What is Brand Equity?
Lee Dean
Is a company with brand equity more valuable than an unknown startup?
Does it have actual value?
Yes, it has actual value. It’s similar to “good will” if you are familiar with buying and selling companies. The “value” means a dollar figure assigned to brand equity. The models are complex and require a lot of data to make the determination. Here is a short list of companies that explore the elements of brand equity, but offer no concrete equations: https://keends.com/blog/brand-equity-equation/
https://www.pica9.com/blog/measure-brand-equity
From the Keen site listed above, this is as close as I’ve come: Brand Equity Index = (Brand Awareness + Perceived Quality + Brand Loyalty) / 3
It is a mix of quantitative and qualitative information.
Pica9, listed above has an online calculator, if you have the data: https://www.pica9.com/localmarketingportalcalculator
Here are some definitions of brand equity:
From the Branding Journal–
“A popular definition of brand equity is that of renowned marketing theorist and Professor David Aacker, who defines brand equity in his book ‘Managing Brand Equity’ as:
“A set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” (Aaker, 1991)”
From the reliable but somewhat dry Investopedia–
“Brand equity is the value a company gains from its name recognition and its perceived benefits and admirable qualities.”
Why does brand equity matter?
From the venerable Forbes Magazine–Here are some subheads, but the link has the whole article:
“Why is brand equity important for companies? There are a couple of reasons.
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It helps increase awareness of the brand.
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It creates brand associations and grows the perceived value.
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It builds relationships with clients by promoting brand loyalty.”
It goes on to say, “Every marketer would agree that it’s a lot cheaper to keep the existing customer than to acquire a new one. Companies that strive to build genuine relationships with their customers and deliberately work on promoting brand loyalty get substantial financial benefits in the long run.
People are willing to pay more for a brand they are loyal to. Moreover, if the brand has done a really great job, the customers will buy the goods they didn’t know they needed. Customer loyalty gives brands a tremendous advantage as it not only increases the brand value and gives massive leverage over the competition, but also reduces marketing costs.”
What are some real-world examples?
According to BrandFinance.com:
According to Brand Finance’s Global 500 2025 research, 4 out of the 5 most valuable brands in the world are technology brands:
Apple: brand value of USD 574.5 billion, up 11% from 2024 Microsoft: brand value of USD 461.1 billion, up 35% Google: brand value of USD 413.0 billion, up 24% Amazon: brand value of USD 356.4 billion, up 15% Walmart: brand value of USD 137.2 billion, up 42%
Notice this is NOT the profits of these companies, or the net worth, or other GAAP standard measures. This is Brand Equity.
To answer the question at the beginning, yes, a company with brand equity is literally worth more than a new startup. For the examples above, the worth is in billions.
By the way, this blog is an editorial context, which allows the use of copyrighted material for criticism, comment, news reporting, teaching, scholarship, and research.1
Editor’s note: I applaud and respect the protections of intellectual property laws, and any company represented above who makes a request for deletion will have that request honored.
The image was found on the Inexpanse website2.