“Marketing should always be seen as an investment rather than a cost, once you know the value of your brands you can better manage them and monitor the effectiveness of the investment”.
This quote comes from Brand Finance South Africa 50, 2019, a report that was published recently. As trade marks are, in essence, the identifiers of brands and trade mark law is all about protecting and enforcing these brand identifiers, the report is worth a look. Reports like these give trade mark law some context and justify the cost of protecting, maintaining and enforcing intellectual property, typically a company’s most valuable asset.
The report seeks to identify the strongest and most valuable South African brands. The authors (one of whom is Jeremy Sampson, a well-known figure in South African branding) say that they “put thousands of the world’s biggest brands to the test every year, evaluating which are the strongest and the most valuable.”
The report says that the purpose of a strong brand is “to attract customers, to build loyalty, to motivate staff”. But, it goes on to say, for a commercial brand “the first answer must always be to make money.” So, the authors claim, we “connect brands to the bottom line.”
This is explained further as follows: “Huge investments are made in the design, launch and ongoing promotion of brands... monitoring of brand performance should be the next step.”
But, as many involved in branding and marketing will know, there are those who have doubts about this monitoring: “Where it [brand monitoring] does take place it frequently lacks financial vigour... as a result marketing teams struggle to communicate the value of their work and boards then underestimate the significance of their brands to the business... sceptical finance teams unconvinced by what they perceive as marketing mumbo jumbo may fail to agree necessary investments.”
The report suggests that it is high time the doubters (bean counters!) got with the programme: “There remain some who still sniff at the mention of intangibles and goodwill. Today the value of the intangibles of a company invariably far outweighs the value of the tangibles, and brand value is usually the major contributor.”
Brand valuation, say the authors, is more rigorous and recognised than it may once have been. There’s mention of ISO 20671 Brand Evaluation and ISO 10688 Brand Valuation. There’s a reminder that the standard brand-value methodology is the royalty relief approach – “estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use.”
Looking at brands in South Africa, the report tells us that brands are outpacing a decidedly sluggish economy, recording growth of 5.8%. We’re told that the values of the Top 10 brands all went up over the past year, in some cases by over 30%. The performance of South Africa’s biggest brands “poses a potential source of growth for the economy that, in turn, could lead to increased job creation and funds flowing to the fiscus.” The suggestion might well be that government should be taking more note of brands!
So, which brands are doing well in South Africa? “In South Africa, like in many emerging markets, telcos and finance are the dominant forces.” But it’s not only cell phone companies and banks that are coining it – retail, entertainment, insurance... they’re doing OK too. According to the report, the top 20 most valuable brands in South Africa are:
- First National Bank
- Standard Bank
- Carling Black Label
- Old Mutual
- Pick n Pay
ENSafrica’s IP team is delighted to manage the worldwide trade mark portfolio of South Africa’s most valuable brand, MTN. The list suggests that in the South African economy there’s a very strong emphasis on services, but it does show that oil and gas are important too, as is paper and, of course, we do like our beer!
Brands, being extremely valuable assets, must be legally protected and, once protected, they should be enforced. That’s where trade mark law comes in.