How Interbrand unlocked market capitalization with brand research

67% of S&P 500 companies may be inaccurately valued due to brand understanding

Are companies leaving money on the table by not effectively communicating their brand value to investors?

Greg Silverman, Global Director of Interbrand’s Brand Economics practice, and his team came to a simple observation: business brand growth and earnings potential aren’t always reflected in a company’s public share price. 

As the world’s leading brand consultancy, Interbrand progressed business valuation by bringing a tangible number to the seemingly intangible asset of brand value. They defined this by the combination of financial performance, the role of brand in driving choice, and brand strength.

Greg came to NewtonX with a hypothesis that was ultimately crystallized by research: 67% of S&P 500 companies may be inaccurately valued, with share prices lagging behind actual brand growth and earnings potential. This disconnect stems from the investment community’s limited understanding of brand impact on valuation.To investigate this hypothesis, Interbrand partnered with B2B market research leader NewtonX and integrated communications agency Brodeur Partners to determine if brand could have a strong connection to share price.

We talked to 241 investor relations professionals to find out how they assess brand, the second most important factor to valuation after financials

NewtonX sourced qualitative and quantitative survey results from 241 investor relations professionals, analysts and journalists representing 27 industry sectors, across the US, Europe, and Asia. We covered survey design, programming, QA, & fielding, along with consultant analysis and a final insights report.

We tested the hypotheses:

• Investment professionals do not understand brand strategy/brand positioning, they do not know where to find information on it, and are unsure how frequently to update their understanding of it. 
• Investment professionals do not believe there is a relationship between PE and Brand Strategy.

The insights revealed an important learning: while the investment community values brand, they do not have a deep understanding of it. 76% of investment analysts and journalists agree that brand has a meaningful impact on valuation. Yet 80% don’t have a deep understanding of brand.

But a solution’s on the horizon. They are seeking to learn more. While less than half of analysts and journalists said that they often or almost always receive a briefing from the company they’re evaluating, 64% said they would like to be briefed more often than they are today.

I appreciate how NewtonX is a strategic thought partner, not just a vendor. We needed someone to understand the complexities and nuance of the story we’re telling, and NewtonX meets our depth there. Even in moments like doing back of envelope math on calls—you rarely get that type of sense checking from vendors, and we really value it.

Greg Silverman

Global Director of Brand Economics, Interbrand

We published How Brand Impacts Share Price, a blueprint to reclaim market cap through brand communications

The result of our partnership efforts is the basis of How Brand Impacts Share Price, a report that connects brand, investor communications and advanced AI-based research. 

By clarifying their brand strategy to the investment community, companies can boost share price. As the report outlines, leveraging strategic brand research can bridge this valuation gap.

For enterprise insights and research leaders looking to maximize company valuation and influence c-suite strategy, realigning investor understanding of brand can help. The potential upside? Unlocking millions in undervalued market capitalization.