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During a recent New York screening of the Barbie movie, film-maker Greta Gerwig praised Mattel for their bravery in allowing her to creatively explore their brand.
While few marketers would take the risk of portraying an idiotic all-male Mattel board and questioning the company’s role in promoting consumerism and unrealistic body images, the gamble paid off. According to Brand Finance, the value of the Barbie brand has increased to $701mn from $588mn last year, although this surge in sales has not yet been reflected in Mattel’s earnings.
Mattel’s CEO, Ynon Kreiz, stated that the company was confident enough to embrace the fun. However, this level of irreverence towards valuable trademarks is nothing compared to Elon Musk’s recent rebranding of Twitter as X.
According to Brand Finance, this decision to discard a social media brand with global recognition would result in the loss of nearly $4bn in brand equity. The value of the Twitter trademark had already decreased by 32% from $5.7bn since Musk’s $44bn takeover in October. Vanderbilt University estimated the brand value of Twitter to be between $15bn and $20bn. These discrepancies imply that Musk may have jeopardized an asset worth anywhere between 9% and 45% of his Twitter acquisition.
This disagreement is significant because we currently live in an era of “intangible capitalism,” as stated by the McKinsey Global Institute. Assets that are less tangible than physical machinery or factories are fueling corporate growth, yet there is no consensus on how to value these assets accurately.
Even the largest publicly traded companies face similar discrepancies. For instance, estimates on the value of Apple’s brand range from $298bn by Brand Finance, $482bn by Interbrand, and $880bn by Kantar BrandZ.
This near-$600bn difference in valuation for one of the most closely observed companies highlights the volatility of brand value estimations. The same applies to Microsoft, whose brand value is reported to have either dropped by 21% or increased by 32% over the past year, depending on the source.
While most investors do not spend much time assigning precise prices to a company’s trademarks, these valuations have implications for various aspects such as acquisition valuations and licensing agreements.
A $250mn dispute in London’s High Court between Sir Richard Branson’s holding company and Brightline, a US train operator, revolves around the value of the Virgin brand. The Virgin “masterbrand” is considered the UK group’s most valuable asset.
Unfortunately, our tools for measuring brand value yield inconsistent and controversial results, as noted by Harvard Business School lecturer Jill Avery in 2018. As long as this remains true, investors and lenders attempting to include brand value estimates in their financial models will be operating blindly.
In algebraic equations, unknown variables are represented by X. Perhaps, by manipulating Twitter’s brand, Musk has made a more profound point.
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