IN THE SPOTLIGHT
The Brand Finance Global 500 Ranking
By Brand Finance
Amazon is the world’s most valuable brand, ahead of Apple and Google, according to the latest “Brand Finance Global 500” report. The e-commerce giant’s brand value increased by 42 percent year over year to a whopping $150.8 billion (USD).
Since the brand’s humble beginnings as an online bookstore, Amazon has become the world’s largest internet business in terms of both market capitalization and revenue. It is no longer just an online retailer, but also a provider of cloud infrastructure and a producer of electronics. Now, it is moving beyond the digital space as last year’s takeover of Whole Foods for $13.7 billion gave the brand a foothold in the realm of brick-and-mortar retailers. Amazon is also present in shipping, music and video streaming, alongside industry speculation on an impending bank acquisition in 2018.
“Jeff Bezos once said that ‘brands are more important online than they are in the physical world,’” explains David Haigh, CEO of Brand Finance. “He has proven himself right by choosing the name Amazon, known as the largest, most powerful river in the world, as 23 years later the Amazon brand carries all before it as an unstoppable force. The strength and value of the Amazon brand gives it stakeholder permission to extend relentlessly into new sectors and geographies. All evidence suggests that the amazing Amazon brand is going to continue growing indefinitely and exponentially.”
Although Apple defended its place in the ranking at second, with its brand value rebounding to $146.3 billion after the 27-percent decline last year, its future looks bleak. Apple has failed to diversify and has grown overly dependent on sales of its flagship iPhones, which are responsible for two-thirds of its revenue. Poor Q4 2017 sales of the iPhone X at only 29 million handsets fell short of expectations, and the model is predicted to be discontinued later this year. With the advent of emerging world brands like Huawei, Apple’s increasing focus on what are effectively luxury products may cost the brand a fair share of the global mass market, limiting the potential for brand value growth.
Google has dropped from first to third in the ranking, recording a relatively slow brand value growth of 10 percent to $120.9 billion. Google’s online ads generated more traffic than expected as aggregated paid clicks rose by 47 percent in Q3 2017, boosting revenues. However, to compete with the world’s most valuable brands, presenting a solid performance is not always enough. Google is a champion in internet search, cloud and mobile OS technology, but similarly to Apple, its focus on particular sectors is holding it back from unleashing the full potential of its brand. Google’s investments in self-driving cars and handsets still lack the scale and audacity demonstrated by Amazon’s new ventures. Nevertheless, the acquisition of 2,000 HTC smartphone staffers for $1.1 billion indicates a shift to a more expansive approach.
Technology Brands Are Improving in the Ranks
For the first time since the inception of the “Brand Finance Global 500” study, technology brands claim all top five places in the league table. Samsung (in fourth place at $92.3 billion) and Facebook (in fifth place at $89.7 billion) both recorded impressive year-over-year brand value growths of 39 percent and 45 percent, respectively, overtaking AT&T (in sixth at $82.4 billion). Change at the top is reflective of a wider global trend as the technology sector accounts for more than twice as much brand value as telecoms.
The dominance of digital is set to grow even more in the coming years as other brands make their way up the global 500 ranking. Google-owned YouTube more than doubled its brand value to $25.9 billion, jumping 70 places to 42nd. Chinese technology brands, taking advantage of captive market conditions, can also boast high brand value growth, with Alibaba (12th), Tencent (21st), WeChat (49th), Baidu (57th), JD (65th), and NetEase (121st) increasing by an average of 67 percent year over year.
However, the growth of Chinese brands extends beyond the technology sector as the country continues to narrow the value gap with the United States at an impressive rate. 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. It comes as no surprise that State Grid, a state-owned utility company from China, is the largest new entrant to the global 500 ranking this year, claiming 19th place with a brand value of $40.9 billion. In addition, the fastest-growing brand of 2018 also comes from China. Spirit industry champion Wuliangye grew a striking 161 percent to $14.6 billion year over year, rising 184 ranks to 100th.
“The growth of Chinese brands is once again the standout story in our annual study of the world’s most valuable brands,” Haigh says. “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. Brands like Huawei, Ping An, State Grid, Evergrande, ICBC, Yili, Haval, Wuliangye and many others are now being recognized worldwide as quality brands. We expect to see this develop rapidly in more and more sectors.”
World’s Strongest Brand, Disney, Will Keep Spreading Magic
With a brand strength index (BSI) score of 92.3, up from 91.3 last year, Disney is the world’s strongest brand and one of the most interesting to watch in the coming years. In light of its recent purchase of a majority stake in 21st Century Fox, Disney can further develop its brand to deliver for more consumers worldwide. The addition of companies like Star India (which reaches hundreds of millions of viewers on the subcontinent), Sky (with presence across the U.K., Ireland, Germany, Austria and Italy), as well as a 60 percent stake in Hulu (arguably one of Netflix’s biggest competitors) mean that Disney can now leverage its greater international exposure to establish its brand as much more than a children’s favorite.
To view the full list of the world’s most valuable brands, click here.
About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in more than 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximize brand and business value.