Source: Millward Brown.
Market research firm Millward Brown has released its 2014 installment of the "BrandZ" report, wherein you'll find the 100 most valuable brand names on Earth. Based on 150,000 consumer interviews across five continents, and conducted on behalf of marketing giant WPP, BrandZ looks at metrics such as trust, appeal, and perceived importance. The researchers then combine this data with financial reports, and strip away distracting factors like price, availability and distribution. The final result is about as pure a brand value assessment as you'll find.
These results can actually move markets. According to Millward Brown, publicly traded companies that appeared in the BrandZ Top 100 list have nearly doubled the return of the S&P 500 since the report's inception in 2006.
What's new?
The total value of the Top 100 increased by 12% from last year's rundown, landing at $2.9 trillion. In the previous five years, the aggregate Top 100 value had increased by just 6% annually. This year's surge is a significant trend break. There are plenty of obvious microtrends at work, but also a bevy of big surprises, including big changes at the top of this list.
Google (GOOG 0.72%) (GOOGL 0.33%) increased its brand value by 40% year over year, leaping from second place to the top spot. Big G had not claimed that spot since 2010. You can call it a comeback.
Apple (AAPL +0.73%) was last year's leader, and the most dominant brand since 2011. But Apple's brand value declined by 20%, helping Google overtake the iconic iDevice maker.
Why is Google rising while Apple sinks? The big fluctuations "point to the extraordinary rate of industry maturation and innovation happening simultaneously," the report says. As exemplified by products such as Google Glass and a plethora of long-term research projects, "Google has built a culture of innovation."
Apple's brand value declined in concert with its share price, which plays a part in the BrandZ value calculation. Millward Brown pointed to "investor concern about the future of the company after founder Steve Jobs, and the recent lack of breakthrough products that differentiate Apple." That analysis is on point, but so is the big caveat that follows:
That said, Apple's share price performance over time suggests that confidence remains strong in a technology brand that makes products, retails them around the world, provides content and is renowned for combining technology prowess, design and service. In BrandZ research, consumers rate the Apple brand extremely high on being different, innovative and meaningful.
The even bigger picture
More broadly, the BrandZ team looks at current brand-value trends and sees sees signs of a rejuvenated global economy.
"If the 9th annual edition of the BrandZ Top 100 Most Valuable Global Brands tells us anything, it is that the recession is over," said Millward Brown CEO Travyn Rhall in the report.
From Visa to American Express, all of the major credit card operators saw their brand values rise at least 40% from the previous year. Consumer-centric industries such as apparel brands and retailers were the fastest-rising categories overall. These trends seem to support Rhall's claim that the recession is over. You just don't see consumer confidence like that in the middle of a full-blown economic depression.
Below is a more visual look at what happened in the Top 10 Brand Values In 2014:
Given the report's stated reliance on share prices and financial reports, I find it interesting that Apple's brand value only adds up to 28% of its current market cap. On the other end of the spectrum, McDonald's (MCD +0.09%) is almost entirely carried by its brand power.
Would an iPhone by any other name smell as sweet? Perhaps, since the technology and design of the device doesn't change with a different name tag. For Mickey D's, remember that BrandZ strips out fundamental business tools such as low prices and massive distribution networks -- vital pieces of the McDonald's business model. Without these advantages, a Big Mac isn't exactly the best burger in town, and the brand message comes into play.
The entire report is recommended reading. If nothing else, BrandZ makes you think about what branding power really is, and how the concept affects business strategies. Apple CEO Tim Cook obviously doesn't manage his business to please the BrandZ researchers above everybody else, nor does Google CEO Larry Page. But the choices they make eventually show up in these rankings, and right now, Google is pulling all the right levers while Apple just isn't.
