Interbrand Global Brand valuation methodology

For anyone who wants to read it -- and for what it's worth -- here's the Interbrand/Businessweek Best Global Brands list for 2008. The bit on methodology is reproduced below, so you can decide for yourselves what weight to place upon its valuation of, say, top brand Coca-Cola at 66.667 million dollars.

The Interbrand method for valuing brands is a proven, straightforward, and profound formula that examines brands through the lens of financial strength, importance in driving consumer selection, and the likelihood of ongoing branded revenue. Our method evaluates brands much like analysts would value any other asset: on the basis of how much they're likely to earn in the future. There are three core components to our proprietary method:

Financial Analysis
Our approach to valuation starts by forecasting the current and future revenue specifically attributable to the branded products. We subtract operating costs from revenue to calculate branded operating profit. We then apply a charge to the branded profit for capital employed. This gives us economic earnings.

All financial analysis is based on publicly available company information. Interbrand culls from a range of analysts' reports to build a consensus estimate for financial reporting.

Role of Brand Analysis
A measure of how the brand influences customer demand at the point of purchase is applied to the economic earnings to arrive at Branded Earnings.

For this study, industry benchmark analysis for the role the brand plays in driving customer demand is derived from Interbrand's database of more than 5,000 prior valuations conducted over the course of 20 years. In-house market research is used to establish individual brand scores against our industry benchmarks.

Brand Strength Score
This is a benchmark of the brand's ability to secure ongoing customer demand (loyalty, repurchase and retention) and thus sustain future earnings, translating branded earnings into net present value. This assessment is a structured way of determining the specific risk to the strength of the brand. We compare the brand against common factors of brand strength, such as: market position, customer franchise, image, and support.

Apart from idle speculation as to how far the values of the listed financial sector brands might have plummeted while the research results were being proofed and printed, there are plenty of points to ponder. One is the relatively poor performance of brands in the pharmaceutical and healthcare sectors; another is the relatively good showing among some business-to-business brands. A third is the reminder that a brand and a trade mark are entirely different things: BlackBerry the trade mark is in danger of being genericised to death by its admiring consumers, while BlackBerry the brand would appear to be flying high.

If you'd like to post any comments on this year's Interbrand list, please feel free to do so below.