· Telstra maintains its title as Australia’s most valuable brand
· CBA reclaims title as most valuable Australian bank and most powerful Australian brand
· Woolworths, BHP and Westpac experience sharp declines
· Coles climbs two places, its brand value up 21%
Australia’s top 100
Telstra has retained the number one ranking as Australia’s most valuable brand. Brand Finance Australia Managing Director, Mark Crowe, comments, “It is testimony to Telstra’s brand strength that despite a decline of 18% in enterprise value, Telstra’s brand value has only decreased by 2%.”
“Telstra’s business performance has had a positive impact on brand value. Reported revenue increased 2%, while the expected cumulative annual growth rate has also improved from 3.7% in 2016 to 4.2% this year. Customer brand equity fell slightly over the last year, with scores on individual metrics such as Consideration, Satisfaction and Recommendation falling marginally.”
Telstra is ranked 125th in the Global 500.
In comparison Optus was the 9th ranked Australian brand, recording a 12% decline in brand value.
Mark Crowe continues, “Optus’ business performance worsened over the course of last year, with Optus’ brand value falling.”
CBA reclaims most valuable Australian banking brand
The ongoing strength of the Australian banking sector is highlighted by Australian banks occupying 2nd to 4th places. CBA, ANZ and nab have enjoyed healthy increases in brand value. Mark Crowe comments, “A 9% increase in brand value has helped CBA reclaim its position as Australia’s most valuable banking brand.”
CBA and Qantas remain Australia’s most powerful brands with brand ratings of AAA-.
Woolworths drops to #5 ranking
After a stellar run from 2009 to 2015, Woolworths has slipped from ranking second in 2016 to being the 5th ranked brand after experiencing a 21% decrease in brand value. Woolworths from 2009 to 2015 was Australia’s most valuable brand. Mark Crowe comments, “Falling profits and a significant decline in brand strength, along with intense competition, will continue to put pressure on Woolworths brand value, unless in particular an improvement in customer metrics can be achieved.”
Conversely Coles has climbed two places to number six through a 21% increase in brand value. “Coles is now poised to pass Woolworths as Australia’s most valuable retail brand,” said Mark Crowe.
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 nearly 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.