The 2018 Brand Finance report showcases top companies like Amazon, Google, and Apple, but brand value in Asia is making leaps and bounds.
Many things can define the value of brand. A better question is, who gets to define it?
Brand Finance is a pretty good option. The independent branded business valuation company headquartered in the UK assisted in building the internationally recognized standard for brand valuation: ISO 10668.
A brand can be valuable because of a number of things: customer loyalty and buy in, its longevity, domination of the market, the list goes on. While some of these measures are subjective, Brand Finance takes a very straightforward approach: it’s—almost—all about money.
“Without knowing the precise, financial value of an asset, how can you know if you are maximizing your returns?” questioned David Haigh, CEO of Brand Finance in the company’s Global 500 2018 report. “If you are intending to license a brand, how can you know you are getting a fair price? If you are intending to sell, how do you know the right time? How do you decide which brands to discontinue, whether to rebrand, and how to arrange your brand architecture? Brand Finance has conducted thousands of brand and branded business valuations to help answer these questions.”
In short, brand value can be whittled down to the premium that can be charged for licensing the brand name. For its annual report of the world’s most valuable brands, the company followed its seven-step process.
There was some jockeying in the world’s most valuable brands, and the inclusion of what Brand Finance deemed the “strongest brands” added another layer to our understanding. However, the fascinating insight comes from the brands that grew the most, and those that fell the farthest.
Amazon, From A to Z
When you’re standing still in today’s business world, you’re falling behind. No brand knows this better than Amazon.
Although they get enough press, we’d be hard-pressed (hah!) if we didn’t talk about the most valuable brand in the world. That’s right, Amazon skipped over Google and Apple in this year’s Brand Finance report.
The online retailer has expanded tremendously in the last decade, becoming a producer of successful electronics and a provider of cloud infrastructure. Brand Finance’s report shared that in just one year, Amazon’s brand value increased by 42 percent to $150.8 billion.
The company’s acquisition of Whole Foods last year let the public know it was expanding its footprint even further, and its establishment of brick and mortar bookstores and its own employee free supermarket let us know we’ll be seeing a lot of the brand off our devices.
But it’s Amazon’s most recent partnership that has people talking. The company has paired with Berkshire Hathaway and JP Morgan to take on the broken healthcare market. With Bezos at the helm, there’s no chance Amazon will remain stagnant.
“The strength and value of the Amazon brand gives it stakeholder permission to extend relentlessly into new sectors and geographies,” Haigh said in the report. “All evidence suggests that the amazing Amazon brand is going to continue growing indefinitely and exponentially.”
Valuable Vs. Strong
There’s surprisingly little crossover between what Brand Finance considers to be a valuable brand and a strong brand: Amazon doesn’t even make the list. Google, Facebook, and Microsoft cross over, but other organizations—outside of Brand Finance’s Top 10 valuable brands—make the cut.
Brand strength is part of the determining factor of valuable brands, according to Brand Finance’s measure. It’s calculated by taking into account marketing investment, stakeholder equity, and business performance; and ranked on a scale to 100.
Disney grabbed the number one spot with its purchase of 21st Century Fox at the end of 2017 and investment in streaming channels around the globe. The entertainment giant ranked at 92.3 on the Brand Strength Index. Other strong brands include Visa, Ferrari, Neutrogena, Lego, PWC, and Johnson’s.
Movers and Shakers
The most telling part of Brand Finance’s report is not who hangs out at the top. After all, we all know Amazon, Google, and Apple are big brands doing big things. The insight that will help us understand business trends for the next few years come from the movers and shakers—the brand moving up the value chain the fastest.
The valuation company included a small write up on the brands that have come the farthest over the last few years. The most important takeaway? Asian brands are growing, and growing fast.
Since 2008, China’s share of global brand value has increased from 3 percent to 15 percent, growing 888 percent to $911.5 billion in 2018.
“The growth of Chinese brands is once again the standout story in our annual study of the world’s most valuable brands,” Haigh said in the report.
“Since the 19th Party Congress in 2017, there has been a renewed emphasis on brand development by Chinese companies in all sectors. Interestingly, while China had been pursuing a dual strategy of building home-grown brands but also acquiring underperforming international brands, like Volvo and Pirelli, the emphasis is now firmly on home-grown brands.”
Baijiu Maker Wuliangye
With an eye-popping 161 percent increase since 2017, the “spirit industry champion” Wuliangye gained the most in value, rising 184 spots to hit 100 on the 500-deep list.
Baijiu—an expensive Chinese white spirit—has a solidified place in China’s networking and gift-giving culture, and is more often purchased as a luxury gift rather than for self consumption. Wuliangye is the second largest baijiu maker in China, and has seen its net profit growth increase, in part thanks to an increase in the price of its signature product, 52-degree, which was selling at $106 a bottle as of March 2017.
WiMAX Leaders UQ Communications
WiMAX—Worldwide Interoperability for Microwave Access—is a technology standard for long-range wireless networking, for both mobile and fixed connections. While WiMAX was once envisioned to be a leading form of internet communication as an alternative to cable and DSL, its adoption has been limited. However, UQ Communications is thriving in the marketplace.
With a goal to build a WiMAX network that makes mobile broadband access available everywhere, this Japanese company jumped 140 percent in brand value between 2017 and 2018. It’s only a decade old, but has some big names investing. Key stakeholders range from The Bank of Tokyo-Mitsubishi UFJ, LTD to the East Japan Railway Company. A big reason for the company’s upswing in the last year? Intel Capital invested $43 million in June of 2017.
Chinese Automaker Haval
The sub brand of Great Wall Motors, Chinese automaker Haval sells more SUVs in its home market than any other brand—upwards of 1 million in 2017. The brand is a first-time member of Brand Finance’s Global 500 list, coming in at 249 after increasing its brand value in the last year by 124 percent.
Success in its home market, one of the biggest in the world, is important. But Great Wall Motors and Haval have their sights set on global growth, expanding into South Africa and New Zealand. We’ll be interested to see if that expansion will be aimed at more Western markets anytime soon.
The Intrigue
“Brand Finance’s research revealed the compelling link between strong brands and stock market performance. It was found that investing in highly-branded companies would lead to a return almost double that of the average for the S&P 500 as a whole,” Haigh shared in the report.
There’s no question that the companies at the top of Brand Finance’s list are doing good work. And there’s no surprise that companies like Amazon, Apple, Google, and Microsoft are in that top 10. The intrigue comes, then, from the companies that are climbing the fastest. With the Asian market heating up, how will companies in North America keep a hold on their top spots? Time, and money, will tell.
Kristen: this is formatted like this for the web, please make this a sentence with commas in between each for the mag. Thanks!
