Brand value is the ultimate currency craved by companies. A valuable brand spurs demand and creates pricing power.
Exhibit A: Apple and the iPhone, which sold 78 million units in the fourth quarter of 2016. The average selling price was $695. Pricing for chief competitor Samsung was more than $500 less, according to research from Canaccord Genuity. The result: Apple earned 92% of the profits in the smartphone category and has racked up a cash hoard of $257 billion on its balance sheet.
Apple tops Forbes' annual study of the most valuable brands in the world for the seventh straight year, worth $170 billion. Its brand value is up 10% over last year and represents 21% of the company’s recent market value of $806 billion.
The Apple train is not slowing down anytime soon. The iPhone 8 is expected to be out in the fall. The company is celebrating the 10th anniversary of the transformational product, and the latest version is expected to include an OLED screen, wireless charging and a host of other changes. The new features could push the price to north of $1,000 for the 256GB version and propel Apple to be the first company with a market capitalization of $1 trillion.
To "google" is synonymous for search, but the Alphabet subsidiary is still fighting to protect its brand. A federal appeals court affirmed the Google trademark this month, ruling the brand name was worth protecting in a case from 2012 involving cybersquatting of 763 domain names with the word “google” in them. The value of Google is surging, and it will not go the way of aspirin, elevator, thermos and other brands that faced “genericide.”
U.S. Circuit Judge Richard Tallman wrote: “The mere fact that the public sometimes uses a trademark as the name for a unique product does not immediately render the mark generic.”
Rounding out the top five brands are Microsoft ($87 billion, up 16%), Facebook ($73.5 billion, up 40%) and Coca-Cola ($56.4 billion, down 4%).
The 100 most valuable brands are worth a cumulative $1.95 trillion, up 6% over last year. They range from Apple on top at $170 billion to German financial services firm Allianz with a brand worth $6.8 billion by Forbes’ count.
We evaluated more than 200 global brands to determine the final list of 100. Brands were required to have a presence in the U.S., which knocked out some big brands like multinational telecom firm Vodafone. The top 100 includes product brands like Anheuser-Busch InBev’s Budweiser, as well as brands marketed under their corporate name like Starbucks.
Forbes valued the brands on three years of earnings and allocated a percentage of those earnings based on the role brands play in each industry (e.g., high for luxury goods and beverages, low for airlines and oil companies). We applied the average price-to-earnings multiple over the past three years to these earnings to arrive at the final brand valuable (click here for the complete methodology).
Tech brands dominate the top 100 with 18 making the cut, including nine of the top 15. Thirteen financial service brands qualified, led by American Express at No. 22 worth $24.5 billion. The 12 consumer packaged goods brands were headed by Gillette at No. 28 ($19.2 billion).
The U.S. is home to just over half the list with 56 brands, followed by Germany (11), France (7) and Japan (6). Companies based in 15 countries landed at least one brand among the top 100.
Most of the major risers this year came from the world of tech with Amazon leading the way, up 54% to $54.1 billion and sixth overall. The e-commerce giant's number of Prime members in the U.S. has doubled over the past two years to 80 million, or two-thirds of American households, according to data from research firm Consumer Intelligence Research Firm. Other big gainers were Facebook (+40%), Starbucks (24%) and Google (23%).
IBM had the biggest drop for the second straight year. Big Blue’s brand declined 20% to $33.3 billion and No. 13 overall after ranking fifth as recently as 2015. The company has moved away from hardware and software to focus on its cloud computing division and the result is 20 straight quarters of sales declines. Other brands that took big hits were HSBC (down 18%), Caterpillar (-11%) and H&M (-11%).
Adobe was the highest-ranking of seven new entries in the top 100. The software brand ranked No. 84 with a value of $7.4 billion. Volkswagen ranked No. 77 last year, but its brand value fell 10% to $6.7 billion to knock it out of the top 100. It was the third straight decline for the reeling German carmaker, which has been embroiled in a scandal involving cheating exhaust emissions tests. VW was ordered to pay a $2.8 billion criminal penalty last month by a U.S. federal judge, on top of a $1.5 billion civil penalty.
