Brands Must Be Valued in Financial Terms, Says New MASB Paper


Marketing exists to drive profitable and sustainable growth through increased demand. Since growth is measured in financial terms, the strength of brands and the resulting customer franchise must also be expressed and analyzed in financial terms.

According to MASB, the Marketing Accountability Standards Board, regular measurement and analysis of the financial value of brands demonstrates the material contribution of brands to the overall value of the enterprise and provides an excellent management decision-making tool to enhance long-term enterprise value. Despite this, the Financial Value of Brands is not systemically monitored or analyzed in most organizations.

“If you have a multi-billion-dollar asset,” Tony Pace, MASB President/CEO said at a recent event, “you should be thinking about the protection and the growth of that at all times.”

To address this common shortcoming, MASB brought together four distinguished authors and two dozen contributors for the recently published The Financial Value of Brands Imperative: Why Brands Must Be Valued in Financial Terms.

The authors, which represent both industry and academia, recommend that brand-centric enterprises develop an internal process to annually measure, explain and report FVB to the executive level, even in the absence of any external regulatory or accounting requirements. For marketers who don’t know where to start, summaries of valuation services provided by several leading measurement providers are included.

“The FVB process is not merely an accounting or academic exercise. It can and must be used as a management decision-making tool with the end goal of enhancing enterprise value.”

As an enterprise moves toward developing and implementing a Financial Value of Brands measurement, analysis and reporting process, four required steps form the road map: 1) gain executive buy-in, 2) expert identification of methodology, 3) focus on reasonable and consistent goals for accuracy and analyzing trends, 4) incorporate FVB calculation into marketing return assessment process (ROMI, ROI, CIR). [DOWNLOAD INFOGRAPHIC]

To facilitate the regular measurement of FVB, MASB is offering a pilot program to assist in the identification of a suitable measurement approach and provider for each participating brand owner. The outcome will be an initial valuation – with results verified by MASB experts – and a path forward for continuing evaluations. Interested brand owners can contact to participate.

The authors are Jim Meier, retired finance executive; Tony Pace, MASB President/CEO and former CMO at Subway; Vithala Rao, Deane Malott Professor of Management Emeritus and Professor of Marketing and Quantitative Methods Emeritus in the S. C. Johnson Graduate School of Management at Cornell University; and Frank Findley, MASB Executive Director, formerly an executive at MSW Research.

MASB is contributing to new global brand marketing standards as a member of Technical Committee 289 of the International Organization for Standardization (ISO).