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Sunday, August 12, 2007

BIG $$ IDEA for Young & Rubicam (and/or Interbrand): Start a brand index mutual fund

I have a major, major idea for Young & Rubicam: They should start a brand index mutual fund based on their Brand Asset Valuator (http://www.brandassetvaluator.com.au/). The fund should tie to current strong and emerging brands based on the BAV methodology of identifying brand strength along the pillars of differentiation, relevance, esteem and knowledge. Look at the "Financial Returns" tab on the BAV website. It states:

"Brand strength promotes strong earnings. BAV® has plotted pillar data against revenue growth, margin, NOPAT (whatever that is -- DB) and economic value added (EVA) in over 400 cases over a ten year period, across 18 economic sectors. From this, BAV® has produced a consistent pattern of results. Differentiation is the margin driver - brands that grow their Differentiation have about a 50% higher operating margin on average than those which allow their Differentiation to decline. Relevance is the key to market penetration. Those brands that grow both their Differentiation and Relevance report the greatest increase in operating earnings."

Well it's a short leap from increased operating earnings to increased stock price -- can anybody say "ka-ching"?

The world's top brands have higher stock prices than nonbrands, but to my knowledge nobody has ever invested in a brand methodology per se -- started a mutual fund based on a brand strength methodology. Creating such a fund would not only prove that brands have a higher value than their generic counterparts (which would be good concrete tangible evidence for the academic), but it would also create an investment vehicle for people who believe strongly in the power of brand.

Well Y&R, what are you waiting for?

Or Interbrand could do it - they have their own financial formula for calculating brand value -- see http://www.interbrand.com/best_brands_2006_FAQ.asp -- and they annually calculate what the top brands are.

I'll stand by and wait for the announcement.