Ryanair: despite the cancellations scandal its brand value may be largely untouched
It is one of the most important facets of any business and also one of the biggest causes of corporate legal action.
In some organisations, from leading drinks companies to football clubs, hundreds of staff are employed protecting the company brand, often from counterfeiters and others who transgress its products and services.
But do companies – even smaller, local firms – put enough value on their brand when it comes to selling up?
Brand managers at Tayburn in Edinburgh believe many owners and shareholders fail to fully factor in the name and reputation when pricing up their company.
Malcolm Stewart, joint managing director at the agency, says a lot of companies overlook what could be a prize asset.
“We see a lot of companies paying lip service to valuing their brand. It should be a priority action, not a nice to have,” he says.
According to BrandZ, an index of brands, those companies that focus on their public image outperform rivals that do not. These may be the titans of the global corporate world, but the same principles apply further down the food chain.
David Roth, a senior executive at advertising agency WPP, says: “This year’s BrandZ global top 100 continues to demonstrate that strong brands deliver superior shareholder value and returns regardless of disruptive external climates.”
Dubbed the ‘The Frightful Five’ by some, the tech giants that head the rankings –Google, Apple, Microsoft, Amazon and Facebook – are more like the ‘Fearsome Five’ to their competitors, given their huge brand power and a seemingly unassailable market position, he says.
The total brand value of the Top 100 brands has risen 8% this year to $3.64 trillion, compared with a 3% rise in 2016, while the number of brands worth more than $100bn has increased from six to nine.
The BrandZ Top 10 in 2017 are worth almost as much as the entire Top 100 in 2006 ($1.42tn vs $1.44tn)
Nine of the Top 10 are technology-related brands, as are all seven of the newcomers to the Top 100 in 2017: XFinity, YouTube, Hewlett Packard Enterprise, Salesforce, Netflix, Snapchat and Sprint.
Of course it can all go badly wrong if a company suffers a crisis, often of its own making, which then impacts on the brand. Arthur Andersen imploded after the scandal at Enron, while BP was forced to spend billions recovering its image after the Gulf of Mexico spill.
Ryanair, described by one commentator as the pantomime villain of the airline industry, has taken a huge knock from its recent flight cancellations and the way it handled the compensation of passengers. It undermined the efforts of chief executive Michael O’Leary who promised in 2013 that the Irish airline would stop “unnecessarily pissing people off”.
Fortunately for the company, its erstwhile image as the butt of aviation jokes may have been in its favour when things went wrong. According to Emma Harris, former Eurostar marketing chief, Ryanair as a brand has never prided itself on being customer-centric.
“So unlike for example, BA or Eurostar, there’s no pedestal to fall from,” she says.
Tim Duffy, chairman of M&C Saatchi Group, agreed. “Compared with United Airlines dragging a blood-spattered, semi-conscious grandfather off an aircraft, this hardly registers on the brand damage meter,” he told Campaign magazine.
“Whilst O’Leary admits to ‘a litany of cock ups over the last 12 years’, this is not one of them. It is a deliberate measure to address the more significant reputational issue of punctuality. The brand will recover quickly as will the share price. Why? One. It’s not that big an issue.”
So what about the day-to-day valuation of a brand, particularly one that may be relatively scandal-free but finds itself in the shop window?
Tayburn directors Richard Simpson and Malcolm Stewart
Malcolm Stewart notes that there was spike in the value of Arm Holdings following a rebrand which came some time before the company was put up for sale. This, he says, shows the benefits of a branding exercise that recognises how much it can be worth, either in its ongoing stock valuation or when the time comes to sell.
“We did something with a Scottish company called Corgi Insurance. They invested heavily in the brand and in raising awareness and when it was sold they felt the new brand awareness had enhanced its value.”
Stewart believes the creative industry needs to do more to articulate brand value and prove that it makes a difference.
“There tends to be a greater focus on product packaging and analytics on volumes, while branding is seen as a longer term issue that can’t be measured,” he says.
The company did some branding work with Sure Thing, an insurer that spun out of Kwik-Fit Insurance.
“The owner’s investor told him to get the branding right, though he was a bit of a non-believer,” says Stewart. “But because the branding work proved positive for the company he came around.”
Tayburn is now working on a new “shared risk” strategy in which the company will consider taking a stake rather than fees and says this is beginning to take off with smaller companies.
Richard Simpson, co-managing director, says: “We hope to show that we will get an upside when it works.
“It means you are forming a bond with a client’s business.”
He say this shift in focus is becoming evident among angel investors and he’s even noticed it on Dragons’ Den, the television pitching show.
“They are certainly showing more interest in brand value, rather just focus on cost.”