fernandejackson: Where Finance Meets Innovation

The brand size and strength of the nation and its companies are in a free fall, a leading brand-valuation firm says.

Looking at the United States as a brand, how much is that intangible asset worth? According to one educated guess, $1.2 trillion less than it was five months ago.

That's from U.K.-based Brand Finance, which claims to be the world's largest brand-valuation service. Corporate customers use the firm to calculate the worth of their branded businesses, to provide insight on how to allocate resources so as to best grow such businesses, and to value the intangible assets of acquisitions.

Brand Finance also rates the value of "national brands," or the total worth of all branded products and services from companies based in each country, including an incremental amount attached to being from a certain country. Brand USA, which was valued at $12.6 trillion in April of this year, plummeted to $11.4 trillion as of September 1.

The measurement uses data from the Organization of Economic Cooperation Development, the World Economic Forum, and Swiss business school IMD. The valuation also takes into account national gross domestic product, broken down by primary revenue sources (agriculture and other commodities), secondary sources (manufacturing), and tertiary sources (services). The number crunching produces an estimated royalty that would have to be paid to the country, plus royalties to each branded business, in order to license their brands, and applies those royalties to present and future revenues in order to arrive at a net present value.

That is a size measurement, but Brand Finance separately rates the strength of each national brand, which factors in the country's infrastructure (including education, in addition to traditional elements like roads and bridges), brand equity (a measure based on market research), and economic growth.

While U.S. brand value remains approximately four times the size of its closest trailers, Germany and China, its brand strength has spiraled from 5th a few years ago all the way to 17th, hampered by inflation, cost of capital, reduced volume of capital, higher unemployment, and declining image abroad.

As to the latter, Brand Finance CEO David Haigh says: "As a Brit, I hesitate to go around criticizing America. But the fact is that a number of unfortunate foreign-policy decisions, the economic crises, Enron [and the other corporate scandals], the banking crisis, and now the debt downgrade have not helped people's perceptions of America. Anyone who underestimates America is a fool, and it probably will rebound. But the last few years, it's been on a downward track."

Of Standard & Poor's downgrade of U.S. debt, Haigh opines that it should have come long ago. "I mean, they do owe $14 trillion," he notes.

The United States is not the only country on a downward track, though. Brand Finance calculates that this year's renewed economic crisis has caused the value of intangible assets worldwide to sag by $6.2 trillion since January.

Meanwhile, in the firm's newest assessment of the brand value owned by individual companies worldwide, Apple has streaked to second place, from 20th in January 2010 and 8th as recently as January of this year. The ranking is volatile overall. For example, Wal-Mart has fallen from first to fifth over the past 20 months, opening the door for Google to take the top slot. And just since January, Bank of America has sunk from 6th to 14th, with HSBC taking over as the strongest bank brand, in the 10th position.

Other companies in the current top 10 include Microsoft, IBM, Vodafone, General Electric, Toyota, and AT&T.