Brands that are using technology to make people’s lives easier in new and innovative ways are winning in 2018, according to Kantar Millward Brown’s latest BrandZ report of the world’s top 100 brands, with technology and tech-related names accounting for 92% of the overall ranking.
Tech behemoths Google and Apple lead the way, both of which break the $300bn brand value threshold for the first time – the only brands in the ranking to do so. Google again takes first place with a brand value of $302bn following a 23% rise, while Apple is just behind at $301bn after seeing a 28% boost.
However, Amazon is closing in quickly, and is on one of the fastest trajectories the report has ever seen, increasing its brand value by 49% to $208bn this year, which means it bumps Microsoft (which itself grew 40% to $201bn) into fourth place.
“Brands are increasingly concentrating on being able to meet consumer needs in interesting ways that gives them a superior advantage over their competitors – particularly when it comes to making people’s lives better and easier with technology,” explains Millward Brown’s BrandZ global strategy director, Peter Walshe.
“What we see this year is a strong team of technology and tech-related brands, [which shows how] tech is adapting and shaping our lives, and brands that are using that to do partnerships are doing really well.”
Chinese brands have had another stellar year, with Tencent, for example, growing by 65% to $179bn securing it a place in the top five for the first time. Tencent’s growth is indicative of the fact Chinese brands are finally starting to build a presence on the world stage, with some of the fastest-rising brands this year coming from China.
To put this into context, the speed at which brands need to grow to reach the top 20 has doubled to 40% over the past year – and Chinese brands are leading the charge by a long way. Ecommerce brand Alibaba sees a 92% rise in brand value taking it up five spots to ninth, fellow retailer JD.com increases brand value by 94% putting it at 59th in the ranking, while alcohol brand Moutai’s brand value jumps 89% taking it to 34th. These brands are the three fastest risers this year.
Over the past 12 years, China’s overall brand value has grown by a whopping 1,444%. By comparison, the US has grown by 239%, Continental Europe by 37% and the UK by just 26%.
Walshe says this is because Chinese giants like Tencent and Alibaba – similar to US brands like Amazon and Tesla – are taking a long-term view when it comes to profit and development, which is very different to the traditional European and North American view of fast moving consumer goods, which are forced by financial pressures to report every three months, leading to shorter-term thinking.
Retail is the fastest-growing category this year having increased overall value by 35%. However, Walshe says this is “misleading” as the growth has been driven almost exclusively by tech-related retail brands such as Amazon and JD.com, which have helped ecommerce brands collectively grow their value by 61% year on year.
Meanwhile, more traditional retail brands like Ikea, which sees its brand value fall 8% this year, meaning it drops 23 places to 76th, are witnessing a decline in brand value. As such, Walshe says consolidation is “inevitable”, particularly for traditional brands, with the most recent example in the UK being the shock proposed merger between Sainsbury’s and Asda.
“It’s easy to look at the top 100, see it’s filled with tech and ecommerce brands and assume consumers are almost withdrawing and saying ‘well, I don’t really want to engage or transact on a deeper level’,” explains Kantar UK’s head of business development, insights division, Jane Bloomfield.
“But it’s almost the opposite because what those brands are doing is really fulfilling very basic needs of convenience and taking the effort out for us, which means we value them more.”
Between them, the top 100 brands are worth $4.4tn, up 21% compared to last year, making it the biggest year-on-year rise since 2007.
UK brands fall down the ranking
Just four UK brands make it into this year’s global top 100, further highlighting the huge levels of growth and innovation needed to make it into the ranking.
Vodafone is the most valuable UK brand (37th in the global ranking) despite experiencing a 9% decline in brand value over the past 12 months. Although it has grown 15% HSBC drops back two spots to 50th in the overall ranking, while Shell falls six spots to 63rd (despite growing brand value 10%) and BT just makes it into the top 100 at 94th following a 15% drop in brand value.
BT’s decline in value is partly a result of its ongoing issues with customer service. However, the telecoms business says it is working hard to turn that around – starting with bringing all of its call centres back to the UK and Ireland by 2020.
“If you look at what customers have said about BT over the last few years, [call centres] have been a clear point of frustration; the customer service hasn’t always been where it needs to be,” Pete Oliver, BT’s managing director of marketing and sales, tells Marketing Week.
“While this will take a while to roll out, it will make a huge difference to how people value the BT brand in the long run.”
Walshe says HSBC and Shell have done especially well compared with other UK brands because they are working hard to change perceptions and innovating with how they connect with consumers on a day-to-day basis.
Shell, for example, now has more retail outlets than Starbucks and Subway, having realised it can no longer pin its future on solely selling fuel.
While Tesco fails to make it into the global top 100 it did increase brand value by 13%, putting it seventh in the UK top 10 – a sign its efforts to improve the customer experience are finally starting to pay off.
“We are incredibly conscious that we have a long way to go although it is encouraging to see what we’re doing is helping us to improve [brand health] metrics,” says Tesco’s chief customer officer, Alessandra Bellini.
“It is very important that we stay focused on what matters, which is serving Britain’s shoppers a little better every day. If you focus on your customers and make sure everyone in stores, online, across the distribution line, in head office has that in mind and puts customer health and satisfaction first, building a brand that is sustainable for the future with an operating model that is sustainable financially, then hopefully we have the recipe to be successful in the long run.
“We’ve seen the progress of doing that in the last two years and we are persuaded that if we do it better and even more we will get to a better place.”