Brands Are Assets

Accountants like to put tangible assets such as buildings and equipment on the balance sheet. They also like to depreciate them over time -- it lowers your business income taxes, and it recognizes the fact that no matter how much maintenance you put into them, tangible assets do eventually lose their value to the enterprise. All their value. All tangible assets. All the time.

Brands are the opposite of tangible assets in nearly every respect. For example, they're hard to value -- there's no purchase price as there is with a computer or an office building. Most significantly, brands can actually appreciate in value over time. Not all brands, and not all the time. But look at Coke, Fender, Gibson, Mercedes-Benz, BMW... Although it may be difficult to quantify, there's no denying the fact that these brands add value. The world is full of Stratocaster clones, and they will soon be real clones -- a US Federal court recently ruled that Fender has no exclusive right to any of the iconic Stratocaster design elements. But none of the copies command the retail price premium that the genuine article does, even though the raw materials and components may be nearly identical, and the manufacturing process practically the same. The only apparent difference is that Fender decal on the headstock.

Even more exciting is the idea that brands can actually grow in value over time. Like tangible assets, brands require annual investment. But where maintenance costs are pure expenses that do nothing but subtract from the bottom line, brand marketing can be an investment that multiplies the value of the business. In the era of Internet marketing, it's tempting to focus your attention and your resources exclusively on marketing programs that can be measured. That's like the drunk who looks for his car keys under a street light because he can see -- even though he knows that they're somewhere else entirely, out there in the darkness.

Of course, you can't just blindly throw money at media and expect to build a brand that will build your business. You need a long-term, comprehensive plan that will create a brand you and your company can live up to. Your brand is made up of the promises you make to your customers, so there is nothing more damaging to a business that making promises that aren't kept. Consumer are hyper-vigilant about that these days, and social networks spread word of a hollow brand faster than you say "damage control." A strong, durable, flexible brand is like a tree. The roots are market research, the trunk is message definition and positioning, and the branches are the communications -- advertising and public relations