Brands Are Worthless* (*Without a Product That’s Selling)

Photograph by Tom Kelley/Hulton Archive/Getty Images

How much more is a car worth when it’s an Oldsmobile instead of a plain old Chevy? These days, zero.

This week Interbrand, a consulting company that’s part of advertising giant Omnicom, released its annual list of the world’s best brands, leading to the usual media hoopla about the changes in the brand value rankings. The news is that Apple passed Coke to become the world’s most valuable brand, worth $98,316,000,000.

That’s an very precise value to set on an intangible asset. Maybe on a good day it’s a cool $99 billion? Interbrand seems to have a formula for this; several screenfuls of methodology are online here–though, as with Coke, the exact recipe remains elusive. And is this really the year Apple became No. 1, or should we trust the competing BrandZ list, where Apple’s been on top since 2011? On the whole, if you don’t want to quibble too much about the numbers, the Interbrand list is not unexpected, which is as it should be: A list of top worldwide brands is going to be filled with names you’ve heard of.

But what’s the point of setting a price on a brand? Advertisers and marketers love it, naturally, because it puts a specific value on what they do. For everyone else the annual ritual has a downside. It encourages folks to think that you can you can get the cream out of the Twinkie and still have something valuable left.

Well, you can’t. The problem with the whole idea of “brand value” is that it’s impossible to separate from the product you’re selling. The Interbrand list more or less acknoweldges. Brands move up and down the list from year to year as their sales ebb and flow. Nokia’s a case in point. Just two years ago, Nokia was No. 14 on the list, valued at $25 billion. Last year it was No. 19, at $21 billion. This year, it’s at 57, valued at $7.4 billion, just a shade over what Microsoft agreed to pay for Nokia’s phone business.

All this seems reasonable. There’s nobody who would argue that the value of Nokia’s business hasn’t declined markedly. But what was it that was worth $21 billion last year? Try this though experiment: let’s say you ran a mobile phone maker that didn’t make the top global brands list at all. Would you have paid $21 billion to sell your product under the name “Nokia?”

Years ago folks probably thought they had the whole brand thing down pat. What was the value of the Oldsmobile or Mercury brands? The excess you could charge for the hood ornament over a plain old Chevy or Ford, which was essentially the same car. These days it’s easy to set a value on that: it’s zero. That’s why Oldsmobile and Mercury have been discontinued. Those may never have been the world’s shiniest brand names. That doesn’t matter. Certainly Pan Am was as great a brand as there ever was. The name was last sold in bankruptcy for a reported $24,5 millionIt’s not clear it was even worth that. Now Pan Am’s just  a cancelled television series and a railway operator. And taking the name of an iconic airline doesn’t do much to burnish the image of a railway. What made the brand matter in the first place (cf. every Don Draper presentation in Mad Men) was the experience it sold: flying.

The fixation on brand value makes a lot of people miss the obvious about brands. Take, again, Apple. Talk about Apple’s brand often ends up turning to “mystique,” a word that has trailed Apple since the old “Think Different” ads with Mahatma Gandhi and Albert Einstein. Apple, it’s said, isn’t just a brand but a lifestyle. No doubt Apple has had excellent advertising.

But you know what? Gandhi didn’t sell nearly as many Macs as Justin Long (the Mac guy) and John Hodgman (the PC guy) in Apple’s later Mac campaigns. Truth is, it’s the other guys (Cisco, Microsoft, IBM … you know who you are) whose advertising now relies on soft-focus messages about changing lives around the world. The messages Apple delivers over and over again are: Our products have everything you need straight out of the box. They’re easy to use. They don’t crash. In other words, Apple sells the brand by selling the product. Yes, it’s the oldest idea in advertising. It’s also the only one that consistently works.

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