The value of intangible assets owned by the world’s largest companies has fallen by 25%, according to a new report published by Brand Finance, the world’s leading brand and intangible asset valuation consultancy. The new analysis has found that global intangible value has followed the trend seen in previous financial crises and has now declined 25% year-on-year, from US$76 trillion in 2021 to US$57 trillion in 2022.
Every year, the Brand Finance Global Intangible Finance Tracker (GIFT™) report tracks the value of the world’s largest companies by intangible asset value. Intangible assets are identifiable, non-monetary assets without physical substance. Intangible assets can be grouped into three broad categories – rights (including leases, agreements, contracts), relationships (including a trained workforce), and intellectual property (including brands, patents, copyrights).
This year’s fall in the value of intangible assets resembles the 27% decline in total intangible value in 2011 but is only half as big as the 59% decline observed in 2008 in connection with the global financial crisis.
David Haigh, CEO & Chairman, Brand Finance commented:
It is important for businesses to understand the value of intangible assets. Brand Finance’s new data highlights the volatility of market values of firms when so much value is left unaccounted for. Investors should be concerned that these intangibles undisclosed, which could indicate they are also insufficiently supported and managed.
Apple (intangible assets up 23% to US$2,297 billion) has taken top spot as owning the world’s most valuable intangible assets, up from 2nd last year. Saudi Aramco (intangible assets up 9% to US$1,786 billion) has risen one place from 3rd to 2nd, while Microsoft (intangible assets down 17% to US$1,586 billion) has fallen from 1st to 3rd.
UnitedHealth Group (intangible assets up 35% to US$526 billion) is one of the big winners this year, entering the global top ten rankings at 7th, a big jump from 13th last year.
With most economic sectors suffering a fall in intangible asset value, Oil & Gas was the significant outlier with a 52% increase in intangible asset value. The growth in the Oil & Gas sector is largely driven by the increase in global oil prices and three companies: Exxon Mobil (intangible assets up 268% to US$292 billion), Chevron (intangible assets up 197% to US$222 billion) and Saudi Aramco (intangible assets up 9% to US$1,786 billion).
China (down 39%) and the United States (down 27%) are the countries accounting for the largest intangible value decreases. The United States accounts for nearly two thirds of global intangible value (61%), with China having the second largest contribution equalling 5% of global intangible value.
Note to Editors
The Brand Finance Global Intangible Finance Tracker (GIFT™) report is the world’s most extensive annual research exercise into intangible assets, considering over 59,000 publicly quoted companies (with a total value of over US$120 trillion) across 150 jurisdictions.
In its analysis, the Brand Finance Global Intangible Finance Tracker (GIFT™) report provides detailed insight into intangible value reporting by company, sector, and country. Graphs, additional insights, and opinion pieces by our experts can be found in the report.
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.