Brands embody a promise of the values and benefits provided by the product or service of an organization. With an aim to show how much a brand contributes to the absolute valuation of the parent company, the leading evidence-based consulting company Kantar BrandZ made a list of the top global brands of 2021 for its latest report.
How are these brands valued?
We know that brands are seen as intangible assets, but to know the worth of a brand to its company, brand valuation is done. It quantifies the value of the brand and allows the marketers and investors to compare the brands. And also make quicker and more informed decisions about their business strategies.
Kantar BrandZ has a database of 4 million consumers about their attitude of 18,500 brands across 51 markets. It uses a valuation tool using two components-the Financial value (attributed to the brand) and the Brand Contribution to calculate how much a brand alone contributes to the corporate value.
Step 1 calculating the Financial Value– At first the Earnings of the company is found from the Bloomberg/S&P report and then the value of the intangible asset (goodwill, patents, trademark, brand) is derived using the intangible ratio. Then, the attribution rate (from the annual reports of the company) is applied with the value of the intangible asset to find the Branded Intangible Asset. After this, Brand Multiplier (which you can source from S&P/ Capital IQ) is multiplied with Branded Equity Multiplier to find the brand’s true financial value.
Step 2 calculating the Brand Contribution– Kantar BrandZ dived into its unique consumer survey on 170,000 consumers to understand their attitude about brands and then used its brand equity model to find out the brand contribution using the current demand and price premium for the brand’s product or service.
Finally, the brand value is calculated using the following formula-
BRAND VALUE= FINANCIAL VALUE* BRAND CONTRIBUTION
Here the brand value represents the dollar amount contributed by the brand to its parent company.
The top 100 brands in the world
This year, the total value of Kantar BrandZ™ top 100 brands is more than USD 7 trillion, which is worth more than the combined GDPs of France and Germany.
With a total brand value of $684 billion, Amazon tops the list for 3 consecutive years. The brand value of Amazon increased by 64% mainly due to increased customer satisfaction with the speed and convenience of its services. There is no doubt that Amazon has become a dominant force in the retail world.
Second in ranking comes Apple, which crossed half a trillion dollars in brand value for the first time. Apple continues to leverage on the premium price charged among a brand conscious customer segment for its different products.
The internet giant Google became a strong performer and regained its edge by securing the third position with a growth of 42% due to the rebounding ad industry.
Other than this 3, brands such as Microsoft, Tencent, Facebook, Alibaba, Visa, McDonald’s and MasterCard have also made it to the top 10 list.
On the other hand, Tesla became the ‘Top Riser’ brand, with a growth of 275% in 2021. The growth was fueled by the consumer and investor interest and a profitable run in China. Social media apps Instagram and Tiktok also made it to the list of top 20 risers. The algorithm of Tiktok, which allows the users to explore new sorts of videos, was credited for the increased popularity of the app. The app has become so popular that some people might buy Tiktok likes in order to increase their chances of going viral on the app’s algorithm, so that they can potentially make the most of the apps popularity.
Top brands emerging stronger than ever before
Even though the aftermath of the pandemic is still prevalent, 2021 is seen as a year of recovery for the giant brands. The total value of the top 100 global brands grew by 41% in 2021. The CEOs learned the hard lessons of the COVID-19 pandemic and used it to steer forward in a new manner. In addition, brands that scored high on ‘Meaningfully different’ among consumers, such as Amazon, have gained impressive increase in brand value.
From the second half of 2020, much of the economic recovery has been driven by Chinese consumers. Demand from the Chinese has improved the performance of brands such as L’Oréal Paris and Tesla. It was also observed that strong brands were more resilient in the face of crisis and recovered faster, just 15 weeks after the crash of COVID-19 in March 2020.
Acceleration driven by technology
After the onset of the pandemic, technology driven brands (such as Facebook and tech-enabled retailers like Amazon, Pinduoduo etc.) are accounting for more than 50% of the value of the top 100 brands in 2021. Even Customer experience saw a revolutionary change with the increase in use of virtual showrooms by telecom brands, by Tech brands such as HP and by other retailer-based brands such as Dune, Tommy Hilfiger etc. Tech giants such as Microsoft, Nvidia benefitted from the increase in demand of cloud-computing, chips and servers.
How are the newcomers doing?
Thirteen new brands joined the list of top 100 global brands in 2021. The top newcomer was NVIDIA, ranking 12th in the global list. Out of the 13 brands, 8 belonged to the Business Solutions and Technology Provider brands (for example: Qualcomm, AMD, Tata Consultancy services etc.). On another note, Snapchat and Spotify also entered the list with the increase in chatting and streaming during the quarantine.
Some Category trends of the brands
Apparel-A shift towards work-from-home and new normal has led to more use of outfits which are comfortable to wear. An increase in demand of wellness-centered, athleisure brands like Nike (up 68%), Puma (up 69%) and Lululemon (up 85%) was also observed in 2021. This year also saw a decrease in the sales of formal apparel, although the category brand value rose by $180 billion.
Car– The electrical, high tech and premium car brands are driving the enthusiasm in this industry. On a different note, the top automobile brands are focusing on sustainability. Brands like BMW, Volkswagen and Toyota made commitment to manufacture more electronic cars.
Retail– Retail is the biggest brand category in the world, with over a value of trillion dollars. Both online e-commerce giants like Amazon, Alibaba and ‘brick and mortar’ brands such as Walmart, Costco, Lowe’s saw improved performance. The use of online retail services increased immensely due to the pandemic, and the foot-traffic to retail stores rose with the opening of the stores.
Personal care– Increased desire for health, protection and wellness helped the top personal care brands to thrive during this pandemic. During the initial stages of the pandemic, people were more focused on self-grooming products. This helped brands such as L’Oréal Paris, Estée Lauder to launch different variants of personal care beauty products. Even Colgate launched new toothpastes to differentiate and cater to different segments.
Fast food– With a brand value of more than USD 300 billion, the category shift towards e-commerce and online ordering services has pushed the top fast-food brands such as Domino’s to be digital logistics expert along with their basic business. It is also the year when fast food giants like McDonald’s dived deep into digital ordering apps to serve a larger customer base during the social-distancing time.
Media & Entertainment– The entertainment and media category saw an extremely successful year (with $1.28 trillion brand value), all thanks to the pandemic restrictions. People streamed, gamed and reconnected on social media like never before. Netflix, Amazon Prime, Hulu, Disney+ are still flourishing, although consumers are becoming more cautious about the cost of subscriptions.
Banks– Banks throughout the world are faced with the new phase of digital banking. Online banking, digital payment platforms and credit cards services helped banks such as HSBC to maintain their performance. Even Google Pay and Apple Wallet saw an upward surge in their services amongst the youth.
Is it becoming an elite club?
It is becoming harder than ever to spot a place in the top 100 most valued brands in the world. The threshold for this year’s entry was $18.9 billion, which is an increase of 44% from that of 2020. This shows it is becoming important for brands to make a more different and meaningful impression in the minds of the consumers so that the products or services of the brand have a greater demand and can be priced more than its competitors in the future.
What do the clients have to say?
The C-suite executives of some of the top global brands were also interviewed for this report to gain insights on how they identified opportunities and implemented new approaches during this challenging time.
Lynne Biggar, Executive Vice President and Chief Marketing Officer of VISA informed that post pandemic, they were focusing to enable digital commerce for both buyers and sellers. For this, they started a campaign to promote small local business and they also educated the masses of Latin America. They even used the Olympic Team Visa athletes to promote the message to people.
In the similar manner, Myralda Derks, Chief Customer and Business Intelligence Officer of L’Oréal also expressed how the digital transformation has urged the brands to stay highly active online, through both its e-commerce channels and communication. This need to stay active on e-commerce platforms is likely to increase. Therefore, businesses might also want to look for accounting solutions and perhaps for professional e-commerce accountants beforehand, given they want to stay ahead of their competitors.
Several other marketing officers also highlighted the crucial role that influencers will play in the exclusive branding of the products, to earn more customer trust and increase brand value, in the days to come.
By Anika Tahsin Lisa
