New ISO Standard for Valuing Brands
The International Organization for Standards (ISO) has finally adopted a standard for the valuation of brands. ISO 10668 establishes a framework for brand valuation, from approaches and methods to reporting.
ISO is a non-governmental, membership organization, the self-proclaimed world's largest developer and publisher of International Standards.
In its own words, ISO standards are designed to:
“…make the development, manufacturing and supply of products and services more efficient, safer and cleaner facilitate trade between countries and make it fairer provide governments with a technical base for health, safety and environmental legislation, and conformity assessment share technological advances and good management practice disseminate innovation safeguard consumers, and users in general, of products and services make life simpler by providing solutions to common problems.”
ISO 10668 applies to brand valuations commissioned for all purposes. It specifies that when conducting a brand valuation the valuation analyst must conduct three types of analyses before issuing an opinion on the brand’s value. These are legal, behavioral and financial.
Legal: The analyst must identify and assess all of the IP rights that attach to the brand.
Behavioral: The analyst must form an opinion on awareness, perceptual attributes, knowledge, attitude and loyalty in each customer segment impacted by the brand.
Financial: ISO 10668 refers to the market, cost and income approaches, recommending the income approach.
- This is not a mandatory standard; valuators do not have to follow it. Of course, if related litigation ensues, the standard might be a basis for interrogatories, so analysts should know what ISO 10668 asks for.
- It is significant that finance, marketing and legal analyses make up the final report. It has long been argued that valuing IP cannot be done out of context, that the benefit stream anticipated from a set of IP rights will be determined by the legal and market particulars with respect to those rights.