Pawn Your Guitars, Guns, Logos!
How Ford Motor Went Into Hock
Posted by Randall Smith on June 6, 2012
Today a client asked how we price our services. I answered, “It’s based on the value of the project we provide and recognizes the investment of time it takes us.” Two years ago, we helped this client with their logo, as well as other projects. As I answered our question, an NPR newscast I recently heard came to my mind.
The headline of CNN’s version of the story was: “Ford gets its iconic logo out of hock.” The article relates how the Ford Motor Company needed money in 2006. For collateral, Ford put up its blue oval script logo—first designed in 1928—and other trademarks like the Mustang and F-150, to open a $23.5 billion line of credit.
The equity of intangible assets like your brand doesn’t typically show up on your company balance sheet. But perhaps it should. The Ford story certainly validates the idea that investing in the perception of your brand is a worthwhile corporate activity. Although Ford didn’t place a value on its logo, Interbrand, a company which tracks brand values, said the Ford brand is worth $7.5 billion, and ranked 50th out of the top 100 brands in a recent survey.
Of course the reason the Ford story grabs your attention is the same reason that people often mistake their logo for their brand. The logo is just a representation of the brand. The value in the logo is the value inherent in all your perceptions about the company—everything you’ve read, know, seen or heard. Choosing one brand over another is a short-cut use of the attributes, values and beliefs that you use to differentiate the product (or service) and simplify the decision-making process.
The media didn’t speculate on what might have happened if Ford had defaulted on their loan. I presume that the blue oval logo and all of the brand associations which the logo represented could have been sold to another company, then used by them to transfer the Ford brand equity to another automobile maker. Certainly some dilution of the equity might occur in the process, but I would think the essential value would be retained.
Too often, marketing managers take a rather short-term view and think of building positive brand image as a variable marketing expense. On the contrary, building strong brands is an investment aimed a creating a long-term intangible asset. Brands don’t exist because of companies. Companies exist because of brands.
Invest in your brand. You never know when you might need a loan.