New York City - London, 27/3/2019
Netflix is America’s fastest-growing brand of 2019, according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy. With brand value growing by a whopping 105% over the past year to $21.2 billion, Netflix is set to play the lead role in home entertainment, building a disruptive business as a universally accessible narrowcaster and in this way effectively challenging traditional broadcasting brands.
“Netflix delivers high-quality and varied programming to anyone with internet access and a credit card. The platform has embarked on a disruptive approach to media services and now has incumbents in the market looking over their shoulder,” said David Haigh, CEO of Brand Finance.
Media Industry Faces Disruption
YouTube (brand value up 46% to $37.8 billion), another rapidly growing digital media brand, jumps ten spots this year to 13th nationally. Like Netflix, YouTube is building a broad platform for video content, in an effort to leverage its brand from merely peer-to-peer video creation and sharing to also include a growing premium and professional video library.
Similarly, Twitter (brand value up 66% to $3.2 billion) jumps almost 100 ranks to become the 258th most valuable brand in America. Another successful social media platform, Instagram is the most valuable new entrant to the ranking this year, claiming 47th spot with a brand value of $16.7 billion. In contrast, falling out of favor with its core customer base, Snapchat (brand value down 39% to $1.5 billion) has tumbled down almost 200 ranks to 469th, nearly dropping out of the Brand Finance US 500 ranking this year.
The most valuable among the traditional media brands and performing considerably better than its peers, Disney enters the top 10 nationally on the back of its M&A activity and diversified product strategy. Fresh off the acquisition of 21st Century Fox, the Disney brand jumps 40% in brand value to $45.7 billion, furthering its strategic vision to take advantage of legacy products and seeking to grow into new media delivery channels to reach new audiences.
Amazon – Prime Among Tech Giants
Holding onto the top spot, Amazon features once again as the most valuable brand in the US, growing nearly 25% to an impressive $187.9 billion.
“Our Brand Finance US 500 2019 study reveals little rotation among ranking leaders, and it is undeniable that tech brands have staked their claim at the top. We have witnessed Amazon’s steady climb over the years, as the brand reached for dominance in all sectors that it ventures into,” said Alex Haigh, Valuation Director at Brand Finance.
Traditional tech giants, Apple (2nd, $153.6 billion) and Google (3rd, $142.8 billion) remain entrenched in their positions, after a year of scrutiny that has led to questions about the sector having reached a saturation point. With a 47% increase in brand value to $119.6 billion, Microsoft moves into 4th position and is the fastest-growing brand among the top 10 most valuable, after the company’s successful turn towards a cloud-centric business model. With all eyes turned to 5G, AT&T drops down a spot to 5th position, after a modest 6% brand value increase over past 12 months to $87.0 billion.
Brand Strength Matters
Aside from calculating brand value, Brand Finance also determines the relative strength of brands using a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance.
Though Facebook holds on to its spot as the 6th most valuable brand in the Brand Finance US 500 2019, its brand strength suffered the second worst decline among the top 100 brands, resulting in a brand rating downgrade from AAA+ to AAA- after a year of privacy issues that have landed the company in the hot seat.
In a similar fashion, Boeing is likely to feel the effects of its current reputational challenges in next year’s ranking. Brand Finance valued the brand on 1st Jan 2019 at US$32.0 billion, up 61% from the previous year. Since the fatal 737 crash earlier this month, the loss to Boeing’s brand could reach $7.5 billion and the brand is likely to lose its elite AAA+ brand strength rating. Brand Finance estimates the current revenues from the 737 aircraft to be $24.0 billion, accounting for roughly a third of Boeing’s profits.
Professional services firm Deloitte tells a different story as it takes the crown of this year’s strongest brand in the US market. The accounting and audit firm boasts a BSI (Brand Strength Index) score of 91.2 out of 100 and an elite AAA+ rating.
Retail Requires Revolution
Behind tech, dominating the Brand Finance US 500 ranking as the largest industry with a combined brand value of over $1 trillion, the retail sector comes in second with $340.5 billion. Eighth-ranked Walmart (brand value up 10% to $67.9 billion) is the nation’s most valuable brick-and-mortar retail brand, as it continues to push the boundaries of its physical store and logistics network. Home Depot (brand value up 39% to $47.1 billion) jumped from 11th to 9th rank overall while its rival Lowe's saw its brand value go up 49% to $23.9 billion, rising from 44th to 35th as its new CEO, Marvin Ellison, has made big changes within the brand, from changing his executive team to shutting underperforming stores.
“This year, Amazon’s brand is worth approximately half of the combined value of the 42 retail brands in the ranking. The retail industry is another sector at a crossroads as tech giants and online sellers encroach upon the traditional business model with a completely new proposition. Legacy retailers will need brand revolutions to match the needs of modern consumers,” added David Haigh.
Big Banks Take a Bashing
Still transitioning from the days of the global financial crisis, banking brand reputations are recovering only slowly. This year’s Brand Finance US 500 study sees both Wells Fargo (down 9% to $39.9 billion) and Chase (down 7% to $36.3 billion) lose brand value and drop out of the top 10.
By contrast, Citi is the year’s only large retail bank to register significant growth, as its brand value went up by 18% to $36.4 billion. Ranked 15th, up from 17th last year, Citi recently restructured to a more consumer and institutional client focused business, and has actively engaged in finding differentiation opportunities, such as its clever sponsorship alignments with programs like public bike sharing in New York.
Prompted by the significant shifts that technology is driving into the banking sector, smaller brands such as Ally are disrupting the status quo. Just short of entering the Brand Finance US 500 ranking, the bank’s innovative positioning and singular campaigns make them stand out from the crowd and prepare them well for future growth.
American Express is another brand from the financial sector that registers notable performance, countering the general industry sentiment. As one of the fastest-growing in the ranking, the credit card champion’s brand value is up 82% to $27.5 billion, after a year of decisive actions to increase card usage, which has yielded strong results for the brand.
Note to Editors
Every year, leading brand valuation and strategy consultancy Brand Finance values the world’s biggest brands by industry and geography. The 500 most valuable American brands are included in the Brand Finance US 500 2019 ranking.
The launch of the ranking coincides with the International Trademark Association’s (INTA) conference The Business of Brands, taking place in New York City on March 28 and 29. Please email Erika Eyl to meet our representatives.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights and charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance US 500 2019 report.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Brand Finance is a chartered accountancy firm regulated by ICAEW and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
The methodology used to produce the annual Brand Finance rankings of the most valuable and strongest brands across all sectors and countries has been certified with the Marketing Accountability Standards Board’s (MASB) Marketing Metric Audit Protocol (MMAP).
Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximize brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognized standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditized, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.