I entirely agree with Torsten Nilson’s view in “Microsoft story hard to swallow” (MW July 28) that brand valuations should be based on an analytical, marketing-oriented model. This has been Interbrand’s approach since 1988. Since then, we have conducted more than 1,200 brand valuations – with a combined value of 40bn – for use in balance-sheet reporting, mergers and acquisitions, tax planning, brand licensing, litigation support and brand management. Our methodology, and the resulting valuations, are now widely accepted by auditors, tax inspectors, Stock Exchange authorities and the legal profession.
The valuation exercise conducted by Financial World was based on the Interbrand approach. It highlights the issue of brand value and the need to monitor changing values. However, accurate brand valuations depend upon the valuer having access to accurate internal data. As this was unavailable to Financial World, its “brand valuations” were based on published historical information, which inevitably throws up rogue results.
As far as we are concerned, the real issue is not that we need to change a proven methodology but that more companies should be using the methodology to track performance on a consistent and comparable basis for both internal and external reporting.