Valuing the Intangible: Top 100 Global Brands

Those that regularly read this blog will know that this particular Kat is especially fond of numbers – statistics, figures, tables, averages and valuations amongst other things (readers may also be interested to note that he has a very well-thumbed and dog-eared thesaurus lying close to his keyboard. ‘Statistics’ is found in section 86…) fill him with unbridled joy. It is therefore with some interest that the Kat notes the publication of the sixth annual BrandZ (do you see what they did there?) Top 100 Most Valuable Global Brands.

Speaking of statistics, the report weighs in at 106 pages (including what would traditionally be considered to be covers) of text and pictures (with emphasis on the latter) with a fair smattering of tables and even the occasional graph. As one might expect from its title, the report is concerned with the classification and valuation of the world’s most valuable global brands. It explains (at p.102) that “The dollar value of each brand in the ranking is the sum of all future earnings that brand is forecast to generate, discounted to a present-day value.” While to the uneducated this may simply appear to be speculation and economic hocus-pocus, the report tells us otherwise with a (very) brief summary of its methodology (also on p.102). Thus, brand value is calculated in three steps: (1) Branded Earnings – What proportion of a company’s earnings is generated “under the banner of the brand”? – (2) Brand Contribution – “How much of these branded earnings are generated due to the brand’s close bond with its customers?” – and (3) Brand Multiple – “What is the growth potential of the brand-driven earnings?”

More fun with projections (source: xkcd.com)

The result is, according to the opening pages of the report: “the only ranking grounded in both quantitative consumer research and in-depth financial analysis.” So there you have it: no crystal balls were harmed in the making of these valuations... And so on to the statistics proper:

The big winners in terms of brand growth over the past year are “facebook”, with a 246% increase in “brand value” over 2010 levels, and Chinese brand “Baidu” with a 141% increase. “Apple” has wrested the top spot from “Google” with an 84% increase in value to $153,285 million, which (as the report will tell you) is just a little more than the GDP of Peru. Big losers over the past 12 months are “Bank of America” with a 43% drop over 2010 values to $9,358 million, and “Nintendo” and “Santander”, both with a 37% drop in value (to $11,147 million and $11,363 million respectively) – readers will be pacified by noting that “Nintendo” and “Santander” are still worth more than the GDP of Mozambique based on 2010 IMF estimates, and that “Bank of America” is only marginally behind the GDP of Mauritius (again based on 2010 IMF figures).

Most interesting, to this Kat at least, are the comparisons both between and within certain sectors. Therefore, whereas technology in general grew by 18% in brand value, the telecoms sector was relatively stagnant, with only 3 of the top 10 brands in the survey showing any movement at all (and then one of these was down). In soft drinks, the Diet Coke/Coke Light brand overtook Pepsi as the number 2 brand with a 3% increase in brand value.

The full report can be found here (hefty .pdf alert), or by following some of the links above. There goes another Monday afternoon…