Kantar Millward Brown recently released the 2018 BrandZ Top 100 Most Valuable Global Brand rankings with surprising news. 8 of the top 10 brands are technology or tech-related, with the top five being Google, Apple, Amazon, Microsoft and Tencent respectively. These are brands that use technology to understand consumer needs and then shape an ecosystem of services to fulfill them.
This is also the first year that growth was reported across every category and that non-U.S. brands outstripped U.S. brands, with 14 Chinese brands entering the lists.
The 2018 rankings show the list’s largest annual increase in value of nearly $750 billion (+21 %), for a total brand value of $4.4 trillion. Which begs the question, just how do you value a brand?
Wel, it turns out there are more opinions on that that needles on a porcupine, and the issue is just as prickly. In a way, everyone is searching for something to replace the line item Goodwill in an auditor’s valuation. In the old days Goodwill seems to have been a thumb-suck attempt to value everything that an auditor coudn’t put a definite number to, but that made a business attractive. If we accept that most businesses are brands these days (no matter how well- or poorly-defined) then brand value – the combination of functional and emotional impact of a business on customers – is a strong contender for this role.Coca-Cola’s brand has dominated at the top of Interbrand’s Biggest Global Brands list for over 15 years, which is as long as they’ve measured it. But there’s a discrepancy of between US$20bn and US$40bn between the values the world’s most authoritative sources place on that brand.
Interbrand weighs up 3 factors – financial performance of the branded products or services, the role the brand plays in purchase decisions, and the brand’s competitive strength. The first is the easiest to record and assess: standard balance sheet stuff. Impact on purchase decisions is trickier. Professor Kyu Lee at Whitman School of Management calls this the Willingness to Pay test:
“You give consumers two containers of chips of identical quality. One says Pringles, and the other is a no-name brand. And you see how much more consumers are willing to pay for the Pringles.”
Researchers nowadays have ways, through market share and brand profitability cross-referencing, to assess competitor strength. But what other intangibles should come into play? The brand’s ability to attract and retain the best talent would certainly impact on whether any value is sustainable in the longer term.
More work is needed as Africa build successful brands, ultimately for sale.
Chris Harrison leads The Brand Inside in Africa