New research from the UK IP Office has found that there is “low awareness” of IP valuation within UK businesses, with a series of recommendation to boost take-up laid out. This comes as a new brand ranking list is released, and was immediately met with scepticism by one of the leading marketing trade publications. The debate around brand valuation rankings tables clearly shows no sign of abating.
The study, entitled Hidden Value: A study of the UK IP Valuation Market, is an in-depth look into the current brand valuation ecosystem in the UK. It found that there is an estimated volume of less than 5,000 IP valuations conducted annually in the UK, with companies spending at least £50 million per year. Those figures, the report concedes, are relatively low. It notes a few reasons for this:
- Brand valuation suppliers claim it is because “end users only have assets valued when they need to” and “don’t see the general benefits of valuation, as they don’t see (understand) that the valuation process adds value”
- Companies that have used brand valuation services claim it is because of a “lack of awareness and knowledge” amongst other organisations
- Companies that have not used brand valuation services state that it is because “they have little knowledge of the market, and there isn’t enough information (about either the process or the benefit)”
The main constraint the report finds, however, is that the practice of IP valuation is generally event-driven. It is “unlikely”, the study says, that a company will commission a brand valuation unless it has a specific reason (such as concerning a business transaction) or is asked to do so (for example, by an intermediary). Overall, then, the research suggests that there is “low awareness of the subject of IP valuation amongst businesses in general and what the benefits of the process will be”, adding: “It is not uncommon for companies to regard their IP as valuable, without feeling the need to quantify that value.” For that reason, the report laid out a number of recommendations to spur growth in the IP valuation sector:
- Use case studies to highlight the benefits to business of valuing IP
- Develop a directory of IP valuation suppliers and their specialisms
- Tailor an outreach programme targeted individually at businesses, intermediaries and investors
- Research into links between intangible asset valuations and IP strategy
- Voluntary IP statements and/or labelling to raise awareness of the presence and value of intangibles in a business
It was also suggested that the UKIPO “could play a greater role in making the case for IP valuation to investors” or even “providing some financial assistance”. Time will tell whether that comes to pass, but the crucial focus, the report notes, should be ensuring that businesses understand ‘why’ an IP valuation is valuable; the ‘how’ to commission one, it is hoped, should then follow.
To date, the primary marketing efforts undertaken by brand valuation firms don’t focus specifically on ‘why’ valuation is valuable, but rather highlighting ‘what’ value top brands boast. Valuation ranking tables have been a staple marketing tool for brand valuation firms, including Brand Finance, BrandZ and Interbrand, for a number of years. The reason is simple; they generate significant media coverage, spur debate on the placement of particular brands and highlight the practice of brand valuation. In recent times, however, there has been an increasing push-back against ranking tables. For example, following the release of Interbrand’s annual list of the world’s most valuable brands last week, a columnist for AdAge published a snarky piece on the newsworthiness of such rankings. “What can be learned from it? Um, something something Age of You something something growing rather than maintaining something something Growth in a Changing World. Is it all kinda arbitrary? Bottom's up!”
The debate within the industry continues as well; the next issue of World Trademark Review, for example, will include a lengthy two-way debate between two respected figures in the brand valuation industry. In a bitter exchange of words, Markables managing partner Christof Binder maintains that “rankings are the result of non-commissioned, low-budget, low-quality valuations” that “create confusion and scepticism”, while Brand Finance chief executive David Haigh contends that “league tables have been a good thing for those working in the brand field in the last 15 years and will continue to be in the future”.
Given the divergence of opinions around this subject, the discussion is an important one to have. What isn’t in dispute is that meaningful value resides in strong brands and that putting a figure on this value makes commercial and strategic sense. The hope, perhaps, is that studies such as the one commissioned by the UKIPO – which gives clear and direct recommendations on how to improve and grow the industry – will quell debate and lead to changing attitudes, both inside and outside of the brand valuation sector.