Mark Ritson on branding: Getting to bottom line of brand equity

But all this is about to change. Next month global agency group WPP will launch an alternative brand valuation league table that will directly challenge Interbrand's calculations. The system has been masterminded by chief research officer Andy Farr and his marketing quant jocks at Millward Brown Optimor (MBO).

The modelling work used to generate the valuations will be based on Brandz, the massive annual survey of more than 21,000 brands conducted by Millward Brown. The resulting table will be published in a special edition of the Financial Times each year.

There are many reasons to expect the Millward Brown system to be superior to that of Interbrand. First, Brandz gives it a key competitive edge over Interbrand's league table, which relies on global guesswork to evaluate brand strength. The Brandz data provides customer-based, empirical data drawn from different international samples of representative consumers.

Interbrand estimates; MBO measures.

Second, although there is nothing shoddy about Jan Lindemann and the valuation people at Interbrand, they simply do not have the horsepower of Andy Farr's team at MBO. Farr has been publishing academic-quality research on marketing investments for more than a decade and his team has been strengthened in recent years by the acquisition of Optimor and a string of impressive hires. While the marketing press is obsessed with the transient talent of creatives, the real strength of WPP is increasingly seen in the analytical and marketing minds that now populate the group.

Despite the size and stature of Interbrand's study, WPP and its deep pockets are committed to making the MBO system the industry standard in brand valuation. David Muir, Sir Martin Sorrell's right-hand man, is well aware of the client potential of operating the leading brand valuation system. Aside from the PR advantages and new-client impact, the new valuation method could come close to the holy grail of brand equity measurement.

Imagine Ogilvy, Hill & Knowlton or any of the other WPP agencies being able to demonstrate their impact on a client's business not just in consumer terms but by connecting it all the way back to the financial value of the company. The ultimate advantage of the MBO system is the potential to link brand strategy to the kind of balance-sheet impact that even a chief financial officer cannot argue with.

There is little doubt that MBO is about to launch a superior product to that of Interbrand. But as the incumbent leader in the valuation business, Interbrand is probably the only marketing services brand most non-marketing executives - the ones with all the power and the money - have ever heard of. Ironically the biggest challenge that MBO faces is now a branding one. Can it build a brand big enough to dislodge Interbrand? In the world of brand valuation, top-of-mind awareness is everything.

In marketing, direct comparisons are usually impossible. Agreeing on which ad is the best, for example, is inevitably a matter of subjectivity - often booze-fuelled. But in this instance, both Interbrand and MBO publish their findings using cold hard cash as their metric.

We are therefore about to enjoy the rare opportunity of directly comparing two different marketing approaches.

Will the MBO calculations deviate from those of Interbrand - and if so, who has got their sums correct? All will soon be revealed.

30 SECONDS ON ... BRANDZ

- WPP's annual Brandz survey questions more than 650,000 consumers and professionals in 31 countries.

- The results are analysed to create a combined diagnostic and predictive tool that evaluates the strength and growth potential of brands.

- Respondents are asked to compare more than 21,000 brands in 300 categories from sectors including long purchase-cycle brands, FMCG, retail and e-commerce and services.

- Each respondent is asked to evaluate brands in a competitive context from a category they shop in.

- Their responses generate scores for levels of bonding with a brand, its advantage over rival brands, brand performance and relevance to consumer needs.

- Consumer loyalty and claimed purchasing data are used to generate a 'brand voltage' score, indicating the brand's potential.

This article was first published on Marketing