It’s not hard to find a free logo. It could be clipart, a stock image you found on the internet, or maybe the guy who makes your vehicle decals offered to ‘do up a logo’ for your for free. Hey, even the IT guy knows a thing or 2 about graphic design right? While these may appear to have no cost associated, here is where you’ll pay:

Brand positioning
An experienced brand strategist and seasoned creative team can create an image that captures more than just what your company ‘does’. They can weave in the personality, aspirations and felt sense that you want your company to stand for over time. This is what separates authentic brand images from ‘logo’s. If your strategic position as a business (value, premium, boutique etc.) isn’t carefully crafted into your logo, the cost could be eroded pricing, premiums and missed customer engagements. People often will feel a certain way triggering a physical action based on a quick 2-second first impression, so you need to ask yourself; is the identity is really ‘speaking’ for your business?

Collateral Costs
Branding companies have the background and experience to see the complete landscape of future use for your company’s brand identity. Whether this is outdoor use, stationery, signage, vehicle, golf balls or the Good Year Blimp’ message board, a logo should be designed to be practical, legible and simple. It’s amazing how many times we’ve seen logos designed with a single purpose in mind and then require significant modifications over time.

Pre-Mature Rebrand
If you’ve been successful in your start-up, it may become evident very quickly that your logo is off the mark, it doesn’t stand for what the company is evolving into. This can trigger the need to re-design and re-launch the brand image far sooner than is normal resulting in confusion amongst your customers and prospects. It is certainly normal for companies to go through a systematic brand update from time to time, but these are often refreshes to sustain their growth rather than wholesale changes.

Ultimately, your brand should be authentic, unique, relevant and resilient. It’s unlikely that the source of the free logo was strategically engaged to a point of creating an identity that meets these criteria. We strongly encourage you to obtain the services of an experienced brand strategist or designer.

So, is a free logo really free? As my Dad used to tell me (at nauseam), “You get what you pay for, and you’ll pay for what you get!”.

To illustrate, Interbrand – the world leader in brand valuations – conducted a study of Canada’s most valuable brands. The results are impressive (see chart below). Take Tim Hortons for instance. With an estimated $1.87 billion brand value, 38% of its market capitalization is based on brand alone. One-third of the overall value of the company is intangible!

* Source: Interbrands Best Canadian Brands 2006

Although these examples represent consumer facing brands, it doesn?t mean that the B2B realm is playing a different game. Whatever the business category, brand value is accrued when a company has successfully gained a position of privilege in the end users? mind, accrued a loyal client base and has created memorable impressions on the target audience.

Take FedEx for example. In 2003, FedEx had an estimated brand value over market cap of 19%. Now, imagine for a moment if a non brand savvy investor bought FedEx (ok, this is a stretch, but bear with me) and changed the name to Super Fast ABC Delivery Company, disregarding the FedEX name and its value. What would happen? Undoubtedly, there would be a massive reduction in brand value and an almost certain inflation for 2nd place UPS. This would come as a result of an instant decrease in awareness, trust and loyalty in the FedEx brand, as well as a transfer of those intangibles to companies that have been working hard to build brand equity, and may already have a position in the customers mind. Would Super Fast ABC Delivery Company still get business? Yes, but it’s service offering would be largely commoditized to the point of being known as the “The company formerly known as FedEx”.

When does Brand Valuation matter?
Mergers, acquisition, marketing the sale of your business, business valuations, and franchising are all compelling reasons to acknowledge that your brand has value, and to make an effort to measure it and further invest in it. The old adage that ‘if it isn’t measured, it’s can’t be managed’ is particularly true in this case. If increasing brand value is a priority for your stakeholders, then a Brand Valuation is a must.

Do-it-yourself Brand Valuation
If you have a spare napkin and you want to establish a quick method of identifying the general value of your company?s brand, you can use the “Relief from Royalties” method. This is based on the premise of acknowledging how much you would have to pay to license your own brand to yourself. For example, if you were a premium widget company with 30% market share, and your widgets sold for $6 each, and a generic widget company with 40% market share sold theirs for $4 each, the annual brand value of your company would be $2 multiplied by the total amount of widgets sold in one year (after market share adjustments). The essence of this being that if you remove the brand name of your premium widget, you would be in no special position over the Generic Widget company down the street. Alternately, you could also look at it as the total cost to license the brand to yourself (in this case $2 per widget X total units sold in a year).

Ultimately, investments in brand building belong in the equity column of your balance sheet, not the expense column. Find your unique approach to gain a position of privilege in the users mind, and then measure it! For more information about brand positioning and valuation, contact an RFX brand specialist today!