Every year, Brand Finance values over 5,000 of the world’s biggest and strongest brands. The results of these studies are used to create the annual report of the top 500 of the most valuable and strongest brands.
Brand value in this context refers to the present value of earnings specifically linked to brand reputation. Organisations own and control such earnings by owning trademark rights. Brand Finance measures this using the “Royalty Relief” methodology, one of the most realistic approaches to brand valuation. Brand Finance also measures brand strength or BSI by taking marketing investment, stakeholder equity and business performance into consideration.
The trends in this year’s report showed that brands which managed to innovate, diversify and keep customer’s needs in check in the face of the adversities brought forth by the pandemic fared well.
Top Three Valued Brands Worldwide
Apple has overhauled Amazon and Google, regaining their title as the world’s most valuable brand for the first time since 2016. Apple’s diversification strategy has been the tool to their success, helping them achieve an impressive 87% increase in brand value to US$263.4 billion. Under Tim Cook’s leadership, Apple has branched out its growth strategies above and beyond the iPhone. This has shown in their sales distribution, with half of their sales coming from iPhones in 2020 compared to the two-thirds in 2015. The diversification policies have led to Apple expanding into digital and subscription services such as the App Store, iCloud, Apple Podcasts, Apple Music, Apple TV and Apple Arcade.
Although Amazon stumbled from their position at the top to second, they still managed to record a 15% healthy brand value growth to US$254.2 billion. Amazon was one of the few brands to benefit tremendously from the pandemic as consumers transitioned from visiting brick and mortar stores to shopping online.
Google came in at third place, with only a marginal 1% increase in brand value amounting to US$191.2 billion. Held back due by their inability to keep up with diversification, Google recorded its first ever revenue decline as a result of the pandemic. Additionally, the tightening of marketing budgets caused a shrink in revenue as a majority of the brand’s revenue comes from advertising.
Technology and Innovation Propelled Brand Value
With most of the year spent indoors, consumers were more reliant than ever on digital communication, retail and entertainment. Brands which were successful in leveraging technological innovation thus greatly enhanced its brand value.
As the world prepared to stay in a lot more, businesses which helped with this transition cashed in. With the boost in demand for home deliveries and safer commute, Uber experienced a 34% jump in brand value to US$20.5 billion. This helped Uber catapult into the top 100 at 82nd.On a similar note, software publishers such as Microsoft (which went up by 20% to US$140.4 billion) and Adobe (up by 25% to US$11.7 billion) experienced a surge in brand value as businesses transitioned to remote work. Traditional brick and mortar stores which successfully converted to virtual retail fared well during lockdown periods. Walmart went up by 20% to US$93.2 billion, while Target went up by 30% to US$20.7 billion due to their ability to carry on with business as usual online.
A big part of this transition was all about keeping potential consumers entertained and this was exemplified with the surge in brand value for new media. Netflix experienced a spike in usage with a brand value increase in 9% amounting to US$24.9 billion. Spotify entered the rankings for the first time, enjoying a 39% boost in their brand value amounting to US$5.6 billion. This was significantly aided by Spotify’s expansion to new markets. Electronic Arts was also a new entrant to the rankings with the help of their 14% boost in brand value to US$4.4 billion.
Aviation and Hospitality check out
COVID-19 had drastic impacts on airline brands and the hospitality sector. Aerospace and airline brands take up six out of the ten spots of the list of fastest falling brands in this year’s report, with Boeing (down by 40%) and American airlines (down by 40%) plummeting the most. The effects of a near complete halt on tourism and corporate travel has also impacted the hotel industry. The world’s most valuable hotel brand, Hilton, experienced a 30% drop in brand value to US$7.6 billion.
The world’s largest fast food and cafe chains have also taken the full toll of COVID-19 and its resulting lockdown initiatives. Global leaders in this sector have all recorded losses in brand value, from McDonald’s (down by 10%) to Starbucks (tumbling by 6%). However, brands which had accommodated to operating on takeaway prior to the pandemic managed to adapt to the novel changes relatively better. Domino’s Pizza which operates purely on takeaway and collection in various parts of the world recorded a healthy 7% increase in brand value.
Brands Ranking at Top Three for Strength
In addition to brand value, Brand Finance also determines the relative strength of brands with the use of a balanced scorecard of metrics which evaluate marketing investment, stakeholder equity, and business performance.
Such markers showed that WeChat overtook Ferrari this year, earning the title of the world’s strongest brand with a Brand Strength Index of 95.4 out of 100. WeChat held a high reputation among Chinese consumers due to its reliable and multifaceted nature, helping it become an essential to many users’ daily lives. WeChat successfully broadened and branched out, offering banking, taxi, health and online shopping services, all of which helped it showcase the importance of technological advancement in the face of adversity to competitors.
Ferrari came in second, boasting a BSI score of 93.9 out of 100. Ferrari’s decision to halt production facilities before reopening with a strong focus on worker safety helped reinforce its reputation as a responsible firm.
Sber claimed third place, with a 92.0 BSI score. Its score was highly enhanced by customer loyalty and rebranding. Instead of staying complacent with its title as the largest bank in Russia, Sber has constantly innovated and modernized itself while keeping the customer’s best interest in mind. Sber has rebranded itself in order to consolidate its entire network of services including banking, health, and logistics among other services.
Sector Reputation Highlights
There has been an overall increase in reputation scores in 2021 across sectors which were covered both this year and last, partly reversing a small dip from 2020. Nevertheless, the impact of COVID-19 cannot be entirely dismissed. Consumers have increasingly tested brands in numerous ways in such challenging times, and the best brands have stayed resilient by keeping kitchens and wardrobes stocked, connections running and essential services accessible.
Major cosmetics and food brands scored highest in terms of reputation, with various top performers being over a century old. Global giants such as Johnson’s, Dove and Danone showcased the importance of refreshing and nurturing brand reputation overtime with their highly favorable reputation amongst consumers.
At a time when consumers were more reliant on technology than ever before, the overall ranking of the tech sector fell slightly. While Youtube, Google and Apple along with other big brands enjoyed their strong reputation, they still polarized in some markets internationally. Similarly, Facebook and other tech brands with very mixed reputations did not show any positive signs of notable improvement.
Banks and telecoms brands continue to rank at the bottom for many markets due to the lack of trust consumers place on them. Last year brought on negligible improvement in reputation even though banks did manage to catch up with telecoms.
The Leader of Guardianship
According to Brand Finance’s Brand Guardianship index, this year’s world’s top CEO is Mastercard’s Ajay Banga. Ever since he took charge of Mastercard, Banga welcomed high amounts of technological innovation, which ensured that the brand remained relevant through the various rapid changes transforming financial services in recent years. Banga also put his influence to good use by building strategic partnerships with financial institutions in order to support the fight against poverty.
Summarized by Tasfia Ahmed
