Brand Finance data estimates 79% of global intangible asset value is not disclosed on balance sheets
LONDON, 30 October 2024 – In 2024, the value of intangible assets owned by the world’s largest companies has reached USD79.4 trillion, according to a new report from Brand Finance, the world's leading brand valuation consultancy. This represents a substantial 28% increase from 2023 when global intangible value stood at USD61.9 trillion, now reaching its highest level since Brand Finance began tracking it in 1996. During the same period, the value of global tangible net assets has also increased to USD68.8 trillion.
The Brand Finance methodology relies on the enterprise value of firms to determine implied intangible asset, value because most intangible asset value is not reported by the owner companies. This lack of reporting is why 79% of estimated total global intangible asset value is unaccounted for in company financial reports.
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 record-high in global intangible asset value highlights the growing importance of intangible assets in today’s global economy. As companies continue to invest in digital transformation, innovation, and research and development, intangible assets have become crucial drivers of long-term growth and competitive advantage.”
Annie Brown, Valuation Director at Brand Finance
On a market level, Denmark has overtaken Ireland to become the most intangible market in the world. The total intangible value of the Danish market has risen 6-percentage points to reach total intangible value of 82%. Denmark is considered a highly intangible market due to its strong emphasis on innovation, research, and high-value industries like pharmaceuticals and renewable energy. Pharmaceutical giant Novo Nordisk has seen a significant 45% rise in its intangible asset value, Coloplast AS has increased by 29%, and Vestas Wind Systems has risen by 11%.
Brand Finance data reveals that the intangible asset value of the US market has skyrocketed USD12.1 trillion (34%) from 2023, the country with the largest absolute increase. The Semiconductor sector is driving the US growth in intangible value. Semiconductors has seen the largest growth in intangible asset value among all sectors ranked in the study; it is now the sector with the third-highest intangible value, at over USD7 trillion. US giant NVIDIA has played a significant role in this growth.
"NVIDIA’s remarkable rise has not only solidified its market leadership in the growing AI economy, but has substantially boosted its intangible value, enhancing the value of its brand, intellectual property, and customer relationships. As such, Brand Finance data reveals that NVIDIA now has the third-highest intangible value among companies globally, at USD2.9 billion.”
Annie Brown, Valuation Director at Brand Finance
Moreover, the 2024 ranking reveals that eight of the world's top 10 companies with the highest intangible value are based in the US, with technology and internet giants significantly contributing to the country's high intangible value. Apple and Microsoft continue to hold their positions as the top two companies with the highest intangible value globally. At the same time, media powerhouses Alphabet and Meta, and retail giant Amazon, are also key contributors.
The 2024 GIFT™ study has also split Asset & Investment Management businesses (as defined by third-party CIQ) and Banking businesses into two separate sectors. Asset & Investment Management enters the 2024 ranking in 17th position with 57% intangibility; 43% of this is undisclosed.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations 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 also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization 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.
