What role will intangible assets play in 2024?

binoculars on top of rock mountain at beautiful sunset background.

As the first quarter of 2024 comes to a close, it’s worth pondering what might be coming down the pipeline as the business world gears up for a busy spin around the sun.

We’ve picked three of the most important trends that are likely to impact companies and show how an intangible assets lens can guide you through the commercial twists and turns.

The introduction of retail-level artificial intelligence took everyone by surprise last year, and the trend of widening access isn’t slowing down. The technology is quickly maturing as businesses think of clever ways to deploy AI across different offerings.

But regulations are also catching up. Most pertinent this year will be the legislative tweaks being discussed in the US, UK and the EU. Some early movements have already appeared, but law is always slower than business so, in the meantime, companies are pushing forward with their new AI toys.

That gap between official regulation and commercial utility could end up being a serious brand risk for companies using AI. For example, it might seem like a good idea to feed the AI your giant pools of data gathered over many years. After all, if the AI knows customers better than the customer knows themselves, it can smooth many of the bumps in a normal sales process.

The problem is that even the best AI still doesn’t sound…human. There’s an “uncanny valley” effect when engaging with AI. Sometimes the better an AI system gets, the worse that effect becomes. Coupled with the reality that AI bots might soon be talking to each other online, and then reloading that corrupted data back into their algorithms, the uncanny valley will only exacerbate this year.

This will have a huge impact on brands. When a company relies on AI to tell its story, people will find it easy to filter out that noise. Very quickly, people will gravitate to businesses that are speaking with a genuine human voice.

In other words, the rise of AI may be the most important equaliser in decades. Companies that create an authentic brand in a world full of non-human AI will have a powerful intangible asset.

  • ESG tightens the screws

After years of warning that serious climate change regulations are coming, many countries are beginning to write new laws to do just that. Businesses of all sizes are bracing for a world of greater scrutiny placed on their sustainability practices.

Some examples of looming regulations with sharp teeth coming into force in 2024 include the Carbon Border Adjustment Mechanism (CBAM) in Europe, the EU’s Corporate Sustainability Reporting Directive (CSRD), the SEC’s various climate disclosure rules, California’s new Climate Corporate Data Accountability Act (SB253), the Global Plastics Treaty in 2024 and others.

Will these regulations slow companies down? Of course, that’s what they were designed to do. After all, regulations are a form of tax. But that doesn’t mean these regulations must be a net negative. Indeed, they offer savvy businesses an exciting opportunity to create new intangible assets.

Since business relies on relationships, a clever company knows the importance of building strong networks with regulators to get on the good side of any evolving laws. Getting in early and ticking the boxes for approvals and certifications, for instance, could put you months – or maybe years – ahead of competitors. If 2024 is about erecting 12-foot fences, the correct strategy should be to build a 13-foot ladder, not walk away.

Think of the brand potential of adding hard-to-get ESG symbols onto your marketing material. As we’ve written previously, when governments funnel money into promoting causes, smart companies figure out how to leverage all that free marketing as an intangible asset.

  • Data privacy rules hurt marketers

Speaking of new regulations, gone are the days when marketers could grab all the customer data they wanted without consent. Updated privacy legislation over recent years means the Wild West of internet marketing is now dealing with plenty of new sheriffs in town.

More privacy updates are planned for 2024. The European Union will review its enforcement mechanisms of the GDPR, four US state laws will widen privacy restrictions and Google plans to radically improve its security by rolling out its Privacy Sandbox to Chrome users. Needless to say, marketers will find it much harder to access robust data in 2024.

Stronger privacy rules will have two consequences for the intangible asset of data.

First, if a company has been collecting data for years these new rules mean it must now check that this data is compliant – not just prospectively, but retrospectively as well. While regulators might ignore data collected earlier than a few years ago, they will almost certainly slap hefty fines on companies if they continue to use that same data in future marketing projects.

This places companies in a bit of a bind. Do they continue to use their older data, hoping they can clean it to rectify the most egregious privacy issues, and risk fines if their dataset isn’t up to scratch? Or do they write off years of valuable data? The third option may be to buy compliant datasets off the market, which would mean the data isn’t unique. Tough choice.

Second, the collection of data will become more expensive – potentially prohibitively so for SMEs. After all, companies will not only need to rethink how they collect data but there’s also a good chance that marketing teams will need to hire privacy experts or at least upskill staff. As a result, costs will flow downhill to the customer which will make everything more expensive.

On top of that, 2024 will see cybersecurity become a marketing risk as well. Privacy laws mean that what was once just an “annoying” theft of customer data could suddenly become a real financial risk due to potential fines. The laws give customers more ammunition for legal action against companies that don’t protect their data. Expect more litigation in 2024.

Using an intangible asset lens, the coming year looks full of potential. There will be some speedbumps, which is perfectly normal. But understanding the true value of your company should help position it to take advantage of the shifting sands.

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