The brand label started out in life as a little maker's label on clothing that was particularly high quality and expensive - the label was just as prized as the clothing, and existed as a mark of quality. It would always be on the inside, and contain the tailor's name usually on it's own, but sometimes with a logo. Then it gradually got bigger and moved onto the outside of clothing particularly with the advent of major televised sports, which brought sports merchandise along with it. This evolved and eventually branded clothes had become the norm by the 1980s, at which point it pretty much experienced a boom in popularity.
In other words, it was a status symbol first, then advertising came along with sports, then it became a fashion symbol, and now it's a mix of those three things.
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