Tech giants extend lead as world’s top valued brands

Technology companies continue dominating the list of best-performing companies in the world, with Amazon, Google and Apple leading the pack.

This is according to the third edition of the Brand Finance Global 500 report released at the World Economic Forum in Davos this week.

The research methodology involves calculating brand strength, using a balanced scorecard of metrics assessing marketing investment, stakeholder equity and business performance.

According to the report, Amazon has for the first time broken the $200 billion-value mark,topping the chart as the most valuable brand across the globe. While the American multinational e-commerce and cloud computing firm retains previous years’ title of world’s most valuable brand, this is its highest value yet.

Following 18% growth from $187.9 billion last year, Amazon’s brand value is now over $60 billion more than Google (second place) and $80 billion more than Apple (third place).

Microsoft ranks in fourth position, with a value of $117 billion, while Samsung Group sits in fifth place, with a value of $94 billion, notes the report.

“The disrupter of the entire retail ecosystem, the brand that boasts the highest brand value ever, Amazon continues to impress across imperishable consumer truths: value, convenience and choice. Today, Amazon’s situation seems more than comfortable, but what will the roaring twenties hold in store?” saysDavid Haigh, CEO of Brand Finance.

Currently leading the cloud and home hardware markets, Amazon recently invested in several diverse businesses, including electric truck start-up Rivian and UK food delivery company Deliveroo.

Google’s value was fuelled by Alphabet’s revenue growth, boosted by product enhancements in its core offerings, including Search, Maps, YouTube and Google Assistant; and expansion of cloud and hardware offerings. Its share price increased from $1 082.8 in Q2 2019, to $1 221.14 in Q3 2019.

In October, Apple posted quarterly revenue of $64 billion, an increase of 2% from the year-ago quarter, and quarterly earnings per diluted share of $3.03, up 4%. International sales accounted for 60% of its quarterly revenue.

Despite many success stories, there are also clear signs of a slowdown. The combined value of the Brand Finance Global 500 has increased by less than 2% year-on-year, and while 244 brands have increased their brand value, another 212 are down, including 95 by 10% or more.

While consumers continue to hold the tech sector in high regard, reputation scores have fallen slightly. In part, any decline may be because issues in the public spotlight are finally impacting the reputation of some industry giants. Reputation scores for Facebook (6.3) and Uber (5.7) are all lower by 0.5 points, and Huawei (6.2) is under the global spotlight. Nevertheless, brands such as YouTube (7.8), Google (7.7) and Netflix (7.4) continue to enjoy strong reputations and buzz.

In terms of decline in brand value, Chinese software giant Baidu recorded the largest drop, down 54% to $8.9 billion.

Uber is also failing to deliver on its promise, as its brand value dropped by one-third, down 32% to $15.3 billion, forcing it to share the ride with five fastest-falling brands in the ranking. The company went public last year but with disappointing results, closing its first day of trading with a 7.6% reduction in valuation.

In contrast, one company still very much on the road to success is Tesla, racing ahead as the fastest-growing brand with a brand value of $12.4 billion, up 65% on last year’s valuation.

Unlike other apps that have not been able to satisfy expectations, Instagram is enjoying an explosion of growth, securing the second-highest brand value increase this year, up 58% to $26.4 billion.

“With more than one billion active monthly users and a focus on new technology, like the latest Checkout feature that benefits both consumers and other brands, Instagram is catering to demand and staying relevant,” says Brand Finance.

Research firm GlobalData’s list of top 25 publicly traded global technology companies by market capitalisation for the third quarter ended 30 September 2019 found the top-performing companies were Microsoft, Apple, Alphabet, Facebook and Tencent.

According to Forbes, the world’s most valuable brands for 2018 were Apple ($206 billion), Google ($168 billion), Microsoft ($125 billion),Amazon($97 billion) and Facebook ($89 billion).

A call to the helpdesk may be in order for the telecoms industry, as the majority of telco brands – four out of five – saw their brand value decline this year, despite strong investments.

Over the past five years, the combined value of telecoms brands in the Brand Finance Global 500 has stagnated, while all other major sectors recorded significant increases. Big telcos are being squeezed from all sides as over-the-top messaging apps like WhatsApp are impacting voice and SMS revenue, and challenger brands offer comparable data services at below-market rates, leading to fierce price competition and decreasing margins.

US giant AT&T is the fastest-falling telecoms brand this year, down 32% to $59 billion. Just like its biggest rival Verizon, AT&T finds itself outside of the top 10 most valuable brands in the world for the first time in nearly a decade. The next big opportunity for the telecoms industry, the 5G space is inviting fierce competition, with Huawei expanding into markets traditionally covered by Western providers.

Despite sparking controversy, the Chinese giant, which ranks tenth, is making clear headway, and with a brand value of $65.1 billion, now counts among the world’s top 10 most valuable brands for the first time.

“It is not surprising that a number of telco brands have placed bets on new opportunities, from video content rights to Internet of things ventures,” adds Haigh.

“Focus on extracting as much value as possible from the declining segments cannot sustain growth in the long-term, as the consumption of telecommunications has changed for good. AT&T is the perfect example of how to fight back against the shrinking of the traditional market as they lead the charge in 5G – an area ripe for expansion.”