About Brand Value

Brands can add value to products or they can destroy value. Take a high-performance sedan. Put a BMW or Audi label on it, and you can charge more. Put a Ford or Chevrolet badge on it, and you will have to charge less to sell it.

That much is obvious, and the reason companies have brand managers (my recent experience with Fathead is a great example of companies aggressively managing their brand).

Problem is, brands in general do not resurrect, and never do so without doing something radically different. Nintendo thought outside the box and targeted a new customer segment with its Wii. Result? Resurrection of a dead brand. Sega is still dead, because they haven't done anything different. Apple resurrected its brand with the iPod. But even with these examples, we have examples of TiVo (dying), Sears, Cadillac, Sony, etc. as brands that once they started dying, they have been unable to resurrect themselves.

Reason is: brand value is a trailing indicator. The data in sales, revenue, and margin, which you are using to measure brand value, occurs after people have devalued your brand. Your reduced brand value is out there and having and impact, and you must now overcome it... which is really, really hard.

You must course correct and take action (again my Fathead example is a good one) before your brand is devalued. Audi fixes problems on my car before they are problems. Coach fixes their products even if I am the one that broke it (yes that is true).

The good news is that Web 2.0 makes this possible. People complain about their problems and experiences on blogs, instant messages, domain forums, etc. That information is out there and available to mine. Fathead found me through a blog post. They were looking. Smart of them.

Back to declining brand value. What is Yahoo going to do that is different from what it currently does? In three years they will kick themselves for not taking Microsoft's offer. And I think Microsoft will be thankful for not paying a premium for a dying brand.