• Friday, September 29, 2023
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Is Brand an Intangible Asset?

Is Brand an Intangible Asset?

Have you struggled to convince people in your organisation to invest in branding? Or have you wondered how to conceive of a brand? One way to conceive of a brand and get people excited about branding campaigns is to explain that a brand is an asset; it has value and generates future profits. The most influential idea in marketing is rethinking a brand as an asset.

Is a brand an intangible asset? The answer to that question is crucial because it will determine how businesses should spend their money.

If a brand is not an asset, then any branding should support short-term sales. A branding campaign would only be a success if it raised sales immediately. But we know this is an unreasonable expectation because sticking a logo that no one knows will not boost sales. Branding efforts cumulatively stack to make selling easier over time.

If a brand is an asset, then it would be worth investing in because it would pay off in the long run. Much like an asset like a machine, it may be expensive at first but make money in time.

So, a brand is an asset

Like any asset, brands require long-term investment and will pay dividends over time. Brands have value and can be bought and sold. Brands are best used when they service the strategic vision of the company. Branding has all these properties in common with any business asset.

What is an Intangible Asset?

You cannot touch an intangible asset, but it is crucial to the future success of a business and, thus, has value. An intangible asset is a non-physical part of a business that has value, i.e., it is vital to the business’s future success and/or it could be sold to another company.

Typical examples of non-tangible assets include patents. trademarks, goodwill, employees under contract, information technology and brands

Read also: How Brand Purpose and Corporate Social Responsibility Fit (2)

Tangible Assets vs. Intangible Assets

Assets are anything that a business owns and has a positive value. Assets can be divided into two broad categories: tangible assets and intangible assets.

Tangible assets are physical items of value to a business. They include cash, land, buildings, machinery, inventory, and investments.

Intangible assets are not physical but have real value to the firm. An organisation’s brand is an intangible asset, as well as the brands of any products they own. Other intangible assets include goodwill, accounts receivable, prepaid services, people, patents, trademarks, designs, and trade secrets.

Tangible assets are usually easier to liquidate because it is easier to transfer ownership of physical items for cash. Intangible assets are often transferred through their legal protection mechanism. You cannot sell a piece of engineering, but you can sell a patent or license its use.

Brands are intangible assets that are regularly bought, sold, and licensed.

Tangible assets usually have greater short-term value because they can be used up. For example, a tank of fuel has no value once it is burnt. Intangible assets often maintain their value or get more valuable with use. For example, the code used to make an app can be used repeatedly with no degradation; with use, the code might get even more valuable because engineers can find and fix bugs.

As an intangible asset, brands maintain and grow their value through their use. A brand is just as valuable no matter how many times its logo is displayed alongside a product. It becomes more valuable because brand recognition increases. Brand loyalty increases and brand associations are built, assuming it’s a good product or service.

Most small and medium-sized companies that stagnate are the ones who treat their brand as a distraction from operations. They push it off to an external organisation or delegate it to someone at the mid-level to keep up with the day-to-day tasks related to a website, social media, and marketing collateral.

Companies that excel think about their brand from day one. These brands become assets, and options like franchising, licensing, and co-promotions open up. They treat their brand as something valuable and important, so it becomes something valuable and important.

Where on this spectrum do you sit? Are you treating your brand as an inconvenient distraction? Or are you integrating it into the discussions about all other business functions?

Please do not misinterpret me. I am not advocating treating the brand as the most important part of a company. I do not want to see you waste money with brand-building advertising that is not appropriate and will be lost.

Instead, I want you to elevate the brand to something as important as anything. Every business decision needs to answer: will this increase the value of the brand? Anything less than an enthusiastic yes, and the programme should be killed.

Last line

The brand should be considered in every high-level discussion. A meeting to think about and discuss the brand should be on the executive’s or owner’s calendar regularly. The brand and growing its value should be on the mind of shareholders, and a topic for discussion at board meetings.