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Banking on Brand


Jeff Bezos once said, "Your brand is what other people say about you when you're not in the room." He should know. Amazon is one of the top brands in the world today by pretty much any measure.

Last month, Forbes published its "Most Valuable Brands List for 2020."

The list is not a popularity contest. In fact, there are several steps involved, all requiring an MBA or at the very least a BS in Advanced Calculus. Here's how Forbes describes its methodology:

"After looking at a universe of 200 global brands with a notable presence in the U.S., our first step in valuing the brands was to determine revenue and earnings before interest and taxes for each one. We then averaged earnings before interest and taxes (EBIT) over the past three years and subtracted from earnings a charge of 8% of the brand's capital employed, figuring a generic brand should be able to earn at least 8% on this capital. (Forbes applied the corporate tax rate in the parent company's home country to that net earnings figure.) Next, we allocated a percentage of those earnings to the brand based on the role brands play in each industry. To this net brand earnings number, we applied the average price-to-earnings multiple over the past three years to arrive at a final brand value. For privately held outfits we applied earnings multiples for comparable public companies."

Hello? Are you still there? (OMG.)

Suffice it to say, the Forbes selection process is objective and rigorous (and, oy vey, is it mathematical). The top ten most valuable brands by their count are:

  1. Apple
  2. Google
  3. Microsoft
  4. Amazon
  5. Facebook
  6. Coca-Cola
  7. Disney
  8. Samsung
  9. Louis Vuitton
  10. McDonalds

Here's the bottom line. The top five are in the high-tech space. While our parents (and even their parents and maybe grandparents) would have recognized Coca-Cola, Disney, and McDonalds, the tech companies are fairly young. Amazon was founded in 1994. Google was founded in 1998. And Facebook in 2004. (And why, oh why, didn't we invest in all three way back when?). The old timers of the group aren't even that old. Microsoft only goes back to 1975 and Apple only to 1976.

Compare that to Louis Vuitton, opened in 1854; Coca-Cola, invented in 1885; Disney in 1923; Samsung since 1938; and McDonalds from 1940. These brands built value (not to mention name recognition and customer loyalty) over time.

But, high tech moves at a different pace. For better or worse. (Remember the dot-bomb that almost immediately followed the dot-com boom of the late 1990s?)

Forbes also measures how each of its Most Valuable Brands has increased or decreased since the previous year. Netflix gained 72% in value (and that was measured before COVID sent us all home to binge watch). Amazon increased by 40% and Microsoft by 30%. Facebook, meanwhile, decreased in value by 21% (and, again, that was before any recent ad boycotts or political controversies).

But, don't feel too bad for them. Despite the decrease, Facebook still made it into the top five.

As creatives, who spend as much time helping clients build brand as we do demand, we have to wonder how this list, measured by dollars and cents (and whatever EBIT is), compares to lists of powerful brands measured by recognition, aesthetics and messaging, and customer affinity.

According to Morning Consult's Annual Most Loved Brands List, which ranks brands based on favorability, trust, community impact, and a net promoter score, here's a different set of top ten:

  1. The USPS
  2. Google
  3. UPS
  4. Amazon
  5. Netflix
  6. Clorox
  7. Prime
  8. M&Ms
  9. Home Depot
  10. YouTube

Our take-away here, regardless of politics, is that the USPS, which may not exactly be a profit-center for the government (Wait-a-minute ... was it ever supposed to be?), is more loved than many a multibillion-dollar high-tech giant.

And, as direct marketers, we say "Bravo" to that.



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