World’s Top 50 Most Valuable Commercial Services Brands Could Lose Over US$30 Billion of Brand Value from COVID-19
View the full Brand Finance Commercial Services 50 2020 report here
The world’s top 50 most valuable commercial services brands could lose up to US$34 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Commercial Services 50 2020 report. Brand Finance’s analysis shows that the commercial services sector is a moderately impacted industry globally and could face a potential 10% loss in brand value.
Looking beyond the commercial services sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
Alex Haigh, Valuation Director, Brand Finance, commented:
“The sheer size, diversification and complexity of the commercial services sector undoubtedly means that brands are going to be affected differently from COVID-19. On the one hand, navigating the regulatory, ethical and legal responsibilities of this pandemic drives business for many consultancies, law firms, accounting and assurance brands. However, this additional work may not offset or compensate for the extensive losses that these brands are likely to endure. Commercial services firms are amongst the first to take hits as many clients' priorities are shifting, projects are being cancelled or delayed, and cost avoidance and reductions measures are being put into place.”
Deloitte has retained the title of the world’s most valuable commercial services brand, following a 10% brand value increase to US$32.5 billion. Strong revenue growth is the key driver behind the international giant’s brand value increase, with all five of Deloitte’s business segments recording strong results.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Deloitte is also the world’s strongest commercial services brand with a Brand Strength Index (BSI) score of 91.4 out of 100 and a corresponding elite AAA+ rating.
The brand has invested considerably in its workforce through learning and development initiatives enabling Deloitte to deliver high quality, consistent services to clients. Above and beyond developing its workforce, Deloitte is committed to helping communities through its societal impact initiative, WorldClass, which prepares people and clients for the technological changes of the Fourth Industrial Revolution. The brand’s increased CSR scores are a testament to this. Deloitte is the only brand in the Big Four to record an increase in brand strength this year.
Deloitte is the most valuable brand in the professional services sub sector, with a sizeable lead over Accenture in 2nd and PwC in 3rd.
Despite recording a 4% decline in brand value to US$25.3 billion, Accenture retains its position as the second most valuable professional services sector brand. Accenture’s commitment to innovation and improving its technological capabilities proves to be one of its strongest advantages over its competitors. In 2019, a vast majority of Accenture’s capital investment was deployed in “The New” – digital, cloud and security services. These services are flourishing currently as clients turn to them to support their transformation during the pandemic. The relevance of these services, even during such uncertain times, places the brand in a solid position in the long term.
PwC’s brand value has remained stable, with no brand value change at US$24.8 billion. The brand’s revenue increased across all reporting segments, with advisory recording the highest growth, a result of high levels of demand. PwC’s continued investment in people and technology is expected to cater to this demand and drive growth in the future.
The human resources sub sector has recorded less than favourable results, with the top 3 most valuable brands’ brand values dropping by an average of 10%. Dutch brand, Randstad, has recorded a 15% decrease in brand value to US$3.6 billion. The brand has cited lower core earnings and organic revenue due to weakened European markets, which have taken an even greater hit as a result of COVID-19.
The second most valuable HR commercial services brand, Adecco, has seen a 14% drop in brand value to US$3.6 billion. The brand’s key markets have slowed and thus damaged revenues – including, North America where there has been a slowdown in general staffing as seasonal demand falls and in Germany and Austria, which have proved challenging markets due to the weakened automotive and manufacturing sectors.
Sitting in third in the HR sub sector is Manpower (down 8% to US$2.5 billion). The brand’s future is looking turbulent as it is witnessing significant disruption from COVID-19, especially across the European market.
New York-headquartered Moody’s is the most valuable rating agencies brand in the ranking, despite recording a 1% drop in brand value to US$2.6 billion. 2019 was strong year for Moody’s, with both Moody’s Investor Services and Moody’s Analytics recording revenue growth. The brand has taken steps to become a globally integrated risk assessment firm through a combination of increased strategic investments and acquisitions and through launching several new products and services, including REIS Network and MA’s Commercial Location Score.
Second ranked Experian has posted a 6% brand value growth to US$2.1 billion. The brand has closed acquisitions with AllClear ID, MyHealthDirect and AutoID, contributing to its strong revenue growth. Last year, the brand announced Experian Lift - a new suite of credit score products that creates a more holistic picture of consumer creditworthiness – showcasing the brand’s commitment to product innovation.
S&P Global saw a marginal 1% increase in brand value to US$2.1 billion. S&P Global has recently launched several new products and advanced numerous automation and productivity projects – all of which place the brand in a strong position to better cater to consumer demand and drive brand value growth in the future.
American Express has overtaken Visa in this year’s ranking to claim 2nd spot in the overall commercial services ranking and 1st in the payment services sub sector, after positing a 6% brand value increase to US$29.2 billion. Over the last year, Amex has refreshed or launched nearly 50 products, boosting the brand’s customer engagement.
Dropping 3% to US$26.9 billion, Visa, has slipped to 3rd in the overall commercial services ranking. Visa has focused on forging strategic partnerships with emerging players including digital banks, wallets and a range of FinTechs, allowing the brand to evolve into a digital-first world.
Sitting in third in the payments services sub sector is Mastercard (up 8% to US$19.8 billion). The brand has been celebrating continuous revenue growth, which the brand attributes to its ability to both address the need of consumers – with a focus on reducing complexity and delivering on experience – and its development of innovative solutions to meet the evolving requirements of stakeholders.
Willis Towers Watson is the most valuable brand in the business support sub sector with a brand value of US$3.0 billion. The global broking and advisory company’s strong performance through both organic growth with strong client retention as well as recent M&A activity, such as the acquisition of Tranzact, have boosted estimates of future financial performance. However, recent lawsuits surrounding the Aon merger announced this year, and associated reputational implications, are likely to have a dampening effect on this growth over the next year.
Sitting in second in the business support sub sector is American food service provider Aramark (down 3% to US$2.9 billion). The COVID-19 pandemic has damaged the brand significantly, however, as it negotiates nationwide school closures and the suspension of arena events.
Cintas has seen a 7% brand value growth to US$2.8 billion. The brand celebrated strong performances in the uniform rental and facility services operating segments, contributing to the brand’s organic revenue growth. Cintas’ outlook is uncertain, however, as demand for its products is extremely economically sensitive.
View the full Brand Finance Commercial Services 50 2020 report here
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 50 most valuable hotel brands and the 10 most valuable leisure & tourism brands are included in the Brand Finance Commercial Services 50 2020 report.
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, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Commercial Services 50 2020 report.
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.
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.
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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.