Apple bites back
Apple has overtaken Amazon and Google to reclaim the title of the world’s most valuable brand for the first time since 2016, according to the latest report by Brand Finance – the world’s leading brand valuation consultancy. Apple has the success of its diversification strategy to thank for an impressive 87% brand value increase to US$263.4 billion and its position at the top of the Brand Finance US 500 2021 ranking.
Under Tim Cook’s leadership, especially over the past five years, Apple began to focus on developing its growth strategies above and beyond the iPhone – which in 2020 accounted for half of sales versus two-thirds in 2015. The diversification policy has seen the brand expand into digital and subscription services, including the App Store, iCloud, Apple Podcasts, Apple Music, Apple TV, and Apple Arcade. On New Year’s Day alone, App Store customers spent US$540 million on digital goods and services.
In the past 12 months, the role and practices of Tech brands have been put even more in the spotlight – and a positive reputation cannot be taken for granted, even if a brand is providing shiny products, brilliant apps and a cool image. In this context, Apple continues to win the hearts and minds of American consumers, ranking joint-second among Tech brands for Reputation. This compares to a 6th place ranking 12 months ago. While there is a degree of reassessment in the US about Tech brands, Apple’s reputation remains solid.Laurence Newell, Managing Director Brand Finance USA
Apple’s transformation and ability to reinvent itself time and time again is setting it apart from other hardware makers and has contributed to the brand becoming the first US company to reach a US$2 trillion market cap in August 2020. With rumors resurfacing that Apple’s hotly anticipated Titan electric vehicle foray is underway again, it seems that there is no limit to what the brand can turn its hand to.
Despite relinquishing its position at the top, second-ranked Amazon has still managed to record a healthy 15% brand value growth to US$254.2 billion. The retail giant is one of the few brands that benefitted considerably from the pandemic and the resulting unprecedented surge in demand as consumers turned online following store closures. Over Q2 and Q3 of 2020, e-commerce platforms experienced the highest revenue growth since 2016.
Most recently – further leveraging the circumstances of the pandemic – Amazon has acquired 11 passenger planes from struggling North American airlines to expand its air logistics capabilities. A tactical purchase to support its fast-growing customer base, but also a strategic move towards building its own end-to-end supply chain, the fleet can allow the brand to become a serious contender in air transportation in due time.
Another example of Amazon’s relentless innovation in the face of global adversity, the brand has also announced its foray into the health sector with the launch of Amazon Pharmacy and fitness tracker Halo. Before it brought success to Apple, daring diversification had already been the hallmark of Amazon’s growth strategy, which it continues to pursue with impressive results.
Also bucked by Apple, Google sits in third spot following a marginal 1% uplift in brand value to US$191.2 billion. Slightly behind its peers in terms of diversification, Google recorded its first ever revenue decline as a result of the pandemic. The vast majority of the brand’s revenue comes from advertising, which took a hit over the last year as marketing budgets tightened.
Tesla races up ranking
The importance of technological innovation as a driving force behind brand value is best exemplified by Tesla (up 158% to US$32 billion), the fastest-growing brand in the Brand Finance US 500 2021 ranking. Emerging unscathed from the various controversies surrounding CEO, Elon Musk, Tesla’s market capitalization has grown by an eyewatering US$500 billion over the last year, making it worth as much as the next nine largest automobile manufacturers in the world combined.
The California-headquartered auto brand has also celebrated record numbers of sales this year, ramping up production of its Model Y car and expanding into new markets by opening a plant in Shanghai. As the world’s best-selling plug-in and battery electric passenger car manufacturer as well as a pioneer in using artificial intelligence in the automobile industry, Tesla has continued to strive for innovation and sustainability, developing more efficient battery cells.
AMD leapfrogs ahead
AMD (up 89% to US$2.7 billion) is the fastest growing tech brand, the second-fastest growing brand in the US overall and the biggest mover in the ranking this year, jumping up 186 spots from 473rd to 287th.
As artificial intelligence, data centers, 5G technology, IoT, and autonomous vehicles are rapidly growing, semiconductor brands are perfectly positioned to match this growth as demand requires a new era of sensors, memory and chips.
Lorenzo Coruzzi, Associate, Brand Finance
The impressive growth of the AMD brand can be attributed to the highly anticipated upcoming launch of its Ryzen 5000 Mobile series, which promises a decent advantage over the Intel Core i7-1165G7 and previous Ryzen 4000 mobile processors thanks to a longer battery life, 7nm processor and 8-core x86 CPU for ultrathin laptops. Additionally, Samsung has confirmed that its next chipset will feature AMD RDNA 2-based graphics – the same technology in some of the best graphics cards available, as well as the PS5 and Xbox Series X.
Nvidia (up 73% to US$8.1 billion) is the fifth-fastest growing brand in the Brand Finance US 500 2021 ranking, an upward trajectory it plans on continuing through its US$40 billion deal to acquire British chip designer Arm. The announcement caused quite the stir among industry players as Nvidia sets its sights on becoming top contender for next generation processing and AI.
From product setbacks and sales delays, to COVID-19 and Apple making its own computer chips, Intel has negotiated a turbulent year. Despite this, the California-based tech multinational has managed to increase its brand value by 16% to US$31.8 billion, placing 19th overall in the US ranking. In a move to remain relevant in an increasingly competitive market, Intel has also undergone a rebranding to better reflect its future goals.
Digital media stream on
In a year epitomized by global lockdowns, with working from home becoming the new normal and an unprecedented reliance on digital communication, retail, and entertainment, tech brands – and brands successfully leveraging technological – innovation have significantly boosted their brand values.
The world’s most valuable telecoms brand, Verizon (up 8% to US$68.9 billion), has also recorded a healthy brand value growth and ranks 7th in the Brand Finance US 500 2021. Verizon continues to make significant strides in its 5G expansion program, which now spans over 2700 cities and 230 million people.
Aided by the increased demand for home deliveries and safe means of travel during the pandemic, Uber has seen a 34% brand value jump to US$20.5 billion and entered the Brand Finance US 500 2021 top 50 most valuable brands at 42nd.
Gaming and streaming services enjoyed a significant boost in brand value this year, as users turned to online means of entertainment in the wake of the pandemic. This demonstrates, yet again, the importance of future-proofing brands by going digital.
Video conferencing and business communication software has taken center stage as the working from home revolution takes hold globally. Salesforce’s (up 29% to US$13.2 billion) acquisition of Slack is a clear signal that the brand wants to become more competitive in the space, especially against Microsoft (up 20% to US$140.4 billion). It will remain to be seen whether this platform integration will be effective and deliver the expected value.
Netflix enjoyed a spike in usage, causing its brand value to increase by 9% to US$24.9 billion. With 37 million new users active on the platform by the end of the second quarter in 2020, Netflix’s success has driven improved revenue forecasts and brand equity scores. Despite this, the streaming platform’s growth was not as substantial as in previous years due to challenges posed by competitors such as Disney (down 9% to US$51.2 billion) and HBO (down 3% to US$4 billion).
In line with positive trends in the new media, Electronic Arts (up 14% to US$4.4 billion) enjoyed a similar boost in brand value and revenue forecasts as many consumers turned to gaming to pass the time during lockdown. The brand is poised to continue this trajectory in the coming year, renewing its 10-year partnership with Spain’s professional soccer division La Liga to retain the rights to its exclusive video game. Another gaming giant, Activision Blizzard saw even larger brand value boost, up 20% to US$6.3 billion.
In contrast, Twitter has recorded a 18% brand value drop to US$3.1 billion. The social media platform has come under intense scrutiny after the handling of former President Trump’s account sparked raucous debate surrounding freedom of speech.
Unlike its new media counterparts, COVID-19 has exacerbated the issues faced by traditional media brands – including Fox (down 9% to US$7.7 billion) and NBC (down 44% to US$8.4 billion) – as film and television production was halted and advertising budgets were slashed. The hardest hit in this category is CBS (down 49% to US$5.9 billion) – one of the top ten fastest falling brands in the Brand Finance US 500 2021 ranking – following cuts in advertising revenue and a disastrous merger with Viacom.
Brick-and-mortar retailers embrace tech
At the same time, many traditional brick-and-mortar retailers have successfully leveraged technology to offer online delivery options and develop digital in-store improvements, faring well during lockdowns as a result.
Walmart (up 20% to US$93.2 billion) has inched up to 5th in the overall ranking, following an impressive spike in earnings. With targeted investments in e-commerce and over 400,000 workers hired in the last year to stock shelves and fulfil online orders, Walmart has been quick to adapt to the surge in demand. Similar strategies have been adopted by Target (up 30% to US$20.7 billion), Dollar General (up 28% to US$9.6 billion), Costco (up 28% to US$28.9 billion) and Best Buy (up 23% to US$6.3 billion), which have all seen significant brand value growth as they offered quick turnaround for online orders, reserved slots for elderly and at-risk shoppers, and implemented ship-from-store order fulfilment processes.
With a different story to tell, TJ Maxx has endured a difficult year, becoming the fastest-falling retail brand, down 32% in brand value to US$6.5 billion. The retailer’s struggles are largely due to store closures and a decline in apparel sales during the pandemic.
Restaurants left hungry for growth
The world’s largest fast food and coffee chains have borne the brunt of global lockdown initiatives, with closures destroying sales and social distancing measures changing the way in which customers dine for the foreseeable future. Major players, Starbucks (down 6% to US$38.4 billion), McDonald’s (down 10% to US$33.8 billion) and KFC (down 12% to US$15.1 billion), have all recorded brand value losses.
With consumer habits being forced to change towards delivery and collection, brands that are already set up to accommodate this under their operations have managed to shelter themselves somewhat from the damage of the pandemic. Domino’s Pizza for example, which operates purely on takeaway and collection, has recorded a healthy 7% brand value increase to US$6.1 billion.
Yum! Brands’ Taco Bell also recorded a brand value increase of 7% to US$5.8 billion following the launch of its COVID-inspired bellhop service, where customers place orders on the brand’s digital app, drive to their nearest branch and have an employee bring their food straight to the car.
COVID docks cruises
The ongoing global pandemic has strongly impacted the travel and tourism industries, with cruises being at the helm. Cruises disappear from the Brand Finance US 500 2021 ranking for the first time ever, with Royal Caribbean International (down 90% to US$494 million) dropping 631 spots from 169th to 800th, and Norwegian Cruise Line (down 98% to US$49 million) dropping 1,159 spots to 1,439th overall.
In addition to ships being docked, the industry has received widespread criticism since February after the virus was discovered onboard the Grand Princess vessel. Although each cruise liner has taken innovative steps towards promoting a safer environment onboard, it is unsure how long it will take for the industry to recover, and whether travelers will be willing to sail again.
Long haul problems for aviation
A clear impact of the COVID-19 pandemic, US-based airlines have decreased in brand value across the board, with Boeing (down 40% to US$13.6 billion) among the top ten fastest falling brands for 2021. Following suit, American Airlines (down 40% to US$5.3 billion), United Airlines (down 39% to US$5 billion) and Delta (down 38% to US$5.8 billion) each experienced a significant loss in brand value.
Boeing’s woes continue after hitting headlines at the beginning of this year when its 737-500 passenger plane crashed in Indonesia, its reputation taking yet another battering. The brand has spent much of the last two years in a state of crisis following the two fatal crashes that grounded its 737 Max in March 2019 and its problems have compounded further throughout the pandemic. With the partial return of the plane to operations in December 2020, the brand was hoping for a turbulence-free future to counter its significant losses and job cuts. However, as the brand hit the headlines once again, its brand value records yet another dent.
Bucking the sector trend is Raytheon Technologies, which saw a 19% increase in brand value to US$6.2 billion. Raytheon has undergone several structural changes over the previous 12 months, including merging with United Technologies, as well as divesting other arms of the business.
Staycations vs. vacations
With holidays cancelled and people instructed to work from home, the hospitality sector has reached an almost complete standstill both from tourism, as well as corporate travel. The world’s most valuable hotel brand, Hilton, has seen a 30% drop in brand value to US$7.6 billion. While Hilton’s revenue has taken a significant hit since the outbreak of the pandemic, the brand is showing confidence in its growth strategy, announcing a further 17,400 rooms to its pipeline, bringing the total to over 400,000 new rooms planned – an uplift of 8% on the previous year.
Hilton’s rival, Marriott, the second-fastest falling brand in the ranking, dropped 60% in brand value to US$2.4 billion and plummeted 178 places to 312th overall (ranked 134th in 2020). Online booking platforms are crashing too – Airbnb is this year’s fastest falling brand after a whopping 67% brand value loss to US$3.4 billion, simultaneously dropping 173 positions in the ranking from 69th to 242nd. Booking.com (down 19% to US$8.3 billion) also recorded a brand value loss, losing 11 spots and ranking 83rd overall.
Mixed fortunes for financial services
In spite of the pandemic, banking remains in the top three most valuable industries in the world, with US banks accounting for a cumulative brand value of US$274.8 billion. Bank of America (down 7% to US$32.8 billion) claims top spot as the country’s most valuable banking brand, and fifth most valuable banking brand globally.
Currently holding the lowest reputation score among all banks in the US, Wells Fargo (down 22% to US$31.8 billion) was the bank to experience the largest drop in brand value – the result of failing to rebuild favor among consumers in the wake of several past scandals.
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. According to these criteria, Citi (down 3% to US$32.2 billion) – the third largest US bank by assets – has emerged as the strongest retail bank in the US with a Brand Strength Index (BSI) score of 80.7 out of 100 and AAA- rating (up from AA+ in 2020).
Out of 30 commercial services providers in the ranking, 24 (or 80%) experienced brand value losses. Despite a tough market, Deloitte (down 18% to US$26.7 billion) has defended the title of the world’s most valuable commercial services brand as it continues to outperform its Big Four competitors. Gartner is the only new entrant for the sector, ranking at 483rd and valued at US$1.3 billion.
Over half of all insurers in the Brand Finance US 500 2021 ranking increased in brand value, with Jackson National Life Insurance Company (up 43% to US$3.6 billion) claiming a spot in the top ten fastest growing US brands for 2021. Optimistic profit forecasts resulting from a dramatic drop in claims during the pandemic is one possible explanation for increases in brand value within the sector, as fewer people are on the roads and companies see less work injuries due to employees isolating at home.
Coca-Cola claims podium spot
Coca-Cola (down 13% to US$33.2 billion) has overtaken Disney (down 9% to US$51.2 billion) as the US’ strongest brand, and 4th globally, with a BSI score of 91.7 out of 100. The soft drinks giant was not immune from the impact of COVID-19, however, with the multinational forced to restructure, which has seen over 2000 jobs cut and the brand lose over a tenth of its value this year.
Coca-Cola’s biggest soft-drink rival, Pepsi (down 3% to 18.4 billion), is also one of this year’s strongest performing brands, ranking ninth overall in the US with a BSI score of 88.4 out of 100 and a AAA rating.
While the decades-long rivalry between these two soda giants is often brought to the fore through Super Bowl commercials, both brands have decided against advertising their trademark soft drinks this year. CBS is seeking a staggering US$5.5 million for 2021 Super Bowl advertising packages, with last year’s game generating a record-breaking US$435 million in ad spending.
In December, Coca-Cola announced that it was laying-off 17% of its global workforce – like many industries, soda streams have run flat with large parties, live sporting events and in-theatre movies getting the axe.
With Pepsi opting to replace its traditional Super Bowl ad slot with a new campaign lead for its halftime show, and Coca-Cola toasting other brands in its pre-game message – citing the need to invest in the right resources during unprecedented times – these beverage giants will lay down arms and take battle elsewhere.
The move towards other forms of advertising means each brand will still have a presence around the game, but without the pressure of paying the exuberant prices required for Super Bowl entry.
While it’s clear that the primary reason for bowing out of in-game commercials for this year’s much anticipated sporting event is to save money, neither brand will experience long-term damage by doing so and still remain two of America’s strongest brands.
PayPal swipes spot as 5th strongest
Claiming the title of 5th strongest US brand is PayPal (up 4% to US$16.4 billion) with a BSI score of 89.3 out of 100 and a AAA brand strength rating.
PayPal has consistently gained good marks from US consumers in our Brand Equity Research, and for overall reputation remains in the top echelon along with Amazon, Google, Microsoft and Apple. Like any strong brand, PayPal’s brand equity is enduring – even in the fastest-moving segment of all, the company does not rely on relentless innovation for its own sake.
Consumers have come to depend on PayPal in everyday situations, and have repaid PayPal with trust. As with any brand, reputation alone is not the full picture – a brand has to be readily available and top-of-mind. PayPal ticks these boxes of course, being familiar to most consumers, and especially those under 35.