Google pips Apple in Brand Finance survey

Google has replaced Apple as the world’s most valuable brand, with a brand value of $ 109.5 billion, according to Brand Finance’s Global 500, the annual ranking from the leading valuation and strategy consultancy. 

The Global 500 ranks brands by monetary value and also calculates the most ‘powerful’ brands, as defined by the companies whose enterprise value is most positively impacted by the strength of their brand. Lego has replaced Disney as the most powerful brand in the world. 

In order to determine a brand’s value, Brand Finance first evaluates factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation to determine the ‘strength’ or ‘power’ of a brand. Brand power determines the proportion of overall business revenue that is contributed by a brand.

Brand Value

Google’s brand value rose during 2016 by 24% (from $ 88.2 billion) whilst Apple’s declined from $ 145.9 billion to $ 107.1 billion. Google last occupied the position of the world’s most valuable brand in 2011. The company remains largely unchallenged in its core search business, which is the mainstay of its advertising income. Advertising revenues were up 20% in 2016 as budgets are increasingly directed online and Google finds more lucrative revenue streams from digital consumers.

David Haigh, CEO of Brand Finance, said: “Apple has struggled to maintain its technological advantage. New iterations of the iPhone have delivered diminishing returns and there are signs that the company has reached a saturation point for its brand. The Chinese market, where Apple has enjoyed a dominant market share, is becoming far more competitive with local players entering the market in a meaningful way. Samsung has also been successful in taking market share and financial analysts are projecting declining revenues and margins.”

Brand Power

Lego (196) has regained its status as the world’s most powerful brand, with a brand strength score of 92.7. Much of it success owes to its media licensing deals and partnerships which have driven growth and introduced the likes of Lego Star Wars, Lego Harry Potter and Lego Batman. The Lego Batman Movie will premiere in February with further movies planned for the franchise. This will contribute significantly to Lego’s already significant licensing income but, as importantly, the exposure – to both children and adults - will reinforce Lego’s brand strength for years to come.

Google (1), Nike (28), Ferrari (258) and Visa (57) complete the rest of the top 5 most powerful brands in the world, with the latter seeing an 8 percentage point gain in brand strength – the most of any company in the top 10.

David Haigh adds: “A powerful brand can protect a company’s value during turbulent market conditions or challenging times for a business. The share price resilience of Samsung and Wells Fargo, after a difficult year, is testimony to how a brand can help a company ride out a storm. This is why a brand is such an important intangible asset and should be valued as such. Particularly during M&A scenarios, the fact that brand values are not factored into company accounts can mitigate against fair value being paid. Sellers ought to recognise the full worth of their brand, whilst buyers ought to factor in how far the asset of a brand can be stretched and monetised.”

Sector Insights Financial Services

Financial services companies comprise 20% of the Global 500 and, this year, China has been the big winner. Growth in brand value in China can broadly be attributed to the growth of the Chinese middle class and its maturing consumer economy. 

The brand value of Wells Fargo (13) fell 6% after a turbulent year for the brand and was replaced as the most valuable financial brand in the world by ICBC (10). However, it only fell 3 places on the overall ranking of most valuable brands, remaining the US’s most valuable banking brand, due to its deep roots across the country and its market share.  

Payment service providers Visa (57) and Mastercard’s (110) brand value grew by 81% and 58% respectively in 2016, as their core markets continued to move towards a cashless society and become increasingly reliant on the two companies’ services. 

Entertainment

Walt Disney (24) fell from the position of the world’s most powerful brand to number 6 in the power rankings. This may be because its 2016 Star Wars release was a spin-off and less successful than 2015’s reboot of the main franchise, one of the highest grossing films of all time. Furthermore, Disney’s biggest films of 2016 are all associated with sub-brands rather than Disney itself – Star Wars: Rogue One (Lucasfilm), Finding Dory (Pixar), Captain America Civil War (Marvel). 

Disney remains a hugely powerful brand and will be closely watched during 2017 when the eighth instalment of Star Wars is released and could propel the brand up the rankings again.  

Telecoms 

Of the 40 telecoms brands in the Global 500, AT&T (4) overtook Verizon (7) as the most valuable brand. 

Its geographical and acquisitive growth in South America and Mexico has been rewarded with continued growth in brand value and an increase in market share in the respective regions. 

Spectrum (83) is the highest new entrant of the Global 500. The brand created by Charter Communications which describes itself as the fastest growing TV, Internet and voice provider, counts the acquisition with Time Warner Cable and Bright House Networks under its name.

Non-alcoholic drinks

The behemoths of the non-alcoholic drinks industry, Coca-Cola (27) and Pepsi (67) have fallen by 13 and 12 places respectively as they continue to struggle against the trend towards healthier alternatives and greater scrutiny around marketing sugary drinks to children. Sprite (388) was the only of brand in this category to grow its value over the past year (from $ 3.8 billion to $ 4.4 billion).

Brands offering energy drinks, appear to be protected as Red Bull (227) and Gatorade (372) continue to increase their brand strength rating (by 1 and 3 index points respectively) with their marketing efforts continuing to focus on extreme sports and performance athletes.