Brand is Not Just a Marketing Expense, It’s a Company Opportunity

"marketing materials that are part of marketing expense"

Brand is commonly thought of as the marketing department’s responsibility. And if the marketing expense is high, that should translate into a high brand valuation. But brand is not just a marketing responsibility.

Truly Inc. published a podcast with Tracy Chong – co-founder of Strata Insights – about a brand method she helped create called Brand Economics. According to Ms. Chong, Brand Economics differs from Brand Valuation or Brand Evaluation because it considers all aspects of a business (human resources, operations, marketing, finance). These factors are then used to assign a financial qualification to the brand.

Brand drives revenue. In fact, according to a 2017 Strata Insights study, brand contributed to 34%-74% of the S&P 500’s value. Therefore, it is important to understand the brand’s ability to attract customers. According to Strata Insights, brand is not a marketing expense, it is an organizational opportunity.

As an organizational opportunity, a brand economics valuation looks at: the businesses customers, sales channels, distributors, product or service, pricing in each channel, partners, and the market at large. All aspects of the business can and does contribute to the customer’s experience with a brand.

A couple areas may be missing from Strata Insight’s model – although, Ms. Chong may not have disclosed every consideration during the podcast. The first is starting with the right name. If the theory of brand economics is a brand’s ability to attract customers, having the right name is a crucial starting point. Not only does the name have to be appealing, but it also has to standout from the crowd. Another reason why working with a naming professional is important for every business.

The second consideration focuses on the legal department and the enforcement of rights against unauthorized use of confusing similar trademarks. Ms. Chong explained that it is important to consider the entire business because any department can negatively impact the customer experience with a brand. One example she gave was the IT department designing a website to have three separate logins, which frustrates customers and creates a bad experience with the brand.

One reason to enforce trademark rights against confusingly similar marks is to prevent any negative experiences to be misattributed to your brand. This does not mean that a trademark owner needs to take on all comers, although bad trademark attorneys will say that you do. Enforcement needs to be strategic and thoughtful, but it is something that every brand owner should do because it could be the case that the brand economics assessment indicates that your business is doing all the right things to produce a high brand economic value, but the acts of another party is depressing the value of the brand.

Study Shows Correlation Between A Trademark Filing And Growth

"working paper title about the benefits of a trademark filing"

When dealing with intangible property, it is often hard for a business owner to understand why money should be spent on, for example, a trademark filing. Obtaining a trademark registration can be expensive depending on the path the business owner chooses when starting the trademark registration journey. And the effects of that decision to make a trademark filing may go unnoticed or the positive effects of that decision may be misattributed to something else in the business.

A working paper titled An Anatomy of U.S. Firms Seeking Trademark Registration was recently published by the National Bureau of Economic Research, and it may provide the clarity and understanding business owners need to see that a trademark filing makes a business money. The working paper was also released in perfect timing with the U.S. Senate’s Resolution to Increase Trademark Protection Awareness.

The study created a new dataset by combining the USPTO trademark filing data with firm characteristics, performance, and dynamics in the United States as reported by the U.S. Census Bureau. The paper then provided a first look at the connection between a trademark filing and the broader measures of firm outcomes.

The study found that a trademark filing is highly correlated with the ultimate success of an early entrepreneurship activity including employment and revenue growth. Firms that do not apply for a trademark registration in their initial years are unlikely to do so unless they experience employment growth. However, difference-in-differences analysis suggests sizable treatment effects, with firms making a trademark filing having substantially higher employment and greater revenue in the period following the first trademark filing.

Hopefully, this paper will be peer-reviewed and ultimately validated because, if accurate, it provides businesses with the most valuable justification for protecting a trademark: namely, that it likely will make you money.  More businesses need to recognize the importance of filing trademark applications and the data suggests that too few businesses understand this. According to the Kauffman Startup Index in 2017 there were about 540,000 new business owners each month during the year. That means for the entire year there were about 6.5 million new business owners in 2017. However, through the third quarter of 2018, there are only 480,111 new trademark applications that have been filed in 2018.

Every business, whether a startup or established enterprise, should pursue trademark protection for not only its business name, but also the names of its goods or services. But if you are going to spend the money to protect your brand, you might as well do it wisely. Engage a naming firm to help with the design of a new name and conduct a trademark search to make sure the name is available.

All Brands are Trademarks, But Not All Trademarks are Brands

"brands trademarks"

What comes first the trademarks or the brands? These words are not synonymous, and understanding the difference is important. Vocabulary in general is critically important to understanding new topics and being able to converse intelligently about them.

The Federal Trademark Act defines what constitutes a trademark very broadly. “A ‘trademark‘ includes any word, name, symbol, or device, or any combination thereof – used by a person – to identify and distinguish his or her goods . . . from those manufactured or sold by others and to indicate the source of the goods, even if that source if unknown.”

Traditionally, a trademark is thought of as words and designs, but it can include smells, tastes, colors, shapes, touch, and sounds. What determines if any of this matter can function as a trademark is whether consumers rely on it when making purchasing decisions. Consumers come to rely on any matter when making purchasing decisions by having experiences with the matter. Those experiences can be good or bad, but those experiences are embodied in the trademark and the trademark starts to represent and stand for those collective experiences. The collective experiences embodied in a trademark is referred to as the goodwill associated with the trademark.

When someone mentions the word brand they are referring to “the sum total fo the thoughts, opinions, associations, and experiences people have with your company.” Brand is more synonymous with goodwill than it is the word trademark. And because a brand requires consumer experiences, all brands are trademarks but not all trademarks are brands.

A company can do a lot to influence the experiences consumers have with the trademark. For example, you can have attractive packaging and marketing collateral, and have excellent customer service. All these things positively reflect on the company and create a quality expectation by consumers every time they encounter the trademark. When this expectation is created, you then have a brand.

The path from trademark to brand depends in part from the selection of your starting point. Select matter that consumers immediately recognize as a trademark, and your path will be shorter than if you select matter that takes time for consumers to recognize is a trademark in the first place.

Parody of Music Names in Branding

"picture of a music concert representing trademark parody"

Parody is something that seeps into the branding process from time to time. Depending on the good or service, parody of a recognizable music name could be appropriate. Esquire magazine highlighted the ten most memorable music parody brands. Our favorite was DON A HENLEY AND TAKE IT EASY for clothing.

In trademark law, there is nothing illegal about drawing inspiration from something for a name. Where the line is crossed is when the manifestation of that inspiration is likely to cause confusion with another party’s trademark. The Trademark Trial and Appeal Board has found on multiple occasions that the right of the public to use words in the English language in a humorous and parodic manner does not extend to use of such words as trademarks if such use is likely to cause confusion.

What this presumes is that the music name functions as a trademark in the first place, and trademarks cannot exist in a vacuum. Trademarks must attach to a good or service. In the case of music names that most likely means that the band or musician name attaches to primarily entertaining services. This is significant because trademark rights are limited to the goods or services they are used in connection with plus what would be considered a natural zone of expansion.

Unfortunately for DJ Khaled, that means his trademark infringement complaint filed against Curtis Bordenave and Business Moves Consulting Inc. d/b/a Business Consulting over trademark applications filed for DJ Khaled’s 18-month old son’s name ASAHD, ASAHD COUTURE, and A.S.A.H.D. A SON AND HIS DAD for clothing and magazine publishing services will likely fail. DJ Khaled named his son an acronym A.S.A.H.D., which means A SON AND HIS DAD.

This acronym has not been used with any goods or services, so there are no trademark rights associated with the acronym. Moreover, whatever notoriety DJ Khaled has in his name, that does not transfer to his son’s name. What his case demonstrates is that you need to know thy enemy when you select a name, which we have to assume the defendants fully anticipated in this case.