Finance - Determining the Future Value of Brand Assets

On June 19, it was my privilege to present the Audited Financial Statements for Fiscal 2011 to the Shareholders of PetLynx Corporation. The achievement of positive net cash from operations was a highlight of this report.


However, I wonder if the financial information presented was able to adequately show the potential value of an online utility such as PetLynx. The general public notices the sudden marginalization of offerings from companies like Blackberry or the failure of analyst forecasts to show the potential value of online start-ups for their Initial Public Offering's (IPOs).


Perhaps we do not have tools to reliably report/disclose the value of companies in the new online economy. While we have come to trust the reported value of  'energy company reserves' or 'commercial company bricks and mortar' or 'financial company instruments' (not), I think we now understand it isn't simple to value a company with 'big data' or 'developing web services' or 'robust market penetration and brand'.


So what's this got to do with brand and brand value. Just this. Brand value is directly related to that which drives client experience.  Capital is directly related to brand value because it is the primary requirement for building technology, collecting data and delivering client experience. 


The current balance sheet only accounts in a very limited fashion for the Intellectual Assets from which brand value is derived. Revenues derived from these assets or the value of technology is disclosed, but only after the completion of a transaction. Because the future value of brand is hard to ascertain and disclosure is not transparent, many emerging companies like PetLynx are forced to 'bootstrap' their way along the development path to their eventual emergence as the leading brand. 


While a complete discussion of intellectual assets is beyond the scope of this article, I believe 'Tacit or Intuitive Knowledge' is the asset that must be considered when valuing a web brand. Tacit knowledge is the accumulated experience, education, training and intuition stored in the employee/actors of each enterprise. It is likely the richest and most valuable brand asset an organization possesses. Yet it remains intangible and is not reliably measured.


Organizations use best practices and stored processes in an attempt to convert tacit knowledge to something more tangible. But when it comes to forecasting the value or real potential of the online brand we are still inclined to give way to the empirical knowledge of past performance with its limited ability to show a future value.


Our research is showing consumers wish to have personalized experiences. So far, only the online enterprise has been able to serve up this kind of mass  customization using a client-centric, borderless, intuitive approach supported by real-time data. For this reason, intuitive knowledge is the most valuable and cost effective resource associated with the success of the modern web utility.


Perhaps in the future, sociologists, ethnographers and philosophers may have as much to contribute to our understanding of future brand value as the accountants and securities experts who now rule over the public disclosure of value. Now, I'm just a farm boy, but I find that provocative.