Ocean Tomo, LLC, a part of J.S. Held, Managing Director Gregory Campanella recently spoke on the topic of brand valuation and monetization at a webinar hosted by the Licensing Executive Society’s Valuation and Pricing Committee.
Ocean Tomo will be publishing to the Insights blog a series recapping the webinar, and Greg’s answers to a multitude of questions from the panel moderator on topics such as: defining a brand, understanding brand valuation methodology, the common reasons to perform brand valuations, and how brand value can exist without marketing or R&D budgets.
Part 1: What is a brand?
During the webinar, Greg defined a brand at its most basic level as a bundle of intellectual property rights; but he went on to explain that this bundle of legal rights only has value as a result of the emotionally characteristics and reputation of the brand. For example, the while the legally protectable element of a brand asset is the trademark and name. The value is in the non-technical aspects, emotion, reputation, and key values. Greg explained that, from a valuation perspective, a brand only has value if it has a positive impact on the operations of an enterprise, including premium pricing, lower marketing costs, lower recruiting costs, etc.
Looking at an example such as Louis Vuitton, Greg anecdotally explained that he always laughed at the idea of his wife wanting a $2,000 Louis Vuitton Neverfull tote bag. Essentially, you’re paying $2,000 for a canvas bag that cost about $20 to manufacture; and while this sounds ridiculous when you remove its brand identity women are lining up to spend $2,000 more for a canvas bag because they attach the Louis Vuitton label to it. He went on to suggest that, if he was to print the Campanella name on a similar canvas bag, it would not sell for anywhere near $2,000. The lesson is that it is the emotions and feelings evoked by the brand that allows a brand owner to charge a higher price and justifies the purchase to the customer.
Greg continued to explain that premium pricing is not the only benefit to the owner of an established brand. Brands may also reduce the cost of marketing. Coca-Cola, for example, does not need to constantly advertise because the brand is universally recognized. It is synonymous with an entire class of beverages; and as a brand’s reputation and recognition grows broader, the cost of marketing will decrease relative to a new or lesser-known brand.
Branding is also often used in concert with a Company’s broader strategy. For example, Apple markets its devices as a part of an intuitive, seamlessly integrated experience across multiple Apple platform devices. The idea of an integrated ecosystems is desirable to the consumer. It is also desirable to Apple, because once you choose to adopt a proprietary platform, it increases the cost of switching. Greg provided an example from his own experience, telling the story about how he had to switch phones just so he would be able to video chat with his wife and children on their Apple Devices. In cases like this, Greg explains that it is a combination of the technology and the brand itself that drive value.
For further insights on a practical and actionable understanding of the drivers of brand value along with a comprehensive approach to understanding the linkages between your brand and its value, download the Ocean Tomo Brand Report at: https://www.oceantomo.com/media-center-item/brand-report/
Gregory Campanella is responsible for leading the Management Services Group and is the Managing Director in the Valuation practice of Ocean Tomo, a part of J.S. Held. Mr. Campanella’s work has focused on valuations of intangible, intellectual property, and tangible assets for acquisitions and divestitures, bankruptcy and restructuring, the establishment of monetization strategies including licensing, mergers and joint venture/partnership formations, litigation support, and financial reporting and tax matters.
Mr. Campanella also has experience performing business enterprise, equity, and debt valuations. Industries in which he has experience include telecom, computer hardware, and software, entertainment, semiconductors, life sciences/pharmaceuticals, wireless and wired communication, and e-commerce, among others.
Prior to Ocean Tomo, Mr. Campanella led cross-functional teams providing valuation, financial analysis, strategic consulting, and transaction advisory services to consumer products and technology companies in conjunction with intellectual property (IP) and enterprise acquisition, investments, and divestitures. Mr. Campanella is skilled in the creation of models to both evaluate the economics of alternative spin-out strategies and to establish the value of IP to be contributed in a joint venture.
Mr. Campanella is a member of the Intellectual Property Owners (IPO) and the Illinois Technology Association (ITA). He is a graduate of the University of California with a BA in Economics; received is JD from Loyola University of Chicago School of Law and an MBA from the University of Southern California Graduate School of Business.
To explore this topic and how it could impact your business, please contact Greg Campanella at +1(415)946-2605 or email@example.com.