Brand value is an important part of any company’s business. It is crucial for marketing and sales, and for the overall financial results of the company. It has been proven many times that investing money in creating a powerful brand allows to increase sales and, at the same time, raise the company’s capitalization through increasing brand value itself.
Measuring
There are many approaches to measuring a brand’s value. One particular is called the royalty relief approach. The methodology can be checked here, for example, but there are many other examples of how it’s done. Basically, there are several steps:
- evaluate the brand strength (this estimate may be a little subjective);
- calculate the royalties that are acceptable or that are usual for this particular industry;
- get the revenues from the companies’ financial statements;
- apply the brand strength and royalty rates to the revenues or forecast revenues – in this way, you eventually arrive at consistent estimates of the brand value that can be compared over time.
Top-10 brand value changes in the last 15 years
Here we go with the methodology that Brand Finance / Brand Directory uses to get brand value calculations to examine the dynamics of the most powerful brands over time. The source chart itself is available here. We compare brand values in 2022 to 2007.
- We can see that top-10 companies composition itself has changed and there were several newcomers.
- The distribution of the places over the last 15 years has changed dramatically. Amazon from the last position came to the first in 2018. And only recently has it been challenged by Apple. Basically, Apple return in the first place it had and at the same time
- Microsoft has fallen from first place in 2007 to be fourth in the more recent times.
- Google has been consistently in the top-3 over the last 15 years. What is more, is that several companies from emerging markets like Samsung or Huawei came to the top-10 and have been changing the brand value positions quite substantially.
- It is obvious that the most powerful brands nowadays are concentrated in the tech or media business. The companies that have the most market power, have the most powerful and most valuable brands as well.
Conclusion
Check the brand value not only for other firms or for the market but for your company as well. There are several ways to measure it. The one described in this article uses a more financial approach to evaluate brand power. So you can use it for setting KPIs or quantitative targets to improve your company’s current or future brand value position.