The Annual Report on the World's Most Valuable Global Brands
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Global 500 2015 The annual report on the world’s most valuable global brands February 2015 BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 1 25/02/2015 14:19 Foreword. David Haigh, CEO, Brand Finance “The boardroom can sometimes feel like the tower of Babel, with CMOs and CFOs speaking mutually unintelligible languages, damaging the prospects for what should be their shared goals. Brand Finance bridges the gap between marketing and finance.” What is the purpose of a strong brand; to communicate the value of their work and boards attract customers, to build loyalty, to motivate then underestimate the significance of their staff? All true, but for a commercial brand at brands to the business. least, the first answer must always be ‘to make money’. Sceptical finance teams, unconvinced by what they perceive as marketing mumbo jumbo may Huge investments are made in the design, fail to agree necessary investments. What launch and ongoing promotion of brands. Given marketing spend there is can end up poorly their potential financial value, this makes sense. directed as marketers are left to operate with Unfortunately most organisations fail to go insufficient financial guidance or accountability. beyond that, missing huge opportunities to The end result can be a slow but steady effectively make use of what are often their most downward spiral of poor communication, wasted important assets. resources and a negative impact on the bottom line. Monitoring of brand performance should be the next step, but is often sporadic. Where it Brand Finance bridges the gap between the does take place it frequently lacks financial marketing and financial worlds. Our teams have rigour and is heavily reliant on qualitative experience across a wide range of disciplines measures poorly understood by non-marketers. from market research and visual identity to tax As a result, marketing teams struggle to 2. Brand Finance Global 500 February 2015 BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 2 25/02/2015 14:19 and accounting. We understand the importance of Omaha certainly does extremely well from of design, advertising and marketing, but we most of his investments, but could he be doing also believe that the ultimate and overriding better? purpose of brands is to make money. It is all well and good to want a strong brand that That is why we connect brands to the bottom customers connect with, but as with any asset, line. By valuing brands we provide a mutually without knowing the precise, financial value, how intelligible language for marketers and finance can you know if you are maximising your teams. Marketers then have the ability to returns? If you are intending to license a brand, communicate the significance of what they do how can you know you are getting a fair price? If and boards can use the information to chart a you are intending to sell, how do you know what course that maximizes profits. the right time is? Of course not all non-marketers need to be Brand Finance has conducted hundreds of brand convinced that brands are valuable. Warren and branded-business valuations to help answer Buffet, renowned for his financial nous and stock these questions. The following report is a first step picking ability, is famously keen on investing in to understanding more about brands, how to some of the world’s biggest and best-loved value them and how to use that information to brands such as Heinz and Coca-Cola. The sage benefit the business. The team and I look forward to continuing the conversation with you. Brand Finance Global 500 February 2015 3. BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 3 25/02/2015 14:19 Contents About Brand Finance 3 Methodology 4 Sector Analysis 6 Understand Your Brand’s Value 18 How We Can Help 20 Contact Details 21 Appendix, Full Table 22 Bridging the gap between marketing and finance 4. Brand Finance Global 500 February 2015 BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 4 25/02/2015 14:19 About Brand Finance Brand Finance is the world’s leading regulatory bodies around the world. We are one independent brand valuation and strategy of the few companies certified to provide brand consultancy. Brand Finance was set up in 1996 valuations that are fully compliant with ISO with the aim of ‘bridging the gap between 10668, the global standard on monetary brand marketing and finance’. For almost 20 years we valuations. have helped companies to connect their brands to the bottom line, building robust business cases Transparency for brand decisions, strategies and investments. There are no black boxes. Our approach is to In doing so, we have helped finance people to work openly, collaboratively and flexibly with evaluate marketing programmes and marketing clients and we will always reveal the details of people to present their case in the Board Room. our modelling and analysis. This means our clients always understand what lies behind ‘the Independence number’. Brand Finance is impartial and independent. We assess and help to manage Expertise brands, but we do not create or own them. We We possess a unique combination of skills are therefore able to give objective, unbiased and experience. We employ functional experts advice because we have no vested interest in with marketing, research and financial particular outcomes of a project and our backgrounds, as well as ex-client-side senior recommendations are entirely independent. We management who are used to ‘making things are agency agnostic and work collaboratively happen’. This gives us the mindset to think with many other agencies and consultancies. beyond the analysis and to consider the likely impact on day-to-day operations. We like to think Technical credibility this differentiates us because our team has real Brand Finance has high technical operational experience. standards. Our work is frequently peer- reviewed by the big four audit practices and our For more information, please visit our website: work has been accepted by tax authorities and brandfinance.com Brand Finance puts thousands of the world’s biggest brands to the test every year, evaluating which are the most powerful and most valuable. The Global 500 covers the top 500 from all sectors and is just one of many annual reports produced by Brand Finance. Visit www.brandfinance.com to discover more. Global 500 2015 The annual report on the world’s most valuable global brands February 2015 Brand Finance Global 500 February 2015 5. BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 5 25/02/2015 14:19 Methodology What do we mean by ‘brand’? Definitions + Enterprise Value – the value of the E.g. entire enterprise, made up of ‘Branded VW Group multiple branded businesses Enterprise’ ‘Branded Business’ + Branded Business Value – the value of a single branded business ‘Brand’ E.g. operating under the subject brand Bentley + Brand Value – the value of the trade marks (and relating Bentley Brand marketing IP and ‘goodwill’ attached to it) within the branded business Definition of ‘Brand’ Brand Strength In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most for all the expectations and opinions held by directly and easily influenced by those customers, staff and other stakeholders about an responsible for marketing and brand organisation and its products and services. management. In order to determine the strength However when looking at brands as business of a brand we have developed the Brand assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing more technical definition is required. Brand investment, brand equity (the goodwill Finance helped to craft the internationally accumulated with customers, staff and other recognised standard on Brand Valuation, ISO stakeholders) and finally the impact of those on 10668. That defines a brand as “a marketing- business performance. Following this analysis, related intangible asset including, but not limited each brand is assigned a BSI score out of 100, to, names, terms, signs, symbols, logos and which is fed into the brand value calculation. designs, or a combination of these, intended to Based on the score, each brand in the league identify goods, services or entities, or a table is assigned a rating between AAA+ and D combination of these, creating distinctive images in a format similar to a credit rating. AAA+ and associations in the minds of stakeholders, brands are exceptionally strong and well thereby generating economic benefits/value” managed while a failing brand would be assigned a D grade. 6. Brand Finance Global 500 February 2015 BF_NEW_GLOBAL_REPORT_2015_GLOBAL PRINT.indd 6 25/02/2015 14:19 Methodology Brand strength Brand Brand revenues Brand value index ‘Royalty rate’ (BSI) Brand Strong brand investment Brand equity Brand Weak brand performance Forecast revenues Brand strength BSI score applied to an Royalty rate applied to Post-tax brand expressed as a BSI appropriate sector forecast revenues to revenues are score out of 100. royalty rate range. derive brand values. discounted to a net present value (NPV) which equals the brand value. Brand Finance calculates the values of the sourced from Brand Finance’s extensive brands in its league tables using the database of license agreements and other ‘Royalty Relief approach’. This approach online databases. involves estimating the likely future sales that are 3 Calculate royalty rate. The brand strength score attributable to a brand and calculating a royalty is applied to the royalty rate range to arrive at a rate that would be charged for the use of the royalty rate. For example, if the royalty rate brand, i.e. what the owner would have to pay for range in a brand’s sector is 1-5% and a brand the use of the brand—assuming it were not has a brand strength score of 80 out of 100, already owned.