“The proper stewardship of a corporate brand includes the measurement of financial metrics that may result from certain brand strategies,” says Rene Hlousek (Beacon Valuation Group LLC). For example, brand managers would want to know whether certain strategies (e.g., increased brand awareness, improved product recall, etc.) will result in greater revenue growth and, hopefully, profitability.

Consider this: An alternative method, the residual contribution method, results in a valuation metric that allows you to track the brand from a purely valuation perspective, by systematically exploring the relation between a business enterprise, its underlying key intangible assets, goodwill, and, ultimately, corporate brand value. It’s one thing to know that if you raise brand awareness by 20%, it will result in a corresponding increase in revenue. But how does that translate into value? “That’s not answered by the existing schools of thought and valuation models,” he says. Additionally, “current and popular methods to value a corporate brand, although traditionally deemed as being adequate or ‘passable’ for financial reporting purposes, are far less than sufficient when it comes to measuring the full or realistic value of this intangible asset.”

“The tracking of corporate brand values with the residual contribution method on an ongoing or regular basis can benefit management internally and be used as a strategic planning and evaluation tool aimed at maximizing value for the company’s stakeholders,” says Hlousek. “RCM-based brand tracking systems can also be used as a means of better monitoring marketing efficiency, improving marketing budget allocation, and highlighting marketing’s contribution to the bottom line in financial and valuation terms.”

For more information: Hlousek is the developer of the residual contribution method, and he recently conducted a BVR webinar that explains it in detail. To acquire a recording, please
click here.