George Pitcher: Can it really be valuable if it cannot be realised?

Interbrand’s UK brand value chart is dominated by the retail banks. But is branding really that important in a sector famous for customer inertia? asks George Pitcher

The branding issue is either utterly trivial or tremendously serious, with apparently nothing prosaic in between. At the frivolous end, we’ve had PwC Consulting rebranding itself as Monday and Deloitte Consulting outflanking its competitor by renaming itself Braxton.

I say that Deloitte has outflanked PwC simply because its new identity is more practical: in order to remind myself which company had done what, I did a quick Internet search. You try entering “Monday” into a search engine. By contrast, “Braxton” got me to the Deloitte site immediately.

Now I gather that Freeserve is thinking of rebranding itself as part of Wanadoo, its French parent since 2000. This would oblige its 2.5 million customers to change their e-mail addresses. You couldn’t make this stuff up.

Then, at the serious end of branding, we have multinationals talking about the global brand values that they carry on their balance sheets. One thinks immediately of the Americans, with Coca-Cola, Nike, McDonald’s and Microsoft.

But the British are well represented too at this end of the branding market, where brands are valued at billions of pounds. Branding consultancy Interbrand this week published its league table of British brand values, which shows a new domination by the high street banks.

Barclays comes top, with a brand value calculated at a shade under £6bn. Royal Bank of Scotland (RBS) is not far behind, at £5.7bn. Vodafone is third at £5.5bn, then we go back to banks with Lloyds TSB at £4.6bn. Reuters comes in at fifth, with a brand value of £3.2bn, and then it’s NatWest (part of RBS, where brand value must be a major issue) at £3bn. Halifax and Abbey National are ninth and tenth – after BT and BP – at £1.8bn and £1.7bn respectively. The likes of Cadbury’s, British Gas and Boots don’t make the top ten. Marks & Spencer has slipped from fifth in 1999 to 14th this year.

Interbrand calculates brand value as “the net present value of the earnings that the brand is expected to generate in the future”, which in turn represents a company’s ability to charge above the market price for its products or to make above-average profits.

Don’t ask me how this is done, but it is supposed to be of enormous trading importance to a branded concern such as Barclays – not least because I calculate that its brand value, on Interbrand’s estimate, constitutes some 20 per cent of its overall market capitalisation.

I don’t doubt that Barclays’ solid reputation, enshrined in its brand value, allows it to charge higher interest rates without losing business, but that might be as much to do with the legendary customer inertia in retail banking. What I do wonder, though, is whether this brand value is as important to Barclays as it’s cracked up to be and, in particular, whether it does have such a critical effect on future profitability.

Far more critical for Barclays’ earnings growth is its ability to expand its product base and protect its margins against bad debt. On the question of the former, it has just had to call off talks aimed at an agreed takeover of Bradford & Bingley.

With share values plummeting, that’s hardly surprising – accepting Barclays paper at the moment is hardly an inspiring prospect for shareholders, although it might represent good value. More importantly, market volatility makes the banks impossible to value. What price brand value under these circumstances?

On top of that, there are the provisions that Barclays needs to make for bad debts. I write this before details of these provisions are announced this week, but the news won’t be good. There is little or nothing that brand value can do about an issue such as this – it may even find itself undermined.

None of this is to say that brand value isn’t important to a company such as Barclays. It serves just to make it clear that there are trading issues that make brand value fairly irrelevant when it comes to the nature of future earnings, on which Interbrand calculates its brand values.

I’m not even sure that, for a bank, brand value translates very easily into an ability to charge higher rates and consequently to enjoy wider margins. A survey from another brand consultancy, Link Consumer Strategies, looks at consumers’ attitudes to allegedly “premium” products and services and comes up with some fairly depressing reading for the retail banks.

According to Link: “Consumers of all socio-economic backgrounds are keen to buy the best – but not all product categories lend themselves to a premium status.” Apparently, premium imagery is paramount in product categories such as cars, drinks, toiletries, clothes and electronics, but is “less effective in areas where image is less important”, such as banking and insurance.

This would seem to suggest that, in Interbrand’s brand table, Vodafone’s third place and BT’s seventh place are of considerably greater value to the brands’ owners – if the electronics sector is presumed to include mobile phones – than Barclays’ first place and RBS’ second. There is simply more that some companies can do with their brand values than others.

An odd situation arises, in which Barclays finds itself blessed with the highest brand value in the UK, representing a greater proportion of its market capitalisation than any of its competitors’, but is unable to leverage it even to the extent, perhaps, of poor old M&S.

For Barclays, brand value could turn out to be as much of a burden as it is a blessing.

George Pitcher is a partner at communications management consultancy Luther Pendragon

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here