The Superbrands Discount

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by: Jonathan Salem Baskin

Check out this page on the Brandweek site and you can see the list of America’s Top 2000 Brands.

It’s an approximate measure, for sure, coming from some organization called Superbrands, but so is the overall concept of brand itself. While most analyses of branding get all caught up in qualitative measures, at least this list is based on a quantitative fact that’s elegantly simple:

The top brands are the brands that spend the most on branding.

Who said you couldn’t buy your way to popularity? Brands as the business corollary of Paris Hilton’s fame. I love it. No wonder we need exotic sensing devices and anti-boolean variables to explain what all that spending buys.

A number of other measures might be more useful in determining whether spending on branding was worth it. Brand equity should be a real factor in influencing costs of other corporate activities; here are three for instances:

  • CAGR (more brand equity should lower cost to get on shelf)
  • Average Salary (employees should trade some % of salary for benefit of working for a great brand name)
  • Product Development (richer brands should yield new products/extensions faster)

Oh, here’s another measure: sales. And another: profits. Superbrands should be able to sell easier/better/more often, and do so at a high profit margin than lesser brands, right? 

So the really meaningful measures of brands wouldn’t be aggregate expenditure, but rather strategic benefit or return. Calculated in dollars, pounds, yen, or whatever.

But for now, we’ve got the Superbrands ranking, and I’ve been struggling to come up with a productive use for it. I think I’ve got it:

Discount companies that top this list. 

More brand spending means they probably don’t have a clue about what really drives consumer preference and loyalty. Practice a little risk assessment here; more willingness to spend on the vagaries of brand might very well mean less ability (or willingness) to focus on more important drivers of performance.

Call it The Superbrands Discount…perhaps gin up a thumbnail equation, like profits/branding expenditure…and assign a % discount to the stock price accordingly. A higher profit-to-brand ratio is not a good thing?

I’m going to track the top 10 for the next year, and then compare them against their categories. If there’s actually a benefit to the branding expenditure, I’ll celebrate it here; if not, well, maybe there’s something to the discount idea.

Here are the top 10 names:

  1. AT&T
  2. McDonald’s
  3. Verizon
  4. Macy’s
  5. Sprint
  6. Geico
  7. Home Depot
  8. Subway
  9. Target
  10. Lowes

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