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Brands are undeniably one of a company's greatest assets, but they are difficult to measure accurately. It is surprising, therefore, that most marketers and managers in general are unaware of the new international standards for measuring, monitoring and reporting on brand valuation, the monetary value of a brand and brand valuation, the health of a brand. While U.S. auditors continue to avoid creating standards for measuring and reporting one of a company's most important assets, international bodies have been busy developing standards that investors should demand and implement. In 2019, the International Organization for Standardization (ISO) adopted a number of standards for the continuous monitoring of brand health: ISO 20671: 2019, brand evaluation – principles and principles. These latest standards supplement an earlier ISO declaration on brand valuation: ISO 10668: 2010: Brand valuation – Requirements for monetary brand valuation.

How the monetary value is assigned to a brand

The ISO brand valuation standards define very precisely how a brand should be assigned a monetary value, although there are some alternatives. This standard identifies three general approaches to determining the value of a brand: (1) the cost approach, (2) the market approach, and (3) the income approach. The cost approach rates a brand based on the cost of replicating the brand at the time of rating. Past brand development expenses may affect the cost of brand replication, but a brand's current value may be more or less than previous expenses. The market approach bases the value of a brand on what can reasonably be expected of a brand buyer to acquire the brand. The market approach is based on information about the sale of similar brands. Finally, there is the income approach, in which a brand is valued based on the income that it is likely to achieve over the life of the brand. In other words, this approach tries to estimate the present value (present value) of the cash flows generated by the brand.

Factors that affect brand health

The value of a brand at all times and the change in this value over time are important indicators of the success or failure of brand management. They represent the “ultimate metric” for success because they are given in terms of the financial performance of the company. However, such metrics are incomplete. Hence the development of the ISO measures for brand evaluation. Marketers will be well acquainted with such measures as they are the standard for brand health. These measures include awareness, attitudes, preferences, intentions and satisfaction. These measures often serve as early indicators of future problems or opportunities, even if they do not have a strong direct prediction of sales and revenue. For this reason, it is important to monitor them continuously as part of a systematic brand management process. The ISO brand evaluation standards emphasize that brand management includes a continuous improvement process. In addition, customer-oriented and market-oriented measures are not the only factors that influence the health of a brand. Changes in the legal, economic, political and financial environment can also influence the health of a brand. Therefore, the ISO standards also require an assessment of the impact of these factors.

Marketing's golden ticket for greater organizational impact

Marketing professionals should familiarize themselves with the ISO standards and use them as justification for measures and resources. Much of the credibility and organizational power of accounting, finance, and operations grows from the existence of performance standards that these disciplines point to as a justification for mastering resources. Marketing lacked such external justification, but it is no longer the case. Used wisely, the ISO standards for brand valuation and brand valuation are the "golden ticket" of the marketing disciplines for greater organizational influence and better performance of the companies that use them.

ContriBranding Strategy Insiders: David Stewart, President Professor of Marketing and Commercial Law, Loyola Marymount University, Author, Financial Dimensions of Marketing Decisions.

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