Your Brand, Your Reputation

Reputation is an important currency in the world of  business, yet how do we value it? While reputations have been called priceless, invaluable, sterling or worth their weight in gold, real business cannot be conducted using such far-reaching generalities. A reputation must be quantified in order to truly calculate its contribution to a company’s bottom line.  

Research on how to monetize reputation, primarily as it relates to calculating brand value, is being done in the Twin Cities. Renée Marino, managing director of forensics and litigation services at Grant Thornton has been collaborating with local brand leaders researching how our interactions with brands can be monetized. 

Q: How do you summarize the role of reputation in business today? 

A: Reputation is an asset of a company, but resides outside of it, within the population.  Our ability to protect a reputation is different from how we lock up a piece of equipment, it is within our influence, but not our control. Skeptics may struggle with valuing invisible assets, yet they represent a huge portion of our economy and managing and measuring them has become a major focus of business. 

Q: How do you go about valuing something that’s invisible? 

A:We look for evidence of cash flow. For example, a patent establishes a 20-year legal monopoly for the invention it covers. Because of this, it can be sold or licensed. Competitors may have to pay for a license to use your invention, either voluntarily or by order of a court.  

A trademark can also be licensed or sold. The recent bidding war in court for Polaroid was all about figuring out which buyer could command more licensing royalties by letting other companies use the name. 

Q: Is a trademark the same thing as a brand? 

A: The value of a trademark or trade name is in the feelings it invokes and the consumer actions that follow. The concept of brand is larger. I consider the definition of a brand as a “promise kept,” which includes the product’s attributes, quality, delivery and follow-on service. Many invisible assets have a hand in keeping or failing to keep that promise. 

Q: There seems to be a greater focus in business today on brand values. What factors are driving that? 

A: Part of it is driven by the tremendous amount of outsourcing that has happened in the past two decades. Companies are having private and foreign companies handle tangibles, like manufacturing. Internet bidding allows brand owners to keep costs down from their approved suppliers and allows far-away companies to compete.  

What companies are keeping under their own management is their invisible assets, so much so that we are seeing the rise of virtual companies whose only business is to manage one or more of these invisible assets such as managing brands or a patent portfolio. 

Q: Are there other factors driving today’s focus on brands? 

A: Financial reporting changed in 2002 so that invisible assets must be valued separately when a business is acquired, and then tested if there is an event that suggests they may have lost value. An event that causes a business reputation to suffer could theoretically cause the stock to drop enough that the company might have to write down invisible assets. 

The amount of information available about consumers and their buying behavior is also driving a change in how brands are viewed and valued. Direct marketers experiment to test responses to solicitations. Amazon tracks everything you’ve bought or laid eyeballs on to see if it can find something that would be appeal specifically to you.  

LinkedIn knows who we know and can see evidence of our social structure and how we spread ideas. This data is enabling a new type of math that is being developed to explain how our social network structure leads to the rise of a fad. 

 There is a growing realization that we are not rational decisionmakers, after all. And that has far-reaching implications for how stock options are priced, what monetary policy should be followed and, of course, how we interact with brands.  

Brands can explode out of nowhere or reputations can crash overnight. We have data to trace how that happens and we use it to try to create an effect. It’s an exciting area that business leaders must pay attention to if they are to maximize the value of their brands, their reputations and, thus, their companies. 

Beth LaBreche (blabreche@labreche.com) is CEO of LaBreche. She specializes in such reputation management services as brand strategy, online presence, visual communications and public relations, including issues management, crisis communications and media relations.