The annual report on the world's most valuable global brands February 2015

32 Pages·2015·9.62 MB·English

Global
500
2015
The annual report on the world’s most valuable global brands
February 2015
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Foreword.
David Haigh, CEO, Brand Finance
“The boardroom can sometimes feel
like the tower of Babel, with CMOs and
CFOs speaking mutually unintelligible
languages, damaging the prospects for
what should be their shared goals.
Brand Finance bridges the gap between
marketing and finance.”
What is the purpose of a strong brand; to communicate the value of their work and boards
attract customers, to build loyalty, to motivate then underestimate the significance of their
staff? All true, but for a commercial brand at brands to the business.
least, the first answer must always be ‘to
make money’. Sceptical finance teams, unconvinced by what
they perceive as marketing mumbo jumbo may
Huge investments are made in the design, fail to agree necessary investments. What
launch and ongoing promotion of brands. Given marketing spend there is can end up poorly
their potential financial value, this makes sense. directed as marketers are left to operate with
Unfortunately most organisations fail to go insufficient financial guidance or accountability.
beyond that, missing huge opportunities to The end result can be a slow but steady
effectively make use of what are often their most downward spiral of poor communication, wasted
important assets. resources and a negative impact on the bottom
line.
Monitoring of brand performance should be
the next step, but is often sporadic. Where it Brand Finance bridges the gap between the
does take place it frequently lacks financial marketing and financial worlds. Our teams have
rigour and is heavily reliant on qualitative experience across a wide range of disciplines
measures poorly understood by non-marketers. from market research and visual identity to tax
As a result, marketing teams struggle to
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and accounting. We understand the importance of Omaha certainly does extremely well from
of design, advertising and marketing, but we most of his investments, but could he be doing
also believe that the ultimate and overriding better?
purpose of brands is to make money.
It is all well and good to want a strong brand that
That is why we connect brands to the bottom customers connect with, but as with any asset,
line. By valuing brands we provide a mutually without knowing the precise, financial value, how
intelligible language for marketers and finance can you know if you are maximising your
teams. Marketers then have the ability to returns? If you are intending to license a brand,
communicate the significance of what they do how can you know you are getting a fair price? If
and boards can use the information to chart a you are intending to sell, how do you know what
course that maximizes profits. the right time is?
Of course not all non-marketers need to be Brand Finance has conducted hundreds of brand
convinced that brands are valuable. Warren and branded-business valuations to help answer
Buffet, renowned for his financial nous and stock these questions. The following report is a first step
picking ability, is famously keen on investing in to understanding more about brands, how to
some of the world’s biggest and best-loved value them and how to use that information to
brands such as Heinz and Coca-Cola. The sage benefit the business. The team and I look forward
to continuing the conversation with you.
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Contents
About Brand Finance 3
Methodology 4
Sector Analysis 6
Understand Your Brand’s Value 18
How We Can Help 20
Contact Details 21
Appendix, Full Table 22
Bridging the gap between marketing and finance
4. Brand Finance Global 500 February 2015
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About Brand Finance
Brand Finance is the world’s leading regulatory bodies around the world. We are one
independent brand valuation and strategy of the few companies certified to provide brand
consultancy. Brand Finance was set up in 1996 valuations that are fully compliant with ISO
with the aim of ‘bridging the gap between 10668, the global standard on monetary brand
marketing and finance’. For almost 20 years we valuations.
have helped companies to connect their brands
to the bottom line, building robust business cases Transparency
for brand decisions, strategies and investments. There are no black boxes. Our approach is to
In doing so, we have helped finance people to work openly, collaboratively and flexibly with
evaluate marketing programmes and marketing clients and we will always reveal the details of
people to present their case in the Board Room. our modelling and analysis. This means our
clients always understand what lies behind ‘the
Independence number’.
Brand Finance is impartial and
independent. We assess and help to manage Expertise
brands, but we do not create or own them. We We possess a unique combination of skills
are therefore able to give objective, unbiased and experience. We employ functional experts
advice because we have no vested interest in with marketing, research and financial
particular outcomes of a project and our backgrounds, as well as ex-client-side senior
recommendations are entirely independent. We management who are used to ‘making things
are agency agnostic and work collaboratively happen’. This gives us the mindset to think
with many other agencies and consultancies. beyond the analysis and to consider the likely
impact on day-to-day operations. We like to think
Technical credibility this differentiates us because our team has real
Brand Finance has high technical operational experience.
standards. Our work is frequently peer-
reviewed by the big four audit practices and our For more information, please visit our website:
work has been accepted by tax authorities and brandfinance.com
Brand Finance puts thousands of the world’s biggest brands to the test every year, evaluating which are
the most powerful and most valuable. The Global 500 covers the top 500 from all sectors and is just one
of many annual reports produced by Brand Finance. Visit www.brandfinance.com to discover more.
Global
500
2015
TFehber uaanrnyu 2a0l1 r5eport on the world’s most valuable global brands
Brand Finance Global 500 February 2015 5.
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Methodology
What do we mean by ‘brand’?
Definitions
+ Enterprise Value – the value of the
E.g. entire enterprise, made up of
‘Branded VW Group multiple branded businesses
Enterprise’
‘Branded
Business’
+ Branded Business Value – the
value of a single branded business
‘Brand’
E.g. operating under the subject brand
Bentley
+ Brand Value – the value of the
trade marks (and relating
Bentley
marketing IP and ‘goodwill’
Brand
attached to it) within the branded
business
Definition of ‘Brand’ Brand Strength
In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most
for all the expectations and opinions held by directly and easily influenced by those
customers, staff and other stakeholders about an responsible for marketing and brand
organisation and its products and services. management. In order to determine the strength
However when looking at brands as business of a brand we have developed the Brand
assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing
more technical definition is required. Brand investment, brand equity (the goodwill
Finance helped to craft the internationally accumulated with customers, staff and other
recognised standard on Brand Valuation, ISO stakeholders) and finally the impact of those on
10668. That defines a brand as “a marketing- business performance. Following this analysis,
related intangible asset including, but not limited each brand is assigned a BSI score out of 100,
to, names, terms, signs, symbols, logos and which is fed into the brand value calculation.
designs, or a combination of these, intended to Based on the score, each brand in the league
identify goods, services or entities, or a table is assigned a rating between AAA+ and D
combination of these, creating distinctive images in a format similar to a credit rating. AAA+
and associations in the minds of stakeholders, brands are exceptionally strong and well
thereby generating economic benefits/value” managed while a failing brand would be
assigned a D grade.
6. Brand Finance Global 500 February 2015
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Methodology
Brand strength Brand Brand revenues Brand value
index ‘Royalty rate’
(BSI)
Strong brand
Brand
investment
Brand
equity
Brand
Weak brand
performance Forecast revenues
Brand strength BSI score applied to an Royalty rate applied to Post-tax brand
expressed as a BSI appropriate sector forecast revenues to revenues are
score out of 100. royalty rate range. derive brand values. discounted to a net
present value (NPV)
which equals the
brand value.
Brand Finance calculates the values of the sourced from Brand Finance’s extensive
brands in its league tables using the database of license agreements and other
‘Royalty Relief approach’. This approach online databases.
involves estimating the likely future sales that are 3 C alculate royalty rate. The brand strength score
attributable to a brand and calculating a royalty is applied to the royalty rate range to arrive at a
rate that would be charged for the use of the royalty rate. For example, if the royalty rate
brand, i.e. what the owner would have to pay for range in a brand’s sector is 1-5% and a brand
the use of the brand—assuming it were not has a brand strength score of 80 out of 100,
already owned. then an appropriate royalty rate for the use of
this brand in the given sector will be 4.2%.
The steps in this process are as follows: 4 D etermine brand specific revenues estimating a
proportion of parent company revenues
1 C alculate brand strength on a scale of 0 to 100 attributable to a specific brand.
based on a number of attributes such as 5 D etermine forecast brand specific revenues
emotional connection, financial performance using a function of historic revenues, equity
and sustainability, among others. This score is analyst forecasts and economic growth rates.
known as the Brand Strength Index. 6 A pply the royalty rate to the forecast revenues
2 D etermine the royalty rate range for the to derive brand revenues.
respective brand sectors. This is done by 7 B rand revenues are discounted post tax to a
reviewing comparable licensing agreements net present value which equals the brand value.
Brand Finance Global 500 February 2015 7.
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Sector Analysis – Global
Global
500
Apple remains the world’s most valuable brand. Cook has convincingly demonstrated that Apple’s
Detractors have been predicting the brand’s new product pipeline and brand can dominate
decline for years now and last year’s brand despite Steve Jobs passing. The iPhone 6 and 6
value results suggested a slight slowdown in Plus have been both a critical and commercial
growth. Critics have suggested the company success. Technologically it represents a
has been relying on tweaks to what is significant step forward from the iPhone 5s,
effectively the same mobile hardware for the principally because Apple has finally decided to
last several iterations of the iPhone. Many also introduce a larger screen. Though still placed
criticised the price point of the iPhone 5c, firmly at the premium end of the market,
seeing it as a missed opportunity for Apple to consumers snapped up the iPhone 6 in their
exploit the explosive growth of the smartphone droves, helping it set a new world record for
market in developing economies. Without the quarterly profits for any company in history, at
charismatic presence of Steve Jobs it was $18bn.
suggested Apple was drifting. In 2013, Brand
Finance downgraded Apple’s brand rating (an Apple has plans to leverage its brand further in
indication of the future potential of the brand) the coming months as it moves into ‘wearable
from the highest possible AAA+ grade to AAA. technology’ with the launch of the much-
heralded Apple Watch. Wearable tech has been
However in the last six months Apple has developing for a while but has yet to make a
emphatically rebutted those criticisms and Tim major impact. Apple has a remarkable knack for
8. Brand Finance Global 500 February 2015
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1 Rank 2015: 1 2014: 1 6 Rank 2015: 6 2014: 7
BV 2015: $128,303m BV 2015: $58,820m
+23% +30%
BV 2014: $104,680m BV 2014: $45,410m
Brand Rating: AAA Brand Rating: AA+
2 Rank 2015: 2 2014: 2 7 Rank 2015: 7 2014: 8
BV 2015: $81,716m BV 2015: $56,124m
+4% +24%
BV 2014: $78,752m BV 2014: $45,147m
Brand Rating: AAA- Brand Rating: AAA-
3 Rank 2015: 3 2014: 3 8 Rank 2015: 8 2014: 6
BV 2015: $76,683m BV 2015: $48,019m
+12% -9%
BV 2014: $68,620m BV 2014: $52,533m
Brand Rating: AAA Brand Rating: AA+
4 Rank 2015: 4 2014: 4 9 Rank 2015: 9 2014: 13
BV 2015: $67,060m BV 2015: $47,916m
+7% +50%
BV 2014: $62,783m BV 2014: $31,845m
Brand Rating: AAA Brand Rating: AAA-
5 Rank 2015: 5 2014: 5 10 Rank 2015: 10 2014: 9
BV 2015: $59,843m BV 2015: $46,737m
+12% +4%
BV 2014: $53,466m BV 2014: $44,779m
Brand Rating: AAA- Brand Rating: AA+
using its brand to popularise and hence rejoining the elite AAA+ group. Nevertheless
monetize existing technology, as it did so Apple’s brand (and those of rival tech firms such
successfully first with the mp3 player, as Google and Microsoft) remains stronger than
smartphone and later the tablet. The Apple that of any bank brand. Brand strategy and
Watch will support Apple’s strategy to allow rebuilding trust will be critical to banks’ survival in
consumers to pay for transactions using their the not too distant future.
mobile devices, ‘Apple pay’. This poses a major
threat to financial services brands. Though the The very top of the list of the world’s most
system will initially be linked to traditional bank valuable brands continues to be dominated by
accounts, it cannot be too long before Apple now well established tech and telecoms giants.
extends its brand once more to become a The ranks of the top five remain unchanged.
comprehensive financial services provider. Samsung is 2nd, Google 3rd, Microsoft 4th and
Verizon 5th, all having registered reasonable
Consumer trust that financial information is brand value growth rates of between 4 and 12%.
secure with Apple will be essential of course. The Walmart is the only brand whose primary
company’s icloud system was the target of a high application is not in tech or telecoms. Though it
profile hacking scandal in September 2014 when has grown 4% this year, what was once the
the private pictures of hundreds of celebrities world’s most valuable brand has slipped down
were posted online. This setback contributed to the rankings again; now at 10th it looks set to
Apple’s brand rating remaining at AAA rather than drop out of the top ten next year.
Brand Finance Global 500 February 2015 9.
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Sector Analysis – Global
Brand Value Over Time
150
Apple
120 Goggle
) Amazon
n
b
$ 90
S
U
(
e Walmart
u
al
v
d 60
n
a
r Coca-Cola
B
30
0
2007 2008 2009 2010 2011 2012 2013 2014 2015
The fastest rates of growth have been posted by Rival online services such as Google seem to be
more recently founded tech brands. Twitter’s struggling to maintain ad revenues as consumers
brand value is up 185% to $4.4 billion. Though spend an increasing proportion of their time on
user growth is slowing, it has recently mobiles rather than PCs. Ad space is obviously
reorganised certain aspects of its presentation to more limited on a smaller screen, affecting what
make it more accessible to those less familiar can be charged. Google has until recently been
with it such as ranking posts by popularity rather the gateway to all other parts of the web,
than chronology. There is also increasing dominating the ‘search’ market, giving it a vast,
optimism about its ability to monetise both users captive audience for advertising. However when
and visitors who do not log in. Twitter has been using a mobile, Google is frequently bypassed,
able to differentiate itself from other online with people using apps rather than a search
advertising platforms positioning itself as the engine. Even if it can improve the profitability of its
place to interact with consumers during major mobile advertising, it faces an uphill struggle to
real-time events such the Olympics, Super Bowl hold onto its position.
and World Cup.
It has followed Google’s lead and making a
Facebook’s brand value is up 146% to over $24 number of interesting acquisitions of smaller (but
billion. It has leapt from 122nd globally in 2014 to nonetheless expensive) tech brands. Instagram
30th this year. Over 200 million people joined in and Whatsapp have both been snapped up.
2014 taking the total number of users to 1.4 billion. Google has tended to take a fairly monolithic
10. Brand Finance Global 500 February 2015
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