· Airbus’ brand value falls 10% to US$9.2bn as innovative marketing fails to halt order decline
· Innovative marketing campaigns have not been able to reverse faltering demand for the A380
· Boeing is the most powerful and valuable aerospace brand, growing 17% to US$16 billion
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable aerospace and defence brands are ranked and included in the Brand Finance Aerospace & Defence 25 2017.
Airbus retained 2nd position in Brand Finance’s list despite a 10% fall in brand value to US$9.2 billion. The A380 superjumbo has been positively reviewed and well received, yet has been beset by problems and threatens to become an albatross around Airbus’ neck. Orders have disappointed with only a handful of Airlines such as Emirates fully committing to the model. Airbus has made concerted attempts to persuade customers with its marketing communications. In a mostly B2B sector, it has taken the innovative approach of reaching out to the consumer level to create demand for Airbus (and the 380 specifically) as an endorsement brand of Airline brands. Its visually stunning ‘A Family that Flies Together’ ad went viral, topping Campaign Magazine’s viral chart, an almost unheard of feat for a B2B brand. The ‘iflyA380.com’ website was launched to encourage travellers to post Instagram pictures of their experiences on the A380. The impact of these initiatives is yet to be seen however but cannot come too soon, with an end to A380 production rumoured.
Boeing remains the world’s most valuable and strongest Aerospace & Defence brand with an increase in brand value of 17% to US$16 billion. The 737 Max model received a total of 3,419 orders and is Boeing’s fastest-selling plane. Boeing also signed a US$16 billion deal with Iran for 80 passenger planes, the biggest US-Iran deal since the Islamic revolution.
Northrop Grumman, another US giant, is the industry’s biggest riser this year with a 50% increase in brand value. The brand has been making headlines by beating Boeing and Lockheed Martin to a US$80 billion Long Range Strike Bomber contract for the U.S. Air Force.
Brazil’s Embraer had a good year with a sizable share of the midsize markets and orders of its well-priced Legacy Aircraft. It is set to fly its new E195 commercial jet sooner than expected, which could boost the order backlog for the jet. In 17th place with 10% brand value growth, alongside profits that exceeded expectations, the future looks positive for Embraer.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined 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. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
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 Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings 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, while in extractive industry, where goods are often commoditised, 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 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.