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The world’s 1st consultancy certified by Austrian Standards to provide brand valuation & evaluation

13 December 2019
This article is more than 1 year old.

Brand Finance, the world’s leading independent brand valuation firm, was today officially certified by Austrian Standards as the only brand valuation consultancy producing reports and opinions compliant with ISO 10668 and ISO 20671 combined.

ISO 10668: Brand Valuation – Requirements for Monetary Brand Valuation was released in September 2010. Brand Finance not only helped to develop the standard but was one of the first consultancies certified by Austrian Standards to provide monetary brand valuations compliant with the new standard. The standard requires three types of analysis: firstly, Legal analysis, to prove ownership of brand assets; secondly, Behavioural analysis, to demonstrate the brand equity of brands; and finally, Financial analysis to determine a financial valuation opinion.

ISO 20671: Brand Evaluation – Principles and Fundamentals was released in March 2019. Brand Finance was actively involved in Technical Committee 289 of the International Standards Organisation which created the new standard. ISO 20671 is intended to provide much greater direction for brand valuers in their understanding of the Elements, Dimensions and Indicators of brand strength underpinning the Behavioural analysis required by ISO 10668.

David Haigh, CEO of Brand Finance, commented:

“For 25 years Brand Finance has been actively promoting the development of valuation and reporting standards for brands. ISO 10668 was the first major breakthrough and has transformed the professional practice of brand valuation. ISO 20671 is another major breakthrough because it indicates what brand management must do and what brand valuers must understand when appraising brands.

We have now reached the point where all key companies recognise that brands are real assets that can be reliably measured. We are proud to be the first brand valuation firm offering services totally compliant with both of these ground-breaking standards.

CEOs and their CFOs can now be totally confident that reliable brand valuations are available. CMOs increasingly refer to the new standard as ‘the golden ticket for marketers’.”

Dr. Holger Muehlbauer, auditor for ISO 20671 commented:

"The new international brand valuation standard ISO 20671 recognises that the primary purpose of a brand is to increase overall corporate value, reduce risk and ensure the sustainable existence of a brand. The standard applies to both internal and external brand valuations and helps analysts, investors and lenders as a reference for professionalism.”

Peter Jonas, Director Certification, Austrian Standards, added:

“I am pleased that Brand Finance is a pioneer in ISO 20671 certification and has successfully verified its technical expertise.”

ENDS

About Brand Finance

Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.

Every year, Brand Finance values 5,000 of the world’s biggest brands. Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available can be found on the Brand Finance website.

Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).

Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.

David Haigh, CEO of Brand Finance, represented the British Standards institute on the International Standards Committee working party on the standardisation of brand valuation methods and practices, ISO 10668.

About Austrian Standards

Austrian Standards, established in 1920, is structured in the business divisions of development, consulting, publishing, training and certification and finances the standardization system by more than 80 per cent through the sale of its products and services.

Austrian Standards is an internationally renowned member of the European Committee for Standardization (CEN) and the International Organization for Standardization (ISO).

Media Contacts

Konrad Jagodzinski
Communications Director
Brand Finance
Florina Cormack-Loyd
Associate Communications Director
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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