What an Intangible Economy Means for Marketers

John Stuart, the former head of the Quaker Oats Company, once told a colleague the following over lunch: "If this business were to be split up, I would be glad to take the brands, trademarks and goodwill, and you could have all the bricks and mortar—and I would fare better than you." If this were the case around the mid-20th century, when Stuart stressed the power of brand, his point is only more valid today. In recent decades, the American economy has shifted from focusing on physical objects—land, vehicles, factories—to non-physical items such as patents, copyrights and know-how. The latter camp, of course, also includes brands. The Rising Value of Brand Valuation This is good news for CMOs who struggle to articulate their worth to others in the C-suite. Shifting the perspective of marketing from an expense, as it appears on SEC filings, to an asset can only help protect budgets, build credibility and advance careers. “Marketers are under tremendous scrutiny but have power if they know how to play the game,” said Laurence Newell, managing director of North America at Brand Finance, a brand valuation firm. “And the name of the game is economic value.” The many benefits of brand All marketers know strong brands generate sales. They can also boost margins by convincing consumers to pay higher prices and lead to lucrative licensing deals—just look at Barbie. A brand’s ability to increase revenue, however, is “only part of the story when it comes to the value of a brand,” said Greg Campanella, managing director at Ocean Tomo, an intellectual property advisory firm owned by global consultancy J.S. Held. Campanella pointed to other benefits, such as attracting and retaining skilled employees and the option to spend less on marketing without seeing customer loyalty plummet. Companies can also use brands as collateral in securing loans. “Financiers and banks understand the importance and value of brand to an organization, and they're willing to lend against it,” said Campanella. Ocean Tomo estimates intangible assets now represent 90% of the S&P 500’s enterprise value, up from just 17% nearly 50 years ago. Consistency and persistence This means, above and beyond creating new TV spots or partnering with influencers on TikTok, brand managers are responsible for nurturing a precious piece of property. While CMOs might feel pressure to meet quarterly targets, employing methods that bump sales in the short term that could hurt the brand’s reputation in the long term can be unwise. Just imagine Louis Vuitton selling discounted handbags at Walmart. “Brand is something you have to not only consistently invest in, but also be consistent in how you're building it,” said Brian Rafferty, global director of business analytics and insights at brand experience firm Siegel+Gale. “It can't be something that changes all the time because you'll confuse people.” Standing apart from rivals and private labels—another key benefit of brand—also requires persistence. “You want people to see you as different from the competition, and to do that you have to stand for something over time,” Rafferty added. Consider the cost of starting over from scratch. Last month, Brand Finance released a report stating Twitter’s brand value was equivalent to $3.9 billion, down from $5.7 billion the year prior. As Twitter turns into X, it's unclear what will happen to that dollar amount. https://twitter.com/benparr/status/1683138514408591360 Not just b-to-c None of these principles are limited to b-to-c companies. In recent years, b-to-b organizations have dedicated more resources to promoting their names, logos and overall image, bringing more attention to brand in the category. This year, for instance, marks the second time Cannes Lions handed out awards for b-to-b creativity. In May, Brand Finance released its first-ever b-to-b brand valuation rankings in partnership with the International Advertising Association and b-to-b marketing agency Stein IAS. “CEOs and CFOs rightfully are asking their CMOs and agencies for the business case supporting the investment in brand,” said Tom Stein, chairman and chief brand officer of Stein IAS, who also served as the 2023 Creative B2B Lions jury president. “While a lot of data exists, the brand valuation component has been missing.” Stein noted that while the top 100 b-to-b companies have a trillion dollars more in enterprise value than the top 100 b-to-c companies, the former group is a trillion dollars behind the latter when it comes to brand value. “Is leaving a trillion dollars on the table a problem?” asked Stein, before answering his own question: "Absolutely." At present, much of the world relies on an idea-based economy, where brands have long surpassed the worth of bricks and mortar. Once members of the board embrace this viewpoint, CMOs can work from a position of strength. As Brand Finance’s Newell put it: “Given the growth of intangible value, marketers now play the biggest role they ever have within a company.”

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What an Intangible Economy Means for Marketers

The increasing importance of positioning brand as an asset

Paul Hiebert

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Paul Hiebert