Three Things They Didn’t Tell You About the World’s Most Valuable Brands

Forbes magazine just published its latest ranking of the World’s Most Valuable Brands.  The results weren’t all that surprising — Apple remains the far-and-away leader at $154.1 billion — and writer Kurt Badenhausen’s summary provides a good topline analysis of the ranking.  But there are always interesting data points in these kinds of reports that don’t make the headlines, so I thought I’d share with you three noteworthy, if not well-publicized, facts about the world’s most valuable brands.Forbes Worlds Best Brands 2016

1. Brands matter in B2B. Sixteen of the top 100 most valuable brands — and 2 of the top 10 — are B2B companies. GE tops the B2B brand list with $36.7 billion of value attributed directly to its brand.  For reference, the amount equals IKEA’s total revenues.  Also of note, that amount represents 40% of the company’s total revenue.  So it’s safe to declare GE’s brand is critically valuable to the corporation.

When I’m speaking about brand-building, I’m often challenged by people who think that brands don’t matter in B2B — that somehow purchase decisions are too rational, products are too functional, and competitive advantage is too technical in B2B companies for their brands to have any substantive impact.  But the Forbes ranking suggests otherwise.  And adding credence to these numbers is the introduction to GE’s last annual report, which stated, “Every GE business feeds off enterprise strength in technology, brand, globalization and services.” [emphasis mine]

2. Many companies are leaving brand value on the table. It’s not surprising that some companies generate revenues well above their brand value.  But Forbes calculates that 34 of the top 100 brands are more valuable than their companies’ revenues.  For example, Facebook’s company revenues are reported at $17.4 billion while its brand value is $52.6 billion.  In some cases, the differential is likely mostly due to corporate structure, e.g., the $14 billion that Google’s brand is valued over the company’s revenues probably contributes to Alphabet, its parent company’s revenue.  But for many brands, I’m at a loss to explain why companies would not be able to capture more of their brand value.  Perhaps they need to work harder at monetizing their brand equity?

3. Exact brand value is difficult to calculate. The differences between brand valuation rankings illustrates this point best.  For example, as noted above, Forbes reports Apple’s brand value at $154.1 billion.  But last year, Interbrand’s Best Global Brands ranking published by BusinessWeek estimated that value at $170.3 billion.  Some of the difference could be explained by Apple’s declining performance during the time gap, but a loss of $16.2 billion in such a short timeframe seems unlikely.  And the discrepancies do not result from Forbes consistently over-valuing brands — it puts Coke’s brand value at $58.5 billion, while BusinessWeek reports it at $78.4 billion.  The differences are most likely due to the differences in valuation methodologies as well as the subjectivity involved in the calculations.  I’ve written before about the shortcomings of brand valuation techniques, so I will simply reiterate here that these calculations are best used for comparative, not absolute use.

What do you find interesting, surprising, challenging, or helpful about the world’s most valuable brands?  Please share your thoughts in the comments section.

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