Big-brand sound is sweeter than Coke, rings truer than Vodafone

Harvard leads US universities in global list, but Oxbridge doesn't make grade. John Morgan writes

May 17, 2012

Harvard University's brand is more valuable than those of major multinational corporations such as Coca-Cola and Vodafone, according to an analysis that argues that universities must prize their brands as valuable assets.

Patrick Freeland-Small, chief marketing officer at the University of Melbourne, presented a set of proxies for university brand value at the World 100 Reputation Network International Higher Education Conference, held in Washington DC on 15-16 May.

Mr Freeland-Small, a former business development director at the Foster's Group, calculated a notional brand value for leading universities based on the value of their net assets and their performance in reputation rankings.

Using this value, he inserted the universities into Brandirectory's list of top global brands. Brandirectory, "the definitive online encyclopedia of brands", defines brand value as "the net present value of the estimated future cash flows attributable to the brand".

Harvard was ranked seventh with a brand value of $37 billion (£23 billion). That was behind Apple and Google (first and second place), but ahead of some major multinationals.

Stanford University ($21.6 billion brand value), Yale University ($13.9 billion), Princeton University ($11.9 billion) and the Massachusetts Institute of Technology ($11.3 billion) all made it into Mr Freeland-Small's list of the top 100 commercial and university brands.

He judged the universities of Cambridge and Oxford to be the most valuable UK higher education brands ($3.3 billion and $2.9 billion, respectively), but the pair did not make the top 100, as their net assets are smaller than those of leading US institutions.

"The big US universities rank in the top end of global brands - that is the very interesting thing about it," Mr Freeland-Small told Times Higher Education. The table was "really to point out (to universities) that you've got very valuable assets - treat them with respect", he added.

He argued that as the sector explores global alliances and transnational education, it will be brands that help institutions strike such deals and partnerships, and enable them to reach "licensing" agreements with desired partners.

Calculations of brand value in the commercial sector take the total value of a company's stock (market capitalisation), then subtract the value of net assets to judge the extra value the market is willing to pay for that company's brand.

Given that universities do not have stock, Mr Freeland-Small used their net assets, including endowments, as the basis of his calculation.

He found that in the top 100 global commercial brands, brand value accounted for 20 per cent of market capitalisation on average.

Mr Freeland-Small then applied this average to the universities' net assets. He also applied their scores in the THE World Reputation Rankings (a league table based on a worldwide survey of academics) to "adjust for brand strength" - producing what he judged to be the "proxy for brand values".

Asked about the potential pitfalls of comparing not-for-profit educational institutions and commercial brands, he said: "Universities do operate, basically, on the basis of having to fund their activities. All universities will have internationalisation as part of their mandates.

"Commercialisation just comes naturally into play in terms of funding international activities."

john.morgan@tsleducation.com.

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