BRAND VALUE TOPS US$5 TRILLION

Brand Value. The latest 2024 report on the world’s most valuable brands has just landed, and here are some interesting observations:

Brand value is intangible

Clearly brands play a massive role in driving shareholder value: $5 trillion worth. But placing a value on brands has always been a challenging task. And that’s because brand attributes such as reputation, loyalty and trust are intangible, and thus hard to measure and quantify.

Investments in brand could pay dividends for decades, but because intangible value is open to interpretation, most financial regulators don’t usually accept brand assets on balance sheets. This is a massive issue for brand owners. For example, Apple is missing one of its most valuable assets on its financial reporting – a brand worth $516.6 billion.

How is brand value calculated?

Brand Finance is the world’s leading brand valuation consultancy. They exist to bridge the gap between marketing and finance by helping companies connect their brands to the bottom line. And their methodology for calculating “brand value” is this formula:

Brand Strength (BSI) x Brand Royalty Rate x Brand Revenues = Brand Value

Brand Strength Index (BSI) looks at brand investment, brand equity, and brand performance. The brand royalty rate is determined based on sector. Lastly, forecast brand-specific revenues are determined based on the proportion of parent company revenues attributable to the brand in question. Brand value itself is discounted to net present value.

Okay, I’m very mathematically minded, so I hope this makes sense to you. For me I’m more interested in the output – their annual report on the world’s most valuable brands – and the 2024 report has just landed. Here are some interesting findings:

Apple clinches top spot

Apple clinches top spot as world’s most valuable brand, outshining Amazon, Google, and Microsoft. The value of Apple’s brand has ballooned by over $217 billion since last year’s ranking, even though iPhone sales have plateaued. 

Apple has been expanding its product lines with huge growth in wearable technology – Apple Watch, AirPods, Apple Vision Pro – and Apple TV. Not to mention the premium customers pay to own something with the Apple logo on it. The new MacBook Pro will set you back Aus $3,1999 (so glad they made it just under the $3,200 mark). You could buy three other laptop products (all decent brands too) for that price. A new iPhone 14 Pro will set you back Aus $1,749.

Nevertheless, over 50% of people surveyed by Brand Finance said that Apple’s products were worth the price. Now that’s what I call BRAND VALUE.

Tesla drops 9 spots

Tesla’s rank dropped from 9th to 18th in 2024. This comes on the back of more competition and consumer choice in the EV (electric vehicle) market.

Yes, sales of electric cars did exceed 10 million in 2022. In fact, a total of 14% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. But, China dominates global sales, accounting for 60% of global electric car sales.

Enter BYD stage left, THE world’s best-selling, Chinese EV company (You might have seen the clip of Elon Musk laughing his head off twelve years ago when he was asked if BYD was a threat to Tesla.)

YouTube player

BYD has actually been around for a few decades. In 2023 they became the world’s best-selling EV company, supported of course by massive demand in China. BYD is reporting a profit growth in 2023 of over 85%. Brand Finance ranks BYD 172/500 most valuable brands. 

BYD are planning a major push into Europe, where they plan to build factories to avoid EU tariffs on Chinese car imports. The company is also building a factory in Thailand, to produce right-hand drive models for markets like Australia, New Zealand, and the UK. 

A whole new EV future and market is emerging, and methinks it’s going to be a hard fought contest for the minds, hearts, and wallets of future car drivers (until driverless vehicles become the new, next everyday thing). 

WeChat is the world’s strongest brand

While brand strength doesn’t equate directly to brand value, it is the KPI I’m most interested in because it speaks to the job the brand owners are actually doing to build and maintain their brand in a world that’s waiting for nobody. This is how Brand Finance define and measure brand strength:

In addition to calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Compliant with ISO 20671, Brand Finance’s assessment of stakeholder equity incorporates original market research data from over 150,000 respondents in 38 countries and across 41 sectors.

According to this analysis, WeChat is the strongest brand in the world, earning a brand strength index (BSI) score of 94.3 out of 100, and the associated brand strength rating of AAA+. 

WeChat’s brand strength is underpinned by its essential, familiar, and trusted status in China. WeChat is an integral part of daily life for millions of users. According to Brand Finance’s latest brand tracking data, 81% of respondents surveyed in China are current users of the brand. The brand also secured the highest Net Promoter Score across the entire Brand Finance Global 500 study. Good old customer service still works, after all.

Some other strong brands around the world

Only eleven other brands (along with WeChat) in the Global 500 ranking earn the coveted AAA+ brand strength rating: YouTube, Google, Marina Bay Sands, Wuliangye, Deloitte, Coca-Cola, Netflix, Rolex, Ferrari, Moutai, and ICBC. That list includes a hotel, a Chinese bank, and two Chinese liquor brands.

This is an interesting list. It seems to be that brand strength is something that only comes with age x time x consistency x maturity. Back in my ad days, if I wanted to work on any brand, Coca-Cola was it! And I did. I worked on Coca-Cola for many years at two agencies. And I was always proud to work on the biggest brand in the world (and one which I grew up with too).

Damn I love brands, and the whole concept of value being created by what we, the consumer, think and feel about it/them/the brand. Thank God for companies like Brand Finance who are able to measure and quantify these intangible assets for left brain bean-counters.

Richard Sauerman
Richard Sauerman
Articles: 146