Branding recognised as having quantifiable value

New accounting standards proposed for next year are likely to increase the opportunites for brand evaluation work.

Branding will be quantified through new rules requiring companies to list the intangible value of a brand on its balance sheets.

When the rules are implemented by the Accounting Standards Board next December, any company buying a brand will have to list its intangible value as an asset.

ASB project director Joan Brown says, “Until now goodwill has been included on the balance sheet as an asset and brand value hasn’t. But the distinction between the two varied from business to business, so we decided to include both and add the figures together.”

Under the new rules, the constituent values of the brand will be listed on the balance sheet, although the categories will frequently be too general to include design. The move still endorses the work of the design industry, says Interbrand director of brand strategy Andy Milligan. Interbrand set up its brand valuation department ten years ago and has evaluated 1500 global brands.

“Because design is a major contributor to the appeal and the effectiveness of a brand, it is further recognition of design as a contributor to an identifiable business value, which they help to build,” says Milligan.

“The inclusion of design as a category will depend on the brand. One measure of its value is the factors which drive success. In something like perfume, where image is very important, it may well be that design is listed as a separate driver of success,” Milligan adds.

Design Business Association chairman Colin Porter also welcomes the new rules.”It’s good to see branding validated by the business community.

It has traditionally been the domain of the marketing department, but to see accountants quantifying it as a net asset is good for designers. We are the ones who bring together the disparate elements of the business,” he says.