eMarketing Blog

One of the biggest changes affecting business over the past 50 years has been the rise in importance of intangible assets, including brands. They typically account for between 30% and 70% of company’s market value, but in certain market sectors, such as luxury goods, this figure can be higher. Experts agree that value of intangibles has trebbled over the past 30 years. There is according to these experts, an ‘Intangible Revolution’ so company’s should prepare to  demonstrate the value of their brand-building activities.

What are Intangible assets?

• Technological assets (patents, copyright, know-how)
• Strategic assets (licences, natural monopolies)
• Reputational assets (Company, product and service brands)
• Human resources (skills and flexibility of employees)
• Organisation and culture (values that shape commitment and loyalty of employees)

Source: Value-Based Marketing, by Perter Doyle. (Wiley 2000)

And now new accounting practices such as the IFRS3 on ‘Business Combinations’ requires listed companies to break down the value of intangible assets into 5 categories to highlight value of brand acquisitions, rather than group them under ‘goodwill’. Some time soon we may see ‘Brand Equity’ in the Profit and Loss to highlight the marketplace i.e. the place where the profit arrived, rather than what to spend its money on.

So where do you start?

1. Clearly articulated market overview showing opportunities, view of competitors and perceived advantages
2. The Strategy
3. Critical value creating activities; brand, innovation, customers, people, supply chain, environmental
4. Financial performance

‘Most companies start at (4) and work backwards, with very few articulating at the front end, what drives their financial performance.‘ according to David Phillips, senior partner at PwC.

Summarised Courtesy of Gomer Williams CIM (HML Marketing 2007) 
Acknowledge: Jane Simms, The Marketer Apr 2007

Spending on UK internet advertising surged in 2006, overtaking newspaper ads for the first time, a report says.

Online advertising expenditure jumped 41.2% to £2.01bn during the year, the report by the Internet Advertising Bureau and PricewaterhouseCoopers said.

In contrast, spending on national newspaper ads grew just 0.2% to £1.9bn, taking a 10.7% share of the market.

By BBC News Online 28 March 2007 

But despite online ads taking an 11.4% market shares, internet ad spending was just over half that for TV adverts.

TV advertising itself experienced a 4.7% fall in spending to £3.9bn.

“With almost all expenditure on traditional media in decline, the upward momentum of the internet reflects a new era … which is driven by high-speed broadband take-up and user-generated content,” the report said.

Popular medium

The report added that online advertising actually grabbed a record market share of 12.4% in the second half of 2006, as expenditure topped £1.098bn.

As a result of such heavy spending on online adverts, the UK’s online ad market share is almost double the global average of 5.8%, the report added.

Recruitment spent the most on web advertising - increasing expenditure by 2.7% - followed by finance and technology.

“The internet is a hugely popular mass medium now, and advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers,” said IAB chief executive Guy Phillipson.

“2006 was a tough 12 months for the advertising market as a whole, but once again the internet bucked the trend, recording a 41% increase in ad revenues.

“With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the UK is set to continue unabated,” he added.