Branded Story / International Trademark Association

Why Brands Matter

Brands do not exist. One could make this argument, claiming that you can’t harvest a brand in the ground, build it from raw materials in a factory, or mass produce it and store in a warehouse. You can’t forget to pack it before leaving on holiday or accidentally leave it lying around for the dog to chew.

Yes, one may not be able to touch a brand, but they are arguably the most valuable intangible asset on your company’s balance sheet. Strong brands enable consumers to distinguish your products from that of your competitors. Brands cultivate affinity, trust and customer loyalty. Brands allow your company to charge a premium for its products. And brands play a key role in making products stand out in an increasingly competitive global marketplace.

Strong brands are not created overnight. They are the result of the brand owner’s consistent commitment to quality, a willingness to listen to, and serve, its customers, and they are built on a foundation of trust. A recent report by Edelman revealed a deep crisis in trust generally, particularly in government and the media. Six in 10 survey respondents said they trust the results of search engines over web-content developed by humans. Among those who are uncertain who—or what—to believe, business is the most trusted institution. Indeed, the report described business as “the last retaining wall.” Brands lie at the heart of this trust.

From the outset, a brand needs to be maintained and protected. By registering, managing, and carefully licensing your trademarks, you protect your brands from being used or abused by competitors or counterfeiters. This is a vital part of any brand strategy.

Protecting brands with trademarks is also good for the bottom line. A study of European brands found that industries with high trademark use have on average 29% higher revenue per employee than those that do not. They also pay their employees 19% higher wages. A similar study look at the United States found that workers at companies in trademark-intensive industries earned $1,236 per week, compared to the $896 earned by workers in other industries.

The boost that trademarks can provide a company and economy is not just restricted to developed economies. Trademarks in Latin America, a study of the economic impact of trademarks in Chile, Colombia, Mexico, Panama, and Peru, found that the economic activities where trademarks are registered and used intensively contribute 15% of GDP on average and generate 18.5 million jobs. Depending on the country, these 18.5 million workers earn between 4.6% and 25% more than workers involved in other economic activities. In short, a strong trademark system is good for business and its employees.

Despite this evidence, many businesses fail to register their trademarks. To some, brands are just a line on a balance sheet and trademarks an additional legal cost. It is in a company’s best interest to change this. And this change needs to come from the top! CEOs and those around boardroom table should take a more hands-on approach to their company’s brands, actively take steps to understand their brands’ value, and act on this information.

Most companies have a high-level brand strategy, often led by its marketing department, but few of these place trademarks where they should be: at the centre. Without trademarks, a brand is at risk. Putting trademarks at the centre of the brand strategy will help protect market share and drive future growth.

Why Strong Brands are at the Centre of a Successful Economy

At the heart of any successful business you will find a strong brand. A brand embodies the connection between a product and the consumer. It is about trust – consumers are loyal to the brands they love and are prepared to pay a premium for them. An economy that contains businesses with strong brands is one that is resilient enough to withstand downturns, keep growing consistently and create jobs. To thrive, brand owners need to operate in an economy where governments understand the value of trademarks.

While it can be difficult to measure the exact value of a brand, it is possible to do so for trademarks and the results are impressive. Interband – a leading brand consultancy – values Apple at $178 billion, Toyota at $53 billion and Samsung at 50 billion in its annual list of the top 100 brands. On a wider level, a Study by the US Patent and Trademark Office shows that Trademark-intensive industries contributed 23.7 million jobs to the US economy in 2014. In some parts the study expanded its scope to look at all IP (including patents, trademarks and copyright). Workers in IP-intensive industries earned an average weekly wage of $1,312, 46 percent higher than the $896 average weekly wages in non-IP-intensive industries in the private sector. IP-intensive industries accounted for $6.6 trillion in value added in 2014.

A similar study from Europe showed equally impressive results. IP-intensive industries generated more than 42% of total economic activity in the EU, where 36% alone (worth Euro 4.8 trillion) was produced by trademark-intensive industries. IP-intensive industries also generated 27.8% of all jobs in the EU during the period 2011-2013, with 21% in trade mark-intensive industries. The wage premium for IP intensive industries was 46%over other industries. Both these studies have been regularly conducted and have showed not just that trademarks are vital to a successful economy, but that their importance is growing with each year.

The effect of trademarks is not just restricted to the developing economies. INTA has done a survey of five Latin American countries that showed that a salary premium in trademark intensive industries varying between 4.6% and 25% and that industries that register and use trademarks intensively there were responsible for 18.5 million jobs and make up 15% of GDP, 15% of exports and 26% of imports.

Trademarks are the point where brands meet governments. By registering their brand as a trademark, businesses are showing that they – and their consumers – value it and are giving themselves a way to protect their brand from others who want to take advantage of the goodwill they have built up, either by counterfeiting goods, or producing their own products using a confusingly similar brand. While brands are built by businesses, brand owners need governments’ help to protect their rights.

Where trademarks are weak and counterfeiting can thrive, the economy struggles. A new report from Frontier Economics, an internationally recognized economics research firm, indicates that the global economic value of counterfeiting and piracy could reach US $2.3 trillion by 2022. It concludes that related costs could reach an estimated US $1.9 trillion by 2022. Taken together, the negative impacts of counterfeiting and piracy are projected to drain US $4.2 trillion from the global economy and put 5.4 million worth of legitimate jobs at risk by 2022.

At the International Trademark Association we believe protecting brands though having a strong trademark system should be at the heart of any government-level economic strategy. Governments need to make sure the right resources are dedicated to developing IP systems that can register trademarks quickly and accurately and to provide strong enforcement mechanisms. They also need to promote the value of brands and trademarks to businesses, particularly SMEs, who often create good brands, but do not do enough to protect them. By focusing on these three issues – resources, enforcement and promotion – governments can ensure that more powerful brands can drive higher economic growth.