While an accountant will take an inventory of all your company’s assets, creditors and debtors to ascertain the ‘paper’ value of your business, the true worth of a company includes its brand value in the market place. You have a logo, a web site, a presence, tangible things people can touch but a good brand also has an intangible element; you can’t pick it up and touch it, but it does have weight and it does have value.
What’s in a brand?
As an example of the power or value of a brand, at this summer’s UEFA European Championships, Christiano Ronaldo –heard of him lately- managed to knock around $4bn off Coke’s share price by moving some bottles of their product out of shot during a post-match press conference in favour of a bottle of unbranded water.
In the same week, France midfielder Paul Pogba, a practising Muslim, removed a bottle of non-alcoholic Heineken beer after he was named ‘Star of the Match’ in France’s 1-0 Group win over Germany.
As one of the official sponsors of Euro 2020, in their response, Coca-Cola said that “everyone is entitled to their drink preferences”. What’s interesting is that since the incident, Coca-Cola’s stock value has since risen, so the cynic in me wonders whether it was all just a ploy to create some headlines.
As a company, Coca-Cola has a value of around $284 billion, more than many small countries, but if all it takes is one person moving two bottles of their product to wipe off 2% of that value it goes to show the added value of a brand. Yes Coca-Cola, along with Amazon and Apple make a substantial amount of money from sales of product but there’s a big chunk of their share price, which is made up purely of this intangible goodwill towards the brand.
Remember how Gerald Ratner undid all of his life’s work – and destroyed a very well patronised high street jewellery brand by stating the products were all ‘crap’. The company’s shares dropped £500 million in a matter of days.
Ronaldo and Pogba are recent examples but, but athletes refusing to endorse a team or competition sponsor isn’t new. Back in 1992 at the height of their battle with Nike, Reebok paid millions to sponsor the warm up gear of the USA’s basketball Dream Team at the Barcelona Olympics. Predictably, which Reebok was counting on, the Dream Team won gold, but atop the medal podium, Michael Jordan and Charles Barkley – both Nike sponsored athletes- draped US flags over their shoulders to hide the Reebok badges of their warm up apparel. Both knew the value of their association with Nike and weren’t prepared to jeopardise it – especially at one of the most watched events in history.
Brands and football
When you look at the brands that sponsor an average football game, in my opinion, it is 100% sport washing. McDonald’s, Coca Cola, various alcohol and sports-betting brands, Tik- Tok, Gazprom; they are they’re there because everyone loves football and it has such an unrivalled, world-wide audience. It’s why we’ve got world cups in Qatar and boxing matches in Dubai. They try and push their human rights record, the obesity epidemic and the gambling and alcohol addictions to one side and get cosy with brand football.
FIFA or UEFA seem to sell to the highest bidder, which ethically is probably a conversation in its own right, but to make it relatable for small business owners, the message is to be careful who you partner up with.
The power of a brand for small businesses
The power of a brand is greater than your balance sheet, and has far more value than I think a lot of people realise. I like to think that we have managed to build a brand at Cypher. If you’d have asked me three years ago, do I think small businesses can build brand, I would say no, at the time, I thought it was all about the business owner’s personality or the credibility of a product, but it’s not, and I think now small businesses definitely have an opportunity to brand themselves and if they do it well, then it’s a massive tool in their arsenal to differentiate themselves from the competition.
Brand v branding
It’s important to remember that branding isn’t just about your logo, or the colours you use on your web site. It is much bigger than that; it’s about how you act, how you are perceived, what clients think of you, your touchpoints and how you ‘show up’. You know when you’ve got your branding right when your customers are proud to share your logo, your work, content and comments too.
Going back to football and its dealings with sponsors, Norwich City, recently promoted back into the Premier League had to do a complete U-turn on a shirt sponsorship deal with Asian betting company BK8 worth millions when fans complained about the adult content being shared on the sponsor’s social media pages.
The club’s fans are very protective of its brand and its legacy but while, hopefully this is an opportunity for Norwich to take a step back and consider all of its future commercial decisions, I am not sure whether smaller businesses have the luxury of making such wrong choices. You don’t generally ditch your football club and go and support someone else over a sponsor, but you would ditch your local restaurant if that restaurant got called out for unhygienic or inhumane working conditions.
Customers vote with their feet and so small businesses need to be more conscious than ever, of not just the quality of their logo and visual branding, but also the values behind them and the perception this can give prospects and customers. Understand that your reputation as a business owner is what people say about you when you’re not there. How you do anything in businesses, is how you’re perceived to do everything.
Perception is Brand
When we take on any client that has a history of trading, we ask them what has brought them to us, essentially why they want to change accountants. A number cite receiving unexpected or big bills. As an example, one recent client was hit with a bill for £16,000, payable in 14 days. The outstanding amount was for work done on their behalf, which only came to light when their accountants were audited. After the shock of the size of the bill, their immediate thoughts were how can we trust anything these guys do for us if it takes six years and a third party auditor to spot that they haven’t billed us properly? Basically, if they don’t look after their numbers, how do we know they look after ours?
This type of scenario absolutely undermines any statements on a web site about being proactive, helping clients with cash flow and supporting business owners because there’s no authenticity to it.
How many of us only share the good bits of our life on social media. LinkedIn is full of stories and posts from business owners winning. The thing is we want to be associated with winners. We queue overnight for the latest Apple product, not because we understand the P and L’s and the balance sheets and the cashflow of the business, but we understand the brand and its association to winning.
The rise of influencer marketing
The power of a brand is massive but these stories demonstrate how tenuous it can be. What would happen if every Premier League or international footballer followed Ronaldo and Pogba and boycotted Coca-Cola, how much would that knock off the share price? And imagine if the water bottle what Ronaldo picked up was an Evian bottle?