*This number is a very, very rough approximation
How much is a brand worth? Not the stuff a company sells, or the buildings and factories it owns. Just, basically, the name of the company — and all of the customer loyalty attached to that name.
Oscar Yuan's job is to answer this question. He's a vice president at the brand consulting firm Millward Brown Optimor.
I visited him recently and asked him the obvious question: How much is NPR's brand worth? He ran through some numbers — NPR's audience size, our budget — and came up with a very rough estimate: $400 million.
It puts us in the same ballpark as companies like JetBlue, Jack in the Box, and Barnes and Noble. Estimates of brand value vary widely from one analyst to another. (And Yuan warned us that he usually does these kind of calculations for for-profit companies.)
Some companies cash in on their brand value by licensing their name to other companies. So, for example, if you run a little-known company that makes toaster ovens, you can pay Black & Decker a fee and they'll let you sell your toaster oven as a Black & Decker. (Black & Decker appliances are now made by a company called Spectrum.)
AT&T has licensed its brand name to a company that makes phones; Procter & Gamble has licensed its Mr. Clean and Febreze brands to companies that make mops and candles.
Robinson Home, a company based in Buffalo, N.Y., makes kitchen products under license from brands like Sunbeam, Pyrex, Oneida and Rubbermaid. "You're buying all the goodwill that they built up with the consumer, and the trustworthiness and the expectation of quality that comes with that brand name," Jim Walsh, the company's CEO, told me.
Robinson does all the design, finds a manufacturer and sells products to stores. The big companies approve the designs and get a cut of sales.
I asked Oscar Yuan, the guy who told me NPR's brand was worth $400 million, how NPR might capitalize on its brand.
"Could we start a television show?" he said. "Could we open stores? Could we possibly have an amusement park with Terry Gross and Carl Kasell there?"
Maybe not. There are plenty of stories of disastrous licensing deals. Colgate — of toothpaste fame — briefly licensed its name to frozen dinners. Bic, which makes disposable pens and lighters, licensed its name for disposable underwear.
Perhaps the most famous cautionary tale in the brand-licensing business is Pierre Cardin. The high-end designer spent the 1980s licensing his name to anything. At one point, there were Pierre Cardin frying pans. In the end, all the licensing ruined his image
That's the problem with brand value. The more you try to exploit it, the less value it has.
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For many companies, their biggest asset is their brand. If you've ever held two T-shirts in your hand and opted to buy the one with the swoosh on it, you've experienced the value of a brand. But as Dan Bobkoff, of our Planet Money team, reports, how exactly to measure that value - and how to cash in on it - is tricky.
DAN BOBKOFF, BYLINE: Oscar Yuan's job is to answer this question: How much is my company's brand worth. He's a vice president at the brand consulting firm Millward Brown Optimor. So with apologies to my bosses, I brought him our brand, NPR.
OSCAR YUAN: All right. So let's see some numbers here. We have all these stats. We have our audience, you have our budget. I want to preface that by saying, you know, normally we do this with for-profit companies.
BOBKOFF: But Yuan says we can do some back-of-the-envelope calculations. He's trying to figure out to what degree our listeners are choosing us specifically because we're NPR, rather than, say, because we come in clearly on the dial. Take McDonald's, he says. Maybe you pull into the drive-thru because you really want a Quarter Pounder, or maybe there are other reasons.
YUAN: It was, you know, on the right corner or they had the 99-cent Big Mac or whatever the case was. There are numerous reasons why they would pick the brand, not necessarily driven by the brand, but some exogenous reason.
BOBKOFF: Yuan says how much the brand itself makes you choose something - whether it's a McDonald's burger, or a radio story about brand value - that's the value of the brand. So he runs some numbers.
YUAN: Which gets you to a brand value of about $400 million, which I don't think is shabby at all.
BOBKOFF: OK. So that's a fraction of Apple, but it does put us in the camp of companies like JetBlue, Del Monte, Jack in the Box, and Barnes and Noble. So once you know you have a $400 million brand value, what do you do with it? How can you cash in on it? You might talk to this guy - Michael Stone, CEO of a firm called Beanstalk.
MICHAEL STONE: Beanstalk represents clients that have famous names, corporations that own famous brand names.
BOBKOFF: Brands like Mr. Clean, Febreeze, At&T. And Beanstalk pairs those brands up with other companies you haven't heard of. The anonymous companies design, make and sell products, paying a royalty to use the valuable brand name.
So I see a Black and Decker toaster oven. Is this not actually made by Black & Decker?
STONE: Yeah. The Black & Decker kitchen appliances were once made by Black & Decker, no longer are made by Black & Decker. They're made by a licensee.
BOBKOFF: Those Black & Decker appliances are now made by a company called Spectrum. In the offices of Beanstalk, I also see AT&T telephones made by a company called VTech. I see the Mr. Clean name on mops; and even the Febreeze name and scent is for sale. Here it is on a pillow.
STONE: Lasting freshness in the pillow.
BOBKOFF: For the big brands, they get their names in more places, on more products. It's a way to still offer products under the brand that may not be profitable or worth the time. And the royalties bring in more revenue with little effort. And for smaller companies - like Robinson Home, in Buffalo - it brings an instant advantage over no-name competitors.
Jim Walsh is Robinson's president and CEO, and he says since the early '90s, the company has been making kitchen products under a license from brands like Sunbeam, Pyrex, Oneida and Rubbermaid.
JIM WALSH: You're buying all the goodwill that they built up with the consumer, and the trustworthiness, and sort of the expectation of quality that comes with that brand name.
BOBKOFF: Robinson does all the design, finds a manufacturer, and sells it to stores. The big companies approve the designs and get their cut of sales. So that sounds pretty good. How could we at NPR capitalize on our $400 million brand? Again, Oscar Yuan.
YUAN: Could we start a television show? Could we open stores? Could we possibly have an amusement park with, you know, Terry Gross and Carl Kasell there? And that would be a very interesting exercise to look at.
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BOBKOFF: Or maybe not. There are lots of tales of disastrous licensing deals. Colgate, known for toothpaste, briefly licensed its name to frozen dinners. Michael Stone - of Beanstalk - says Bic, known for its disposable pens, also misfired with its licensing attempt.
STONE: Underwear. Disposable underwear, which, you know, maybe you could argue makes some sense, it's all about disposable. That lasted about a year.
BOBKOFF: And perhaps the most famous cautionary tale in the business, Pierre Cardin. The high-end designer spent the '80s licensing his name to anything, even frying pans. It ruined his image. That's the problem with brand value. The more you try to exploit it, the less value it has.
Dan Bobkoff, NPR News. Transcript provided by NPR, Copyright NPR.