“It is perhaps fitting that the brand which enables the world’s biggest brands [to] reach their customers and build their own brand equity (through search and advertising respectively) has itself become the world’s most valuable [brand].”
– Brand Finance Global 500 2017 Report
Lego might have been crowned the world’s most powerful brand thanks to partnerships with Star Wars and Batman, but it is far from the most valuable. And for the first time since 2011, Apple doesn’t top the finance charts either.
Google has officially claimed the mantle of “world’s most valuable brand” for 2017 (and second most powerful brand, just for good measure).
The end of Apple’s five-year reign comes by way of Brand Finance’s annual Global 500 brand rankings report.
As indicated by the report, and the full rankings list, Google’s value increased to reach a staggering $109.5 billion in 2016; a 24 percent hike for the company.
Apple, on the other hand, saw its monetary value plummet from $145.9 billion in 2015 to $107.1 billion; a drop of 27 percent.
It is this decrease that enabled Google to steal the top seat by approximately $2.4 billion.
In the report, the authors had some scathing words as to why Apple failed to retain its position atop the financial charts:
“Put simply, Apple has over-exploited the goodwill of its customers, it has failed to generate significant revenues from newer products such as the Apple Watch and cannot demonstrate that genuinely innovative technologies desired by consumers are in the pipeline. . . Its brand has lost its luster and must now compete on an increasingly level playing field not just with traditional rival Samsung, but a slew of Chinese brands such as Huawei and OnePlus in the smartphone market, Apple’s key source of profitability.”
These remarks clearly display Apple’s complacency as a brand and unimaginative engineering in the products the company has released in preceding years. Furthermore, it shines a light on the fact that the tech giant merely assumes that slapping an Apple logo on a gadget (looking at you, Apple Watch) will equal sales; hence why the organization has taken a $38.8 billion fall from grace over the past year.
Despite these critiques, Apple recently released its first quarter earnings report which showed that the iPhone 7 and iPhone 7 Plus are still extremely hot commodities as holiday sales led to the company pulling in an additional $17.9 billion.
iPhone sales topped out at 78.3 million units, beating the forecast of 76 million units, earning the company a comfortable five percent increase from the previous year. This also allowed Apple to reclaim its place as the world’s top Smartphone seller for the first time in five years.
Google Equals Gold
As for Google, the Internet search provider “. . . remains largely unchallenged in its core search business, which is the mainstay of its advertising income,” as noted in the Brand Finance report.
But it is not merely Google’s monetary value that has led the company to become the world’s most valuable brand. Brand Finance also indicates that Google’s brand strength score is up by two points, “. . . indicating improving underlying brand equity.”
What this means is that the higher brand equity a tech business has, the more likely it is to retain its users and may even be able to, “. . . command a price premium that its products and services might not be worth.”
Google’s step up on the financial ladder is extremely meaningful for the company as the report only takes the Google brand into account as opposed to including to entirety of Alphabet’s portfolio including companies like Google X, Nest, self-driving tech company Waymo, and its many other brands.
Making this even more significant is the fact that Alphabet recently released its fourth-quarter earnings report, revealing a “. . . stronger than expected 22.2 percent increase in quarterly revenue.” This growth was largely driven by mobile search, a boom in video ad purchases on YouTube and its fast growing cloud computing business. The company’s profits, however, did not meet expectations due to a one-off tax payment incurred by the business.
Part of what has allowed Google to skyrocket to 2017’s most valuable brand is its utter dominance in the search market. Since Google still controls roughly 64 percent of the search market, its main source of revenue (advertising) is largely secured from competitive encroachment, seeing a 20 percent increase last year. This boost was seen amidst marketers spending less on page views driven by online searchers, displaying its powerful muscle in the market.
Giving Google a Run for Its Money
Out of all of the 500 companies that Brand Finance analyzed, Amazon was a close competitor to Google and Apple, coming in at $106.4 billion; just $700 million shy of besting Apple and about $3 billion short of taking down Google.
Coming in at No. 4 was AT&T with $87 billion. Next in line at No. 5 is Microsoft with $76.3 billion, then comes Samsung at No. 6 with $66.2 billion. Verizon clocked in at seventh place with $65.9 billion followed by Wal-Mart at No. 8 at $62.2 billion.
Rounding out the top 10 is Facebook at No. 9, with $61.9 billion and ISBC with $47.8 billion.
Clearly the only one of these companies that is capable (right now) of dethroning Google or Apple is Amazon. And with its third-party sellers raking in more cash for the company with each passing year, along with its many other initiatives, there is a good chance that we will see the eCommerce giant top the list in the next few years.
Do you think Google will be able to maintain its lead and top the charts again in 2018? Or do you think Amazon is poised to become the next most valuable brand in the world?