CAMBRIDGE, MA: Strong customer relationships are more highly valued than brands, according to an analysis of a decade of mergers and acquisitions.

Christof Binder, CEO of Swiss IP business Trademark Comparables, and Dominique M. Hanssens, Professor of Marketing at the UCLA Anderson School of Management, looked at data covering over 6,000 mergers and acquisitions worldwide between 2003 and 2013.

Writing in the Harvard Business Review, they reported that brand worth had almost halved as a proportion of enterprise valuation between 2003 and 2013, falling from 18% to 10%.

Over the same period, however, customer relationship values had doubled, climbing from 9% to 18%, with all other categories of intangibles remaining stable.

"Acquirers have decisively moved from investing into businesses with strong brands to businesses with strong customer relationships," said Binder and Hanssens.

They suggested that this trend was being "powerfully reinforced by digital technologies" which not only enable marketers to have more direct engagement with consumers at lower cost than traditional branding and media campaigns, but are also more effective.

And, coming from the other side, the easy availability of information means consumers are more likely to make purchase decisions based on facts rather than simply brand image.

"Customers still value strong brands, but what constitutes a strong brand is now more dependent on customers' direct experience with an offering, and with their relationship with the firm that produces it," they said.

And, while this suggested marketing resources might be better deployed away from brand building to reinforcing relationships, they cautioned against going too far down that road.

"Brand equity needs to stay strong to perform its overall integrative role," they said, adding that strong brand communications would still be important in attracting new customers.

They also hoped their analysis might lead to a "reality check on some of the gigantic brand values now published by leading brand valuation companies".

Data sourced from Harvard Business Review; additional content by Warc staff