Today we announced that we are strengthening our presence in Dubai, through a strategic partnership with Madison Dubai, the independent advertising agency led by Tarek Ghannam.

You might think it seems an odd time to open in a market that’s still in shock from the effects of the 2009 slowdown. But that’s precisely where we see an opportunity and where we’re finding a lot of interest from our clients and partners in the region.

For us the Middle East market is entering a new phase: where there will be a much stronger emphasis and requirement from clients on strategic brand thinking and powerful brand expression.
When the gold rush was at full pace it was all a bit too easy for branding consultancies. All that was required from them was a catchy name and a nice logo and hey presto, the client was delighted and everyone could pat themselves on the back as yet another seemingly successful and competitive new brand was born.

That was then. This is now.

After the gold rush things are a little different. Many of those brands that had an easy ride are finding that it takes something more than a logo to create a brand that people will love. That’s music to our ears and we’re excited about the opportunities to help existing brands reinvent themselves to be more competitive and also help get new ideas off the ground.

The brands that will survive and thrive in this era will be the ones that take branding seriously and create genuine market differentiation and genuine customer preference. They’ll create brands that are as powerful on the inside as they are on the outside of the organisation. Brands that know what makes them special and know exactly what they stand for.

The Middle East will continue of course to take its place at the global economy ‘top table’ as the world recovers, and we expect that some of the iconic brands our children will talk about will have their roots there. We love the boldness and ambition of the region – nothing is impossible and dreams come in XXL size.

'Black swans are always emerging from everywhere.'

‘It’s a sobering time for number crunchers. From quantitative risk analysis to credit ratings, many financial statistics have revealed more artistic license than resemblance to reality,’ says an editorial in the Financial Times of 30 January 2009. And you can add brand valuation to that list, too. All this number crunching whether it’s risk analysis, GDP projections or brand valuation is part of an attempt to measure areas of activity which are for the most part inherently unquantifiable. The assumption is that people and the organisations they manage, act only out of rational calculation; it’s a natural extension of the economic theories of the Chicago School. These figures are a major part of denial of risk.

At another level they are like a comfort blanket for a child, which makes it feel safe, secure and stable. But all of us know deep down that life isn’t like that. Brand valuation and the other statistical analyses with which it is associated are supposed to be an aid to predicting the future, when as has recently been made clear yet again, the future stubbornly refuses to be predicted. All you can really predict about the future is you don’t know what will happen. Black swans are always emerging from everywhere.

So what does this say about an apparently rational process through which, utilising a series of complex, arcane, and, to a lay mind, more or less incomprehensible statistical measurements, brands of all kinds are given a financial value? Well, in my judgment these figures that are produced and so thoroughly scrutinised are about as meaningful as sticking your wet finger in the wind and shouting out a number.

The truth is that brands jump around all the time. They are in fashion, then they go out of fashion. They are well managed, then they are badly managed. Brand managers become too risk averse or they take too many risks. The list of what can happen to brands is endless. Just look at the performance of some famous, apparently invulnerable financial brands over the last few months.

I don’t know if anyone was asked to value RBS corporate brand in say 2007, but I can tell you what the stock market said then and what it says now. In June 2007, RBS shares were valued at £6.30. Today in February 2009 they are valued at just 20p. What goes for RBS goes for much of the rest of the financial sector. I didn’t notice Lloyds Banking Group (as it has rebranded itself) talking about the value of Halifax and Bank of Scotland brands as it took over the collapsing HBOS Group. I’m not implying that Halifax and Bank of Scotland have no brand value; on the contrary, they are massive brand assets. All I am saying is that nobody can calculate their current financial value as brands because they are badly damaged.

And it doesn’t only happen in the financial sector. Scandal destroyed WorldCom and Enron, which in turn brought down the Andersen brand, the greatest name in audit and accounting. Accenture, its former sister, was only saved from disaster because it had changed its name from Andersen Consulting a few years before in response to a legal ruling requiring it to do so.

The brand valuation process ignores tempest, turbulence and volatility. It is deliberately designed to create an entirely illusory impression of permanence and stability. So why is this profoundly misleading activity rapidly growing as a service offering of branding consultancies and accountancy companies?

Tangible assets like buildings and plant machinery have always had a place on the balance sheet. Traditionally intangible assets haven’t, although in recent years this has been changing. Intangible assets like intellectual property, in the form of patents, brands and so on, are becoming increasingly valuable.

Over the years, many sensible companies have paid a great deal of money for brands. So it isn’t surprising that accountants and some branding consultancies and other specialists have created complex econometric formulae both to value brands in the short and medium term and to justify a significant place for them in the corporate balance sheet. The idea behind all this is that they fit into the corporate financial accounts in a way that is logical, rational and above all susceptible to numerical analysis. All this is entirely understandable and I am most sympathetic to companies attempting this task, particularly if they happen to be a Coca-Cola or a Virgin, when it is clear the brand is by far their most significant asset. So although brand valuation is pretty much worthless as a technical tool, it does have the apparent advantage that it makes companies with brands feel good and improves the appearance of their balance sheet.

The truth of the matter though is that brands have no objective, absolute value. Whether it’s a T-shirt or a huge financial institution, there’s only one way to establish the value of a brand and that is to see what people will pay for it. All the rest is, as the Financial Times put it, artistic licence, or – putting it a shade more honestly – smoke and mirrors.

I’ve been through several unfortunately. My memory is that when these things start, people tend to think it is the worst ever. Maybe this time they will be proved right. I certainly hope that’s not the case. I find it difficult to remember what previous ones were like, but you find your way through them. Some companies die, but people make it through.

How do companies tend to react when the economic climate takes such a turn for the worse?

The immediate reaction from most companies, of course, is to cut everything. They see a likely sales drop and want to reduce overheads. The natural reaction is often to cut the marketing budget. But it is also the case that in a time of recession, people are much choosier about their purchases. So an organisation that has something special and particular to say, especially one that promotes itself effectively, can actually take advantage of a slowdown and come out on top. Take Jaguar, for example, who started operations in 1934. They were offering something entirely different and the fact that there was a depression didn’t seem to make any difference.

When times are hard, a branding exercise is almost seen as a luxury. Is this fair?

Not at all. Short term measures are mandatory but when you are on an even keel again you start to think longer term. The first three months of any kind of recession inevitably elicit short term reactions. Everybody right now is in a state of controlled panic; nobody knows what they are preparing for. People are scrambling to do something to mitigate the effect of this slowdown. Whether it’s looking to product innovation or new markets, everyone has to do something. So once this initial panic is over, you are still going to need consultancies. If you are going to launch something now to benefit from the recession, you may want to be quicker about it to capture greater market share. There are going to be collapses and mergers. All of this is going to necessitate some expedient rebranding, so I hardly see it as a luxury.

Can you see any positives arising from the current situation, particularly for those involved in the world of branding? Will businesses be forced to improve to survive?

There are advantages to shakeouts of this sort. This time around we were so focused on consumption that this will chasten us. So maybe, in a moral sense, this is good for society.

There are also going to be a huge number of mergers and takeovers and acquisitions, so there will be a requirement to examine how these new organisations project themselves. In the service sector especially I think we will see huge changes. High touch will make a resurgence while high tech is going to become subordinate. Relationships and relationship management is going to be a big thing there. In many ways the sector has become intolerably inefficient. They have become overly reliant on technology and sacrificed the relationship aspect, which is crucial. And financial services, of course, are now going to have to present themselves very differently – probably with more humility.

Consultancies are often the first to suffer when budgets are cut, and branding consultancies even more so as the marketing budget is often first to go. Is this fair?

Branding should not be part of the marketing budget. If the main carrier of a service brand is the people who work there, then it’s the HR or internal marketing budget that’s relevant. Branding conventionally seems to be allied with marketing but is in fact is associated with a number of disciplines.

Is globalisation going to be a casualty of the recession?

The pace of globalisation has in no way decreased as a result of the recession; if anything, it has increased. So a global reach and understanding is a likely key to success. Nobody, and nowhere, is immune.

Will the green agenda become less important as the world scrambles to cope with the effect of the recession?

Normally, a short-term response is what is required to address an economic crisis. This time, the long-term solutions are the answer to the short-term problems now. It is a question of finding the correct long-term solutions and then waiting it out. Sustainability is very much part of that answer. Take the automotive industry, for example, where we will probably see a revolution as opposed to an evolution. Cars are going to become cheaper and a lot less hazardous because it happens to be in everyone’s interest, not because of some altruistic intentions.

Book launches are tiring.

The big man’s been in India to promote the launch of his latest book, The Brand Handbook. This and other quotes, plus some damn good reviews, ran in national Indian newspapers over the past weeks. Recent book tour whistle stops in Denmark, Switzerland, Turkey and Russia were also well received. At least according to Wally!

Wally also visited existing and new clients. Whilst the mood amongst business heads that he met is perhaps not as buoyant as it was six months ago, very many of them are keen to move ahead with branding programmes. Interestingly there seem to be a considerable number of companies for whom a downturn works out to be a blessing in disguise. It gives them the chance to consolidate the rapid growth they’ve undergone over the past years and plan their next steps. Their brand is a part of such considerations. Also, in a quiet market with drastic ad spend cuts the competition for stakeholder attention is perhaps less grueling than it might otherwise be.

Monocle magazine’s editor in chief Tyler Brule interviewed Wally Olins at the V&A museum in front of, as they say, a live studio audience. Both—honestly—were in pretty top form. The occasion was the launch of Wally’s new black-and-yellow ‘For Dummies’ style Brand Handbook. YouTube video clip of the session below.