Dropping the 'Billiton' name is likely to increase the value of BHP's brand

Image: Screenshot from BHP’s new TV campaign.

BHP’s decision to drop the Billiton name from its branding is likely to have positive effect on the value of the world’s biggest miner.

Mark Crowe, managing director in Australia at Brand Finance, says brand value at BHP currently only represents 3% of overall enterprise value.

“This low brand value/enterprise value ratio is typical of brands in the mining sector,” Crowe told Business Insider.

In other sectors, it is higher. For example, FMCG brand values can account for 30% of enterprise value.

Brand Finance this year estimates that BHP’s brand value fell 28% to $5.148 billion over 12 months, dropping to eighth from seventh most valuable brand in Australia.

Telstra is the most valuable brand, valued at $14.3 billion.

Crowe says the BHP rebranding could help increase the brand value/enterprise value ratio of the miner.

“The change will bring strength and clarity to the brand through reversion to the iconic name BHP, especially in terms of positioning in the Australian market,” says Crowe.

“The transition to the new brand should be seamless given that the shortened name has continued to be used in practice anyway.

“The rebranding should assist with awareness and possibly perception through promoting the strong and favourable associations BHP enjoyed historically with building a bigger Australia.”

BHP, a 130-year-old Australian grown company started in Broken Hill, took on the additional name 16 years ago when it merged with South African miner Billiton.

The abbreviation of the name comes with a brand campaign, called Think Big, an echo of The Big Australian campaign of the 1980s which emphasised the Australian values of the company.

Here’s a clip from that old campaign:

Compare that to the new TV clips:

Geoff Healy, BHP’s chief external affairs officer, says Think Big is designed to demonstrate the important role BHP plays in the Australian economy and community.

“The advertisements will talk about the importance of our Australian heritage, our contribution and our commitment to communities where we operate. The campaign will focus on what people can and should expect of us,” he says.

“In launching Think Big, we will take the opportunity to change our logo and move to a brand that Australians have known us by for generations — BHP. This abbreviated simple expression of our organisation is used colloquially around the world.”

The simplification of the brand, which brings the company closer to its Australian roots, comes as US hedge fund Elliott Associates pushes the mining company to sell off assets and return capital to shareholders.

Elliott proposes that BHP replace its dual Australia-UK listing with a single UK company, with a primary listing in London and with Chess Depository Instruments quoted on the ASX.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.