• by Bob Liodice , August 11, 2010

The Marketers' Constitution sets forth what the ANA believes are ten essential "musts" of marketing for the next 100 years. These will help ensure that the industry thrives and continues to contribute to the growth of the nation's businesses -- as well as to the economic and social wellbeing of our society. Read the entire Marketers' Constitution and show your support for its tenets by digitally signing at www.ana.net/constitution.

- - -

The second tenet of the Marketers' Constitution states, "Marketing must build real, enduring, tangible brand value." A marketing environment in which brands are launched, built, tracked and precisely valued will allow businesses, across the marketing ecosystem, to make strategic decisions about how best to build and protect their brand.

Building brands is marketers' paramount objective -- there is absolutely nothing more important. Strong brands generate strong business results. This, in turn, leads to growth in shareholder equity, which is the predominant C-suite objective of most corporations. Successful brand-building is one of the most difficult challenges for the business community. Built on a foundation of product quality, differentiation, reliability and penetrating marketing, a brand must endure competitive assaults while remaining relevant and valuable to consumers and customers.

Marketers struggle with what defines a successful brand. Often, brand success is tied to growing revenues, profits and share of market. However, in this complex and frenzied business landscape, we lack a "standard" for defining brand success. This is why the Association of National Advertisers (ANA) supports the development of "generally accepted brand valuation standards." Clearly defined and sophisticated measures of brand valuation will shed light on a brand's contribution to the overall health of its business.

For many companies, there is often a large gap between a company's market capitalization and its hard assets. For example, according to Coca-Cola's 2009 annual report, the company's total hard assets were valued at $48.6 billion, whereas its year-end market capitalization was $132.8 billion. The large difference between these two numbers, exceeding $84 billion, represents the value of Coca-Cola's intangible assets.

Given that these assets are predominantly the brands, marketing and financial communities need to establish a generally accepted method for which brands can be evaluated. At a minimum, however, it is necessary for members of the marketing industry to embrace methods of brand valuation in order to understand exactly how brands are contributing to the value of their company.

Brand valuation will make the choice that often has to be made between short-term sales growth and long-term brand equity development easier, and will help to legitimize investment. As the relationship between investments and returns becomes more apparent, companies need to better decipher how and where to invest their marketing funds. They will be able to determine which media and marketing disciplines contribute the most to brand value, enhancing their integrated marketing strategy to achieve the best possible outcome.

The effort and return for branding can be clearly identified and aligned with other core business goals. By strengthening management alignment, brand valuation provides empirical reinforcement for the fact that strong brands generate strong operating results. This can assist with determining appropriate compensation, as it allows for easier assessment of the contributions of different brand-building resources.

The financial support demonstrated by brand valuation is also important for building corporate brands. Understanding a brand's contribution to a company's total valuation is vital to allotting capital and investing in fields such as advertising, PR, investor relations, social media and customer relations.

Brand valuation allows companies to discover potential streams of income that may exist outside their core business. It can help identify growth opportunities and inform negotiations in mergers, acquisitions and partnerships. As many marketing professionals can attest, sometimes problems with production, quality, and distribution can damage a brand's reputation. Understanding the factors that influence brand value not only makes it easier for companies to deal with these issues, but also assists business leaders with defending brand equity.

A marketing environment in which brands are measured with accuracy will allow marketers and business leaders to make the most informed decisions possible. By helping businesses make wiser choices, brand valuation enhances the status of the marketing function, including its supporting network of agencies and media. The recognition of brand valuation standards will finally allow the marketing community to receive its overdue recognition.