Recent weeks have seen the publication of the 2015 brand valuation league tables by Interbrand and Eurobrand, so it is time for T2’s annual comparison of how these league tables compare to one another and to those released earlier in the year by Millward Brown and Brand Finance.
Here are the headline findings:
- The number of brands appearing in the four top 100 lists in 2015 was 203 (versus 209, 213, 215, and 213 in the previous four years)
- The number of brands common to the four top 100 lists was 31 in 2015 (compared to 29, 28, 27 and 28 in the previous four years)
- For these 31 common brands, the difference between the high and low valuations of the same brand averaged a multiple of 2.2 with the narrowest differential being in the value attributed to the J P Morgan brand (only a 20% difference across the four kists) and the largest being for Shell (Brand Finance’s valuation of the Shell brand is a staggering 5.6x the value that Interbrand calculates)
- Fully 50% of the time, there is disagreement between the four consultancies about whether a specific brand increased or decreased in value versus 2014 (of the 28 brands that were common to all four lists for both 2015 and 2014, there was consensus on the direction of the change in value on only 14)
- The top 30 list from each consultancy contains almost as many brands that are unique to that list (an average of 8.5) as they include brands that are common to all four lists (10 in 2015)
At least all four consultancies agree that Apple is the world’s most valuable brand, even if the value they calculate for it range from a low of $128bn (Brand Finance) to a high of $249bn (Millward Brown).
This degree of inconsistency undermines the credibility of brand valuation as the “proof” of marketing accountability. Contrary to what many believe, the issue is not about methodology – it is about the assumption that go into the financial models. The problem is that there is still too much disagreement about the definition of brands and their significance in the decision making process of customers. As a result, the financial models of the four consultancies may contain wildly different assumptions. Millward Brown is extremely bullish about the role of brands in general (the aggregate value of their top 100 list is $3,267 bn versus $1,715 bn in aggregate value for Interbrand’s top 100 brands); whereas Brand Finance is a particularly strong believer in the role of brands in banking (its top 30 list includes 7 bank brands, only 2 of which appear in the top 30 of any of the other three consultancies).
My persistent concern is that brand valuation involves treating the brand as if it were a standalone asset that is the sole responsibility of marketing. It seems that the goal of brand valuation is on proving the value of communication (often specifically, advertising) as opposed to understanding what creates a distinctive experiences for customers. Marketers need to stop treating brand valuation as a tool to prove the value of Marketing, and start using it as a framework for understanding how marketing can contribute to enhancing the overall value of the business.