Interbrand chief Rita Clifton tells Richard Adams that branding is vital for the economy

It's easy to poke fun at a company such as Interbrand, which calls itself the world's leading branding consultancy, and it's made easier by the way the company describes its mission.

"Interbrand is dedicated to identifying, building and expressing the right idea for your brand. An idea that inspires. An idea that endures," it says. "Brands... are central to free markets and democratic societies."

Those are big claims for what is, in effect, not much more than the reputation of a product or company - and not everyone would agree.

Economists, for instance, don't really like brands and call them "imperfections" because they get in the way of a perfectly competitive market.

Ms Rita Clifton, however, believes brands are very important, but then she is the head of Interbrand, which is owned by New York-based marketing services group Omnicom, and she has a much more pragmatic explanation for their status.

Brands are valuable in competitive markets things go wrong, Ms Clifton says, adding that all you can hope for is that, having a strong brand, will mean that less of those things will happen to you.

Mr Matt Barrett, the chief executive of Barclays, is probably more aware than most of exactly what Ms Clifton means after his recent announcement that he didn't use credit cards to borrow money.

Under Ms Clifton's formulation, Barclays' future success depends on how its brand credibility copes with such public humiliation.

It can be done. Few mineral water drinkers now recall the scare over benzene poisoning that hurt Perrier in 1990. The company and the brand recovered,although it lost a lot of market share.

To some, however, the term "branding consultancy" summons up images of old wine being poured into gleaming new bottles, tarting up firms with a new logo and name, often at great expense.

There have been some farcical recent examples, the worst being the UK Post Office, which was rebranded as Consignia.

"The new name describes the full scope of what the Post Office does in a way that the words 'post' and 'office' cannot," Consignia's chief executive said at the time.

Two years later, the Consignia name was consigned to the dustbin in favour of Royal Mail. Marketing Week magazine later called Consignia "a byword for corporate hubris".

Earlier this year, Interbrand was said to have earned £2 million (€2.87 billion) rebranding Electricité de France as EDF Energy.

In cases such as these, isn't branding merely a diversion?

"I think that saying brands are just the logo and the name is just like saying people are the sum of their face and their make-up and their clothes," says Ms Clifton, who argues that "visual branding" is worthless unless it symbolises substance underneath.

That may explain why Interbrand has such chic offices in central London, apparently modelled on a nuclear bunker's first-aid room.

The reason why people find name changes such as Consignia's so risible, says Ms Clifton, is because it's the most visible part of the business.

"I want to try to disentangle the stuff that's said about renaming or rebranding exercises. That can be fun to chuck stones at from time to time.

"My concern is that it can pollute a very important underlying issue, which is that the brand is a key wealth generator in any organisation - it is the most important single asset, it is the thing that generates sustainable value."

According to Ms Clifton and the fundamentalist wings of the industry, brands make up the most valuable part of modern business. That's another big claim.

Interbrand has, for many years, pushed the idea of brand valuation. From this, it claims that "brands are assets with significant quantifiable economic value".

The consultancy publishes an annual list of the world's most valuable brands, extrapolated from the net present value of the earnings that a brand is expected to generate. This year's rankings gave top spot to Coca-Cola, valued at some $70 billion (€59.6 billion).

What's questionable about rankings such as these is that the Coca-Cola company has a stock market value of $112 billion. Since a product such as Coca-Cola exists on little other than its brand and marketing, the $42 billion gap between Interbrand's valuation and market capitalisation suggests something doesn't add up.

For all its failings, the beauty of a share price is that it compresses the expectations of a company, both for now and in the future, into one figure - if you believe in efficient markets.

So either the market has got it wrong, and firms such as Coca-Cola are severely overvalued, or "brand valuations" are off beam.

Fortunately, Ms Clifton's defence of brands is more sophisticated.

"Frankly, brands have got a combination of tangible and intangible assets, rational and emotional. You've got to have a combination of both.

"No one marches anyone into shops and forces them to buy brands. Brands tend to be successful because people want them and that's something that's overlooked.

"People talk about brands being too powerful and I think that's ludicrous."

It might seem a contradiction to go from the idea that brands are the most important asset to saying they aren't all that powerful.

"Brands get powerful if they deserve it," Ms Clifton says. "If they're producing everything people want and projecting the right image in every way, not just in terms of their staff but by being decent and honest - if they're living up to their promises - they deserve to be powerful.

"We should also remember that the minute they [brands\] start being complacent or arrogant, and producing poor products, people can work them out almost immediately. They are the ultimate accountable institution, a damned sight more so than most governments."

Companies then, in Ms Clifton's view, live and die around their brands - which is why branding means more than just logos and clever names.

"I come back to the question: what's your most valuable asset? People talk about reputation as your most valuable asset, but reputation's an outcome.

"Actually, the organising framework that generates your particular reputation is your brand, and how you develop products and services, what style of service, what supporting services you have, how you answer the phone, what your corporate behaviour is."

So Interbrand advises its clients how to answer the phone?

"Absolutely. If you think about a service business, you want to answer the phone in a way that isn't just generically polite but is also delivering to your brand's customers. You want to try to ensure the whole service chain is delivering a strong and differentiated brand.

"The logo and the name and the advertising are just the bits that appear on the surface. They need to symbolise everything that's going on under the surface."

Ms Clifton's own brand was born in Buckinghamshire - "I was the daughter of a shopkeeper, fairly classic grammar school girl" - before going to Cambridge and ending up in the world of advertising.

"It all seemed, wow, a glamorous business, although it was a great irony. My first accounts were Steradent and Harpic.

"I think that was bloody good for me. I was thinking, here I am, in London, working for an advertising agency, it's got smart offices, all these glamorous people and, by the way, you're working on loo cleaner and denture cleaner."

Eventually she joined Saatchi & Saatchi during the firm's heyday in the 1980s.

Ms Clifton's time at the agency saw her work on major accounts such as British Airways (BA) and develop an interest in marketing strategy. Her work with BA led her into contact with Interbrand.

"Interbrand had pioneered brand valuation and what that does is put a hard valuation on what might otherwise be seen as soft and fuzzy.

"If you look at the total value of FTSE companies, something like 70 per cent of the market capitalisation of those companies is down to intangible assets. If you calculate further, about a third of their value can be accounted for by their brand.

"All these add up to enormous influence, notonly on business but also on people's views about themselves, and it leads to national culture."

This is obviously about more than just labels on baked bean tins. Ms Clifton thinks that what this country really needs is bigger and better brands.

"Brands are very important assets, not only to organisations but also, frankly, to the wealth and sustainability of the UK.

"We are facing economic stagnation at the moment, to say the least. There needs to be some kind of energy release and where's it going to come from? What's going to be the long-term sustainable delivery of businesses? You've got to rally around some sort of organising idea.

"I do feel very, very strongly in the brand thing, because I think that's the thing that generates long-term wealth. You can show that they are real entities and critically important to the economy. It's what gets me up in the morning." - (Guardian Service)