Series Brands as Productive Assets: Concepts, Measurement, and Global Trends

www.conference-board.org / economics 1 The paper measures and analyzes brands from an economic (i.e., intangible capital) point of view. First, we define concepts and set out this approach. We describe that a productive role for brands is consistent with assumptions used in the economic analysis of innovation (product differentiation and market power, as in Romer (1990) and implicit in the intangibles framework of Corrado, Hulten, and Sichel 2005, 2009). Second, we analyze the conditions under which brands are long-lived productive assets and contribute to economic growth. Third, we review and improve the measurement of investment in brands. We develop (1) a new U.S. series for brand investment to cover all marketing, including “in-house ” investment, and (2) a harmonized global indicator of brand investment covering 64 countries. We find that the conventional measure misrepresents the trend of brand spending in the U.S., because the conventional measures includes mostly what companies paid for advertisement which declined since 2000, while companies have increased spending social media and strategic marketing which are mostly developed in-house. Moreover, we estimate the world invested $417 billion or.59 percent of world GDP in brands in 2011. We find that brand investment is positively correlated with the level of economic development measured by GDP per capita, and that as countries double their real GDP per capita, brand investment as a percent of GDP increases 0.3 percentage points. And an analysis of economic growth finds that the contribution of brand is comparable t