will tell you that a brand is the personalization of a company; the brand represents how a company relates to people and how people relate to it. So if we think of a brand as a person, how do we decide when we trust someone? Is there an indicator in the handshake or clothing? More likely it’s something that we intrinsically understand about this person, we implicitly do or do not trust her.
The trust that we either have or do not have for other people is the same way we evaluate brands. And if you ask me, if a brand can build implicit trust with its consumers, that is the real value.
photo credit: miss.killer!
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