consultants & creatives - may 2013
DESCRIPTION
Consultants and Creatives are stereotypically considered worlds apart, but in this presentation, Mazen Khater, JWT MEA's CMO argues they are in fact two sides of the same coin - as both tap into intangible assets to create stakeholder value. Slides capture important business data from reputable sources. Author : Mazen Khater, Chief Marketing Officer JWT MEA Presented : Euromena Consulting 2013 Workshop, 31 May 2013TRANSCRIPT
CONSULTANTS & CREATIVES Two sides of the same coin
Mazen Khater CMO, JWT MENA
STEREOTYPICALLY,
THE TWO ARE
WORLDS APART
MATHMEN
MADMEN
Source: Google, GQ
METHOD
MADNESS
ADD
OCD
POWERPOINT
POWER NAPS
COLD COLORFUL
IN REALITY,
THEY’RE IN IT TOGETHER
BOTH TAP ON INTANGIBLE ASSETS TO
CREATE STAKEHOLDER VALUE…
Strategy Leadership Organization
& Culture
Brand / Reputation
Human Capital
Intellectual Capital
Innovation
Partnerships IT Networks Supply Chain Processes Technology Loyalty
S&P 500 – Market to Book Ratio (1982 to 2004)
Source: CMO Council, MPM Forum, “Brand Equity and Shareholder Value” by Jonathan Knowles and Wolff Olins
Dec
02
Dec
03
Dec
04
Dec
97
Dec
98
Dec
99
Dec
00
Dec
01
Dec
92
Dec
93
Dec
94
Dec
95
Dec
96
Dec
87
Dec
88
Dec
89
Dec
90
Dec
91
Dec
86
Dec
85
Dec
84
Dec
83
Dec
82
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
A “Market to Book” ratio of 4.6 means that in 2003
the net tangible assets on the balance sheets of
the companies comprising the S&P 500 accounted
for only 22% of their market value
The remaining 78% represents value that is
coming from intangible assets
THE CHOICE OF
ASSETS IS DUE TO
THE EVER
GROWING
IMPORTANCE OF
INTANGIBLES ON
BALANCE SHEETS
"All our factories and facilities could burn down tomorrow but you'd hardly touch the value of the company; all that actually lies in the goodwill of our brand franchise and the collective knowledge in the company"
Roberto Goizueta, the late CEO of Coca-Cola
"If this company were to split up I would give you the property, plant and equipment and I would take the brands and the trademarks and I would fare far better than you"
John Stuart, the ex-Chairman of Quaker
“It’s about brands and brand building and consumer relationships … Decapitalized, brand owning companies can earn huge returns on their capital and grow faster, unencumbered by factories and masses of manual workers. Those are the things that the stock market rewards with high price/earnings ratios”
John B. Akasie, Financial Editor, Forbes
AMONG
INTANGIBLE
ASSETS,
BRANDS WERE
DEEMED THE
MOST
VALUABLE FOR
MANY
COMPANIES
SEVERAL STUDIES
HAVE CONFIRMED
THE HIGH
CONTRIBUTION
THAT BRANDS
MAKE TO
SHAREHOLDER
VALUE
Coca-Cola 69.6 51
Microsoft 64.1 21
IBM 51.2 39
GE 41.3 14
Intel 30.9 22
Nokia 30.0 51
Disney 29.3 68
McDonald’s 26.4 71
Marlboro 24.2 20
Mercedes-Benz 21.0 47
Emirates Airlines 3.21 29%
STC 2.51 8%
Q-Tel 2.13 14%
Zain 2.08 11%
Etisalat 1.99 14%
Saudi Electricity 1.02 5%
DP World 1.00 12%
Savola 0.87 23%
Kuwait Finance House 0.79 6%
Aldar 0.73 17%
Inte
rnati
on
al B
ran
ds -
2002
Brand Value
(USD Bn)
Company/
Brand
Brand Contribution
to Market Cap (%)
GC
C B
ran
ds -
2009
Source: BusinessWeek, Interbrand/JP Morgan league table 2002, GMR March 2009 Edition
STUDIES HAVE
ALSO SHOWN
THAT STRONGER
BRANDS RESULT
IN BETTER
INVESTMENT
PERFORMANCE
1) The three indices were normalized to 100 for the first time period to set a baseline for the value growth
2) Based on Business Week world’s most valuable brands study, e.g. Coca-Cola, Ford, and Microsoft
2000 2001 2002 1995 1996 1997 1998 1999 1994 1993 1992 1991 1990
500
400
300
200
100
0
Valu
e G
row
th
Index 1: Most valuable
brands in S&P 500
Index 2: Less valuable
brands in S&P 500
Index 3: S&P 500
companies
Brand Contribution to Shareholder Value
USD 100 in 1990 = USD 450 in 2000
Source: UBS, Prophet Consulting, Business Week
OTHER STUDIES
HAVE DIRECTLY
LINKED
OVERALL BRAND
HEALTH WITH
BUSINESS
PERFORMANCE
7.58 6.38
6% 14%
75% 41%
7.35 6.77
46% 36%
2.90 2.09
16% 34%
1.93 1.77
7.24 6.03
Attractiveness
Liabilities
Leadership
Satisfaction
Distinctiveness
Bra
nd
Hea
lth
Met
rics
Consider new offers
Likelihood to switch
Adds to bill
Likelihood to refer
Bu
sin
ess
Perf
orm
ance
Healthier Brand = Healthier Business
Source: MIT Sloan Review
SOME STUDIES
HAVE EVEN
SIMULATED THE
IMPACT OF
BRAND
REPUTATION ON
STOCK PRICES
2.7%
0.8%
3.3%
0.21%
$936 million
$1.9 billion
$4 billion
$292 million
its stock price would rise by…
…had the reputation of
If… boosting value by…
Source: Buisness Week July 9, 2007 / CCW Communications Consulting Worldwide Inc.
EVEN PERSONAL
BRANDS HAVE
PROVEN THEIR
WORTH IN
IMPACTING
SHAREHOLDER
VALUE
CHAIRMAN’S
PUBLICITY HAS
CONSISTENTLY
IMPACTED
KINGDOM
HOLDING’S
STOCK PRICE
Impact of Personal Brand on Stock Price
Source: Forbes; Interactive data via factset search systems
YET, EACH
DELIVERS BRAND
SOLUTIONS
DIFFERENTLY
DRAMA
PRODUCES
DECKS
PRODUCES
DRAMA
ANALYZES DREAMS
ANALYZES DATA
CRAFTS
STORIES
CRUNCHES
NUMBERS
DESPITE THEIR DIFFERENCES,
THEY COMPLIMENT EACH OTHER
Albert Einstein: “What I admire most about your art, is its universality. You do not say a word, and yet … the world understands you.”
Charlie Chaplin: “ It’s true… but your fame is even greater: The world admires you, when nobody understands you.”