If you’re a leader championing growth and transformation in the industrial and manufacturing sector, this webinar will equip you with the insights, strategy, and perspective that turns the industry’s least utilized asset into a value-generating tool.
- Learn how to treat brand like an asset by building, maintaining, and proving its value.
- Laurence Newell from Brand Finance, shared perspective on brand valuation.
Transcript
Tracy Clark:
All right. Well, welcome, everyone! Very excited to get started on this topic. Thank you everyone for joining. We're really excited about this topic around brand valuation in the manufacturing space. We have a tight 40 minutes — it's gonna go by quickly, but I wanted to give some quick tips for the webinar experience so that you can enjoy it to the fullest. We'll have someone monitoring the chat during our conversation, so questions that we might address in the moment, or we might save them till the end — just depends on what we're asking — but do know that we are watching the chat.
And, more exciting, we'll be giving away 3 copies of Radically Relevant, our book that Blake Howard, one of our founders, has written, and you have to be here at the end for a chance to win. We'll end at around 11:40. But first, a little bit about Matchstic for those of you who don't know, which is where Jay and I work. We are a brand consultancy with clients across the U.S., occasionally global, and we're focused on brand identity — everything from research to strategy to brand architecture, visual and verbal identity, naming, and launch. You can learn more about us at matchstic.com.
I'm here with my colleague Jay Holden. He has a wealth of experience, but primarily on the client side in the manufacturing space, so this is super relevant for him. He was really excited when we came up with this topic around manufacturing, branding, and valuation. Jay, tell me quickly why this topic speaks to you in particular, given your prior role.
Jay Holden:
Yeah, I was really excited to have this topic because, as a global brand leader for a manufacturing company for six and a half years — and if you're in manufacturing, you know this — it is a slugfest to get dollars and to get everybody on board with brand and marketing and all of those things. I wish so much that I would have had this information that we're about to get today. Whether you're selling milk tanks, LED lighting, or whatever it is that the group today is out there trying to move forward, this information is something I wish I would have had. So, excited for it today.
Tracy Clark:
Thanks for that. And last but certainly not least, our guest today is Laurence Newell. Laurence is the Executive Chairman of the Americas for Brand Finance. If you've not heard of them, they are a wonderful organization — the world's leading brand valuation and strategy consultancy. They bridge the gap between brand and marketing work and finance by evaluating and quantifying brand strength. That gives organizations the power to manage and invest in brand to make it a truly valuable business asset. You can learn more at BrandFinance.com. Laurence, tell us about what drew you to this work and your role.
Laurence Newell:
Thanks very much, Tracy. It's wonderful to be with you guys this morning — thanks for having me. I'm really excited about diving into the subject matter. To answer your question about what got me into what I do today, it was very much like Jay's story. I began my career on the client side in brand management, and I got into that career thinking it was all going to be about communications and creative expression, which it certainly has a huge component to it. But what I quickly realized, as I was in the world of brand management, was that I was managing a multi-million dollar business. A branded, multi-million dollar business. And with that business came a P&L — and the P&L, really, at the end of the day, is your scorecard as to how profitable and how strong the business is.
So having gone through college thinking marketing and advertising was all about what the cool kids did and all about communications and creative, I quickly realized that this was about P&L management. This was about strategy. That was a very useful eye-opener early in my career — to understand that brands are businesses and should be treated as businesses.
What Brand Finance does specifically, as Tracy mentioned perfectly, is bridge the gap between marketing and finance. At the core of what we do, we help our clients' leadership teams connect brand decisions to financial outcomes, and use that insight to make better strategic choices. We're quantifying, in financial and economic terms, how strong a brand is and how that translates into value. We're looking at brand more as a business asset that should be measured and managed as an asset — and less as a logo, less as identity, which is brutally important obviously, but you can't really have one without the other.
Tracy Clark:
Yeah, totally agree. And it's sort of related to how we think about brand in general — part art, part science, or what we say: head and heart. It is that duality, both in what you're talking about and in how we think about brand generally. A lot of folks in our space really struggle to convey the value of a brand because of that head-and-heart component. People tend to over-index and make decisions more on heart than head, and you definitely need both. But to unlock the financial aspect, then you can expand on the heart, the creative side. So all that said, why do you think folks struggle to tell that valuation story?
Laurence Newell:
I think that's certainly what I've learned over the course of time, and it goes back to this: it is a business story. The language of business, at the end of the day, has a huge marketing component and a huge brand component, but the language of business is finance. Part of the issue that marketers usually have with conveying that story — or articulating their value to the company — is that they're probably not speaking the language of the CFO.
And that's the language marketers really need to learn how to speak. The language of the CFO is not spoken in likes or followers. The language of CFOs is spoken in terms like cash flow, risk and return, and asset value. So while brands are certainly about influencing demand — be it B2B or B2C — it's really about how brand helps to affect markets and how it helps to affect stakeholders to drive value for the business itself.
As brand marketers, whether we're in B2B or B2C, we really have to understand what makes that decision maker tick. But more importantly, how that translates into dollars and cents, and whether it's articulated in a language that is common and necessary for the CFO and the boardroom — not only to understand, but to speak. It's about brand metrics and brand equity data, but how does that data translate to cash? How does it turn into revenue? How does it turn into returns? It's really finding the balance between what drives demand and how that's quantified — not only in marketing metrics, but in financial metrics.
Tracy Clark:
Right. And I feel like manufacturing and B2B in particular have a difficult time, and we see them — and Jay, you've touched on this — specifically undervaluing their brands. Why do you think manufacturing specifically undervalues brand?
Laurence Newell:
Yeah, I think the common misconception is that brand matters less in manufacturing, or in B2B and industrial brands — and we know that's not true. We've studied this. The perception is that B2B and manufacturing brands are purely rational. Well, that's not entirely true. We know that there's a high emotional component as well — certainly regarding affinity and whether this is a brand I like. But really, at the end of the day, it's: is this a brand I trust? Is this a brand that I'm willing to hang my reputation and credibility on?
Because in choosing a brand, what I'm really doing — aside from the functional aspects of what that product or service is going to deliver — is trying to reduce risk. And that becomes particularly important in large-scale, big-ticket decisions, much like those in manufacturing, probably more so than in consumer goods. B2B and manufacturing brand plays probably not as big a role as consumer, but it's important, and it's really about reputation. You've heard the saying: no one ever got fired for hiring IBM. Well, the same thing happens in manufacturing. We're putting our jobs on the line sometimes when we make decisions, and brands help enhance decisions and clarify decision making.
Tracy Clark:
Totally. And we're seeing it more and more in the manufacturing space. We've had an increase in the number of clients in the B2B and manufacturing space because they're realizing that value — they're sort of catching up. The value that it can unlock by creating some differentiation. What we find is that trust is often table stakes for you. Of course you should trust a manufacturing organization, so what else you got? What else is going to capture my attention, again head and heart, to make me choose you over a sea of sameness in that space?
Laurence Newell:
It's absolutely the case. I think that the companies that thrive are precisely the ones that look outside of their four walls to lean on people such as yourselves. Marketing is art and science, and you do need to go to the scientists and the artists to create relevance to your brand — without a doubt. But more importantly, differentiation and credibility. It's really working with partners in the agency space and the consulting space that have certainly the experience, but also the visibility of your competitive set to understand: things sound and look the same, and when things sound and look the same, you're creating commodities. And in the commodity world, you're in a hyper-competitive world.
Tracy Clark:
Yeah. Do you want to be the low-cost leader? Maybe you do, and that's how you brand it. But we find a lot of folks — that's not their play. And so it's interesting because we in the branding world talk a lot about metrics, and there are certain things we can attribute to brand influence. You have found a way to reliably evaluate brand, which is pretty exciting to people like me. Give us a top-line view of how you found a way to do that.
Laurence Newell:
Great question, Tracy. First and foremost, Brand Finance has been in the business of valuing brands for 30 years. This is not something invented yesterday. We've been doing this for the last 30 years. We are an accountancy — we are accountants at the end of the day. We are a regulated accountancy firm, so we better understand not only how to do this, but make sure that we're on standard, because there are guardrails around what Brand Finance does.
What's particularly important are the ISO standards that govern two big themes in our lives. One is brand valuation — calculating what a brand is worth in dollars and cents. The other is brand evaluation — how competitive is that brand relative to other brands. A lot of what we're doing as we perform valuations is benchmarking your brand's strength relative to a competitive set. That's a critical first step — think of it as an acid wash test to understand how strong your brand is relative to others, and why.
The methodology we put in motion when we value brands is called the Royalty Relief Methodology. It's the most commonly accepted methodology among accountants, finance professionals, and lawyers. What it's doing is using market comparables to understand how strong a brand is, and given that strength, how that translates into a royalty rate. We apply that rate to forecasted revenues, take it into perpetuity, and bring it back to a net present value. The Royalty Relief Model is a hybrid model based on marketing metrics and competitive marketing metrics that are applied to forecasted revenues in perpetuity.
Tracy Clark:
Yeah. And the biggest eye-opener for me was when you said that brand valuation has for a long time just been looking back — evaluated after the fact. We struggle with that too, because we ask clients to establish a baseline. And it's becoming a more forward-looking view to help inform strategy rather than historicals. When you said that to me, that really resonated. So tell us more about that shift.
Laurence Newell:
You're absolutely right. Historically, people have tended to associate brand valuation with M&A work, merger work, tax and accounting, or impairment work — all traditionally compliance-oriented questions. And those still matter. A good deal of our business still has to do with understanding how we got to where we are and what that value is today.
But what I find more exciting, as a strategist and brand builder, is the forward-looking view. It's important to understand where we've been and where we are — but what's more interesting is where are we headed? What is the value of our future, and how will brand help get us there? How will we leverage brand to meet that future? What's the size of the prize? Valuation as a forward-looking discipline is really, really exciting, and that's what's arming marketers with the wherewithal to define success from a marketing and brand perspective, while also establishing that common language with the CFO — who holds the purse strings — and the board. It turns into a really interesting discussion: this is what the brand's value is today, what could the brand's value possibly be in the next two to three to five years, and how do we get there?
Tracy Clark:
It really gets you a seat at a bigger table.
Laurence Newell:
It does, it does. And when you look at consumer brands — traditionally well-known brands like Citi and Porsche — there are those classic ones that command pricing premiums, and then there are the Liquid Deaths and the Oatleys, the wilder ones that also command pricing premiums. A lot of it is the result of brand investment. Liquid Death actually keeps ad spending low but brand investment high. They focus on brand building, so they've got the right mix — though some require more advertising, so that's not for everyone. How does that pricing premium translate into the manufacturing markets? It goes back to that point of relevance and differentiation. B2B marketing and B2B brands have to be managed more as business assets and not as afterthoughts. Historically, B2B has seen brand as, at the end of the day, just a business card — and it's not. It's basically a funnel-driven, marketing-metric-defined tool that really helps understand what makes consumers tick, and more importantly, how to pull the right levers to make sure brand is pulling its fair share.
For example, if you're in times of long and complex sales cycles, how do we make sure brand is still representing us when there is that complexity? How do we make sure brand strength is translating to pricing resilience, so that clients or consumers choosing B2B brands are choosing us despite a price increase — because of the perceptions they have? Brand really helps to not only attract and retain, but it also helps to define a stronger value proposition going forward. Think of it as brand serving as a really healthy economic moat. Warren Buffett always says that strong brands serve as very credible, very strong moats that help not only identify, but protect. And that's really what we do when we're driving value — make sure we're defending that asset.
Tracy Clark:
Yeah, it's important, and you have to keep investing to keep that up — to keep the floor at an elevated level and then expand on the high end. And you all have done a recent report. Do you mind talking a little bit about that index?
Laurence Newell:
Absolutely. Two weeks ago, we published the fourth year of our B2B index. What we're doing is understanding, on a global level, what makes B2B brands relevant, competitive, and different — what the score is behind those perceptions and the behaviors behind those brands, and how that translates into dollars and cents. To your point about merging art and science, we're applying it to B2B brands as well — really understanding what drives brand perception in the B2B world, specifically as it relates to B2B brands and B2B competitive sets, and how that translates into economic and financial strength. If you're a B2B brand and want to understand what really drives behaviors and preference, there's a lot that Brand Finance has written on that, and our B2B index is brand new — it's been out two weeks.
Tracy Clark:
I'm excited to dive more deeply into that, and I know other folks on the call will be as well. What we see in our world oftentimes with manufacturing brands is they keep it safe. They're copycats, sometimes they look a little dated. You've probably seen some very good manufacturing brands who don't lose their margin or pricing power because they protected the brand. What are some of those qualities?
Laurence Newell:
I think they're really understanding three big things. Yes, there seems to be a pattern of sameness — and if I'm a B2B marketer and I understand that there's a pattern of sameness, I actually don't see that as a weakness. I see that as an opportunity. When everyone's saying the same thing, pricing at parity, distributing to the same retailers and sales channels and existing relationships, it's just more of the same. And more of the same really doesn't drive value at the end of the day — it just lets services and products become commodities.
A second point is underinvestment. Many companies in these sectors invest heavily in operations, supply chain, and product development — they have to — but probably not enough in building a distinctive brand that can turn those strengths into preference and pricing power. Our index has actually shown us that companies systematically underinvest in brand as an asset. But we also understand that stronger brands are associated with better financial outcomes. So investing in brand is going to pay off — as much as investing in capex, operations, and supply chains.
And the third challenge is not really having a measurement framework that opens the eyes of leadership to say: this is why brand matters, and this is why we need to be disciplined and consistent. Translating those marketing metrics goes beyond the look and feel of a brand, but really expresses the strength of the brand and how that translates into revenue, into better margins, and into better outcomes. It's just understanding that the tool exists — and it provides a really important conversation that takes place with companies.
Tracy Clark:
And the reason why that last point is particularly important is that a lot of brands in the manufacturing and B2B space are very risk-averse. When they see a brand investment, it just dings the dollar signs — warning, that's too much money. But what you're actually saying is that this is lessening risk, because you have that knowledge. You're reducing that risk of not getting ROI back on branding, because you have the numbers to back it up.
Laurence Newell:
Exactly right. You have the numbers to back it up, so this actually becomes a tool with which we are quantifying what worked and how we quantify that return. What is the impact of what we've done? So that it's not a one-off sponsorship activity or a one-off marketing activity — it's actually laying the foundation for something we'll use as a tracking mechanism going forward to understand specifically how much marketing is moving the needle. Many times brand is seen as a cost center, and much less as a value builder.
Tracy Clark:
Now, when you think about moving that needle in those conversations with CFOs — and some people on this call already have the language, maybe just not the depth of proof points — what can a CMO in the manufacturing space expect from this type of investment? What sort of metrics can you expect for that needle to move?
Laurence Newell:
I think it's important that CMOs understand how strong their brand is relative to its competitors. Tracking your brand's equity is critically important for the well-being of that brand. Equally important is socializing, explaining, and articulating those findings with the boardroom and with the C-suite. There's no reason why that information should be a secret. It should actually be a prompt for better conversations that define the future and the vision of the company and the products and services we offer. Marketing has got to open up its cards — it can't hold them close to its chest. It's got to open them up and use that information to inform strategy with an economic output attached to it.
So that this isn't about: we rebranded, did people like the rebrand? No. It's: we rebranded, this is where we were before, this is exactly the day we launched the rebrand, and this is what success looks like over the next two to three years — in marketing metrics, but more importantly, in financial outcomes. The CMO really has to understand not only the language of marketing, but translate that into the language of finance. The language of finance is the language of the boardroom. So to really win and claim a stake at that boardroom table, speak finance, measure finance, measure your brand as an asset — not just as a logo.
Jay Holden:
I just wondered if you had any advice, after all these engagements with companies on this topic, for CMOs on how to begin that conversation — where to begin, which office to go to, and what does that conversation look like?
Laurence Newell:
I think that if I were an incoming CMO into a manufacturing company, or even an existing CMO, I would say: let's not think of marketing as a cost center, let's think of it as a value creator. And the CFO is going to say, okay, define value. The way that we define value is through brand value. So let's measure the value of this asset — and it is an asset. From accounting terms, it is an intangible asset and sits on balance sheets. So the minute you refer to brand as an asset, you're already speaking Finance 101, which is imperative that you speak.
Brand is now going from "brand is important, I think" to "brand could potentially change the quality of our future revenue, future earnings, and multiples that markets are willing to put on those earnings." The conversation starts with saying: this is what brand is, and the misconception is that brand is that. Now, brands can be valued and should be valued, and this is how we go about valuing them. The conversation CMOs have to have is certainly having the data to back up their hypothesis, but also the ability to open that conversation to a wider audience and say: do we agree that our brand is a valuable asset? And if yes, what's the value of that asset? Do we agree that we have to manage and measure this going forward, so that we're able to articulate internally whether we're creating value — and to what extent?
Tracy Clark:
Yeah. Jay, I'm curious — when you were going through this process in the manufacturing space, what was the unlock? You had many conversations and had to bring many proof points to the table. What finally brought brand to the forefront and said, yes, let's sign on the dotted line and get going?
Jay Holden:
Yeah, it's funny — there wasn't, like, an aha "brand as an asset" moment. It was a: Jay, you're the new guy, we're going to bet on you, and this is what you're telling us needs to be done, let's do it. In my case, it was: hey, you have one shot. If this is the shot you want to take, if it works out, Jay, that's great, you can stick around. If not, then we'll do something else. It was that blunt. I rolled the dice, and I think the outcome was really great for that company. So the lesson is: have conviction.
Tracy Clark:
Have conviction, push forward. I think a lot of folks are in that same space, in that same moment — you've got one shot, prove it. That's why CMOs tend to rubber-band back to safe, because they don't want to do any harm. But then you miss the complete upswing of the potential. Before, maybe CMOs didn't have their glasses — but now, Brand Finance is like the clarity glasses. You've got folks like us that can bring that brand elevation through identity, and you've got Brand Finance to bolster it and give you that clear vision through the lenses. Pretty cool.
Jay Holden:
The other thing in my environment was global exchange rates and goodwill across global divisions. Laurence, it just seemed like we were potentially leaving value on the table because of brand value in some of those markets. Can you discuss how that works?
Laurence Newell:
Yeah, absolutely. Going back to the question of what was my aha moment that made me realize brands were valuable assets — one of the brands I managed early in my career was one where the company was thinking of divesting an entire area of the company that they weren't particularly interested in investing in and weren't winning in. So they decided to divest that category, basically sell it. I was told: one of the brands you manage is going on the market. I thought, well, how do you do that? Are we gonna sell the factory? The intellectual property? What are we selling? And so I was told: no, the only thing we're selling is the registered trademark, the brand. That's when it came to me that brands are transferable assets — you can buy and sell them from one company to another, just like a tractor, or a car, or a factory. Brands are bought and sold on the open market all the time. That was my aha moment.
Now, more importantly, that's one use case. Another use case we see a lot is brand licensing. There are companies — B2B brands, absolutely — that license their brand to third parties as a percentage of the revenue those third parties generate. You can actually use brand to generate income streams above and beyond the products and services you offer. You can franchise this property to a third party, and you are going to make money off of that.
The conversation usually turns to: okay, how much is that going to cost? Well, it's probably going to cost a percentage of revenues, and how do we reach that percentage? You go out to the market and quantify how strong that brand is relative to others, so you're able to say: given the strength of this brand and given the royalty rates that this sector of the economy commands, it's not outlandish to think that we can charge 4% on revenues. I'll give you an example. I work with a brand whose brand strength on a scale of 0 to 100 is an 80 — a very strong brand, a AAA- brand. That AAA- brand in healthcare manufacturing services commands royalties anywhere from 0 to 5%. We can go to the open market, look at similar transactions, and determine the appropriate rate. If the brand scores an 80 out of 100 and royalty rates go from 0 to 5, it's conceivable that 4% — just doing the straight algebra — is what we can charge for the use of that brand. All of a sudden, you're making 4% on a sector of the market you weren't even in touch with. It turns out that brands are movable, transferable objects that can be used not just to identify your products and services, but to leverage market opportunities to segments of the population you might be able to reach through a third party.
Tracy Clark:
And we've seen that in our world — a lot of times B2B and manufacturing organizations are in constant acquisition mode, branching off and selling and acquiring, and brand plays an integral part of that, along with brand architecture. We've worked on some pretty complex brand architecture untanglings to make sure they're doing the right thing for each of those movable assets. Because oftentimes they just snap on, say we acquired them, let's keep everyone happy — without thinking of the potential of what could be for all parties involved if we were more strategic about brand and architecture when we make those decisions.
Laurence Newell:
I think you're absolutely right, Tracy. Brand valuation is probably most effective for architecture decisions — that's really an eye-opener, especially in M&A work. I've done a lot of it in the technology space, companies buying each other for growth. The question usually is: okay, we've just acquired this company, what are we going to do with the people? What are we going to do with the office space? Oh, and what are we going to do with the brand? Is this a brand we keep? If so, why — what's the justification? If we're going to sunset it, how are we going to do that, and at what rate? Are we going to, from one day to the next, make the brand disappear so that all the people that work for it and all the people that buy it suddenly know nothing about it? Or how do we actually lay the foundation so that decision is as risk-free as possible — measured in financial and economic terms, so we know the risk, the value of the risk, and the cost associated with that risk. Be scientific about it.
Tracy Clark:
Let's be scientific. Let brands be scientific. I think that's a good ending point. Man, we could do a part two easily on this — I feel like we've just scratched the surface, and I knew the time would go quick. But we do have our book winners to announce. The winners of Radically Relevant are Chris Lacey, Leslie Zane, and Sarah Warrens. Congratulations to the three of you — we'll get in touch to send you a copy. And Laurence, thank you so much for your time. This was truly eye-opening. I could talk to you for hours about this stuff. Maybe we'll do a part two and continue.
Laurence Newell:
This makes my mouth water — I could talk about it day and night. Happy to, indeed. I hope everyone else is interested too.
Tracy Clark:
I love it. And Jay, thank you for your perspective as well. Really nice having the two of you on here, and thank you everyone for joining. I hope you have a great rest of your week.
