The Decline Of Brand Spain

"A strong brand has become a defining feature of success in the current economic climate. Worldwide hyper competition for business, combined with an increasingly cluttered media environment, means that the clear message carried by a properly managed brand can provide the crucial leverage needed to thrive. The financial uplift provided to a product or corporation from a strong brand is well known, and companies invest heavily in protecting their brands. Nations can adopt similar techniques to capitalise on the economic growth that comes with proper positioning of a nation brand. All nations should working to actively realise this potential."

So says David Haigh, chief executive officer of Brand Finance, a global business which advises on the maximising of value through the effective management of brands and intangible assets. It is a company which produces different reports, and just one of them is its report into "nation brands". The 2013 report has just been published, and it is not one that will spread joy among those who promote the "Marca España" (brand Spain).

Great emphasis has long been placed on the "Marca España". A year ago, a whole new website was launched in its name. At the time, it wasn't available in English. It now is and it is quite an impressive exercise in promotion. But what does "Marca España" mean and entail? According to the website, it is a "state policy, whose efficacy will be proven in the long term". The objective is to "improve the image of our country" in seeking to boost exports, attract foreign investment, support internationalisation of companies and raise tourism. It is a grand objective, but will this "state policy" be proven in the long term?

In the short term, it is not being proven. Spain has, over the past year, lost 20% of brand value, says the report. It is lumped in with nations such as Morocco, Bosnia-Herzegovina and Albania which have lost similar values. It is still reckoned to be A+, a distinction shared with Turkey, Brazil and India, but it has slipped from thirteenth position to eighteenth in the international ranking, one position ahead of Turkey.

In order to arrive at this evaluation of countries, Brand Finance applies a framework showing internal and external factors for four key segments - investment, tourism, products and services, and people and skills. It is when you look at what these factors are that you begin to appreciate why brand Spain might have suffered the fall it has.

In some respects, Spain is doing quite well. Foreign tourism is most certainly holding up and has indeed been increasing, even if the tourism is uneven because of a dependence on summer tourism (and it certainly isn't only Mallorca which has such a dependence). The export of brands has been instrumental in helping to bring about what slow economic recovery there has been. Inward investment is beginning to increase, although this is not necessarily investment which can be described as productive investment; not yet anyway. Unemployment remains way too high and will stay way too high; it is unlikely to ever come down to the 8 or 9% level that it was before crisis.

It is in other areas, though, where brand Spain has problems. Take domestic investment, i.e. encouraging "local commerce to invest domestically as opposed to investing overseas". In the tourism sector, as is well enough known, leading hoteliers are investing overseas; greater growth prospects exist in foreign markets for Mallorca's big hotel chains. On domestic tourism, encouraging "citizens to explore domestic destinations rather than vacationing abroad" is not being realised in the likes of the Balearics; the domestic market slumped markedly this summer.

When it comes to people and skills, this is the segment where brand Spain probably faces its biggest single challenge. Encouraging "citizens to study and work locally, rather than going overseas, i.e. avoid the brain drain" is not happening. There is an exodus of talent, one caused by lack of opportunity and too often by the absence of systems based on merit; this is the malaise brought about by "amiguismo", to which I have referred before.

The report doesn't say anything specifically about Spain and it doesn't include factors such as corruption, dealt with by the Transparency International report last week, but as noted in the introduction, a "cluttered media environment" requires a clear message. If this clutter includes a load of negativity, then getting a clear message across isn't easy. Though not included by Brand Finance, this negative publicity surely cannot help to portray the "Marca España" in the best light. Other than this, though, perhaps the strongest message for Spain that comes from the report is that to do with people and skills. The country needs talent. It cannot afford to lose it.