Millward Brown’s North American Marketing Conference always attracts excellent speakers. Don’t just take my word for it—check out the review by Jeff Flemings over at Digital Hive. Like Jeff, I was energized by the combination of passionate presenters and thought-provoking ideas. In this post, I’ll use one of those ideas to try to understand the recent news of the amazing valuation of Google now that the stock price has reached $700 per share.

In Jeff’s post, the first highlight he mentions is the presentation by Allen Adamson, managing director at Landor and the author of the recent book BrandSimple.

At the conference, Allen presented the top-line conclusions from his book in a simple and compelling manner. He suggested that the concept of “branding” is often misunderstood because people neglect to observe its two components:

1. Brand: the brand meaning, i.e., what it stands for in people’s minds
2. -ing: how the brand signals that meaning

As Jeff points out in his post, a brand could have problems on either front. When things are not going well for a brand, it is important to figure out where the problem lies. The strength of many brands is based on what they stand for rather than what they say. But all too often, marketers focus on the signaling rather than the actual meaning of the brand because the signalling component is more easily changed.

I certainly agree with Jeff that Allen’s idea of branding can be a powerful one. I wonder if it can help identify what lies behind the amazing success story of Google.

Yesterday this New York Times blog reported that the calculations of Henry Blodget make Google the fifth-most valuable brand in the United States. The news that Google’s stock has hit $700 a share has evoked a variety of responses from pundits around the world. Many consider the stock to be highly over-valued, but Henry Blodget of Silicon Alley Insider (whose calculation placed Google above P&G in the New York Times article) calls Google’s price-to-earnings ratio of 55 “not preposterous.”

Commenting on the article, “Jimbob” suggests that Google’s success rests on “a very tender model. There is nothing especially difficult (for mathematicians, etc) in the ‘intelligence’ of what Google does. That is, it is replicable.” That may be true, but in his comment, Jimbob discounts the incredible strength of the Google brand.

As I mentioned earlier this year, Google topped the latest  BRANDZ™ Top 100 Most Powerful Brands ranking by Millward Brown Optimor. One of the key contributors to Google’s ranking was its strong Brand Momentum score, which indicated that the brand was likely to have a positive contribution to future revenue growth. We have previously observed a strong relationship between a company’s momentum and how well its stock performs, so it should have come as little surprise that Google’s stock would climb, even if its current dizzy heights might raise an eyebrow.

Commenting on Google’s place in the Optimor ranking, Allen Adamson suggests that it should be no surprise that Google took the top slot. “Google, for example, up 77% over last year, is based on the simple idea that the smartest kid in your class – the one with all the answers - is sitting right on your desktop.”

Others agree. Commenting on my previous post, Duncan Southgate, Director, Global Innovation at Millward Brown, said “I absolutely buy in to the idea that brands offering a sense of calm will be successful as the pace of change around us increases. I would argue that Google does this very successfully in the online world. For me, their clean, simple and efficient home page is still the best place to start any online journey.”

Separating brand meaning from brand signaling suggests to me that the majority of Google’s strength rests in its meaning. Google directly addresses a contemporary cultural tension: information overload. At a time when people feel overwhelmed by information, they are receptive to Google’s promise of empowerment. Google will help them find what they need, when they need it. The design of the home page serves to signal that promise to anyone using the search engine for the first time. Like Duncan, I briefly experimented with iGoogle, adding bits and pieces to my custom search page before dumping them in favor of the simplicity of the generic one.

Of course, it doesn’t hurt that Google costs people nothing, is easily available and works well. Add to that the roster of free services from photo-sharing, mapping, translation, document-handling and social networks, and Google seems likely to earn significant gratitude from a user base willing to exchange eyeballs for free services.

The Google experience is augmented by the company’s innovative, egalitarian, and playful approach to business (which forms part of its “signaling”). For example, when Google went public in 2004, it used an Internet auction to sell its stock to shareholders, something considered revolutionary and inefficient by the establishment. (Click here for my 2006 post.)

But I believe that signaling is just a small part of Google’s strength. It is the icing on the cake of the brand experience.

Does this mean Google is invulnerable? Maybe not but, to pick up on this great comparison between Google and the Eiffel Tower, it seems to me that the Internet without Google is like Paris without the Eiffel Tower. It just not would be the same.

In my previous post, I wondered whether Starbucks needed to find its voice to maintain a strong relationship with its customers. What about Google? Will it need to start signaling more strongly in future? Please let me know your thoughts.

Tags: Millward Brown, Nigel Hollis, Google, Allen Adamson, BrandSimple, Jeff Fleming, Digital Hive, Optimor, BrandZ, Henry Blodget, brands, branding, brand valuation,

This entry was posted on Thursday, November 1st, 2007 at 3:25 pm and is filed under Brands. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Print this Page