Take a second and think about what you consider the top brands of 2004. It's an interesting question that reflects both the brand and you. I asked my wife, and she suggested Coke (NYSE:KO), McDonald's (NYSE:MCD), and Safeway (NYSE:SWY) -- perhaps she was feeling a bit peckish.
Well, on Sunday, the Web magazine brandchannel announced that according to a readers' choice survey, Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Ikea, Starbucks (NASDAQ:SBUX), and Al-Jazeera were the top five global brands of 2004.
This result seems bizarre. Apple and Google both did well, but is that sufficient justification for them to be the top two brands of the year? Ikea and Al-Jazeera are also higher than you might expect, though as a North American it's hard to know how they are perceived internationally. Starbucks alone seems like a reasonable top five pick.
There are more unusual results when broken down by region. In North America, Pixar (NASDAQ:PIXR) was fifth, two spots ahead of Donald Trump. In Latin America, the No. 1 brand was Cemex (NYSE:CX) -- above both Corona and Bacardi. It makes you wonder. Just how bad would an advertising campaign have to be for beer and rum to fall behind a cement manufacturer? Did they decide to show colorful pictures of the commodes of overindulging customers rather than beautiful, joyful people dancing?
Upon closer examination, the results start to make sense. The actual survey question was "Which brands had the most impact on your life in 2004?" One key phrase is "on your life" -- the lives of people who read a branding website. Marketers are much more likely than the average person to use Apple's computers and admire Apple's innovative marketing. This theory is supported by the fact that Apple has been in the top two since 2001, well before the iPod became the must-have toy.
The other key phrase is "in 2004." These words encourage you to think about brands that did unusual things last year, such as Apple and Google. In a way, brands that are ubiquitous, such as Coke and McDonald's, are at a disadvantage. You don't even think that you're using a brand name when ordering a Coke. This is an ideal position for a brand, but it does not make that brand seem particularly noteworthy in a given year.
Combined, these factors seem to have loaded the list with cult brands, those that achieve "cult-like" devotion from customers by promoting a particular set of values that customers wish to be identified with, such as Apple's "Think Different" slogan implying distinctive creativity or Harley-Davidson's (NYSE:HDI) image of rugged individualism.
Cult brands inspire extreme customer loyalty, yet their focus on specific values may exclude the broadest possible market. In fact, on a different list of top brands -- Interbrand's list of top brands by estimated value -- Ikea is only sitting at position 40, with Apple, Google, and Starbucks even worse. And on that list, Coke is No. 1.
To an investor, brands matter because they result in a long-term competitive advantage. Every corner store stocks Coke because of its brand power; it would be nearly impossible for any competitor to displace it. Also, Coke has an inherent advantage in developing and distributing new products based on its brands. Combined, these factors result in strong, growing profits that are exceedingly sustainable over the long term, just one reason Coke is a Motley Fool Inside Value pick. Find out what other companies fit that mold with a free, no-obligation trial.
So when thinking about the brandchannel list, an investor should not consider it a list of the strongest brands, but rather consider it a list of brands that are making waves. These companies can't match Coke now, but might be worth watching for the future.
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Fool contributor Richard Gibbons' son's favorite brand is Dr. Seuss. Neither he nor his son owns any of the securities mentioned in this report. The Motley Fool is investors writing for investors.
