Brand Valuation: Principles, applications and latest developments

Abstract

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This chapter provides an in‑depth overview of the principles, applications, and recent developments in brand valuation. It begins by highlighting the increasing importance of intangible assets—particularly brands—in contemporary business models, especially within the sharing economy, where companies such as Uber and Airbnb derive most of their value from non‑physical assets. The chapter examines why brand valuation is often controversial, noting the lack of consensus among practitioners and the substantial discrepancies between brand rankings produced by major agencies such as Interbrand, Brand Finance, and Millward Brown. Salinas reviews the three main valuation approaches—cost, market, and income—and explains why the income approach, particularly Royalty Relief and Demand Driver Analysis, is the most widely applied. The chapter offers a detailed critique of the proprietary methodologies used by Interbrand, Brand Finance, and Millward Brown, outlining their assumptions, strengths, and limitations. Key areas of debate include the subjectivity of variables like brand strength, the lack of transparency in weighting criteria, and methodological inconsistencies when estimating discount rates and financial bases. The chapter concludes with five guiding principles: brand valuation is ultimately an expert opinion; brand value depends on risk and return; brand strength drives value; legal rights affect value; and the appropriate methodology depends on the valuation's objective, whether technical or managerial.