5 Most Valuable Global Brands of 2014
Companies spend billions of dollars eager to make their brands memorable enough for consumers to intuitively reach for. A recent survey unveils the world's most sought-after brands. Let's first take a look at which companies topped the list and then see if their brands equal big shareholder returns.
Best of the best
BrandZ publishes an annual survey presenting top honors to the most valuable brands. Here are the five best global brands for 2014.
Change in Brand Value from 2013
Four of these five companies graced the top five spots in last year's rankings. Apple was No. 1 in 2013 and Google was No. 2, but Google surpassed Apple this year. Meanwhile, IBM retained its No. 3 spot from last year, and McDonald's dropped from No. 4 to No. 5. The newcomer to the top five is Microsoft, which climbed three spots from No. 7 last year.
Wins and woes
Google reigns supreme as this year's most valuable global brand. The company that's become much more than a search engine increased its brand value by a wildly impressive 40%. Google currently generates the overwhelming majority of its revenues from search advertising. But in order to remain relevant beyond its core search platform, the California-based tech giant is actively diversifying its business. Its YouTube acquisition, Android mobile software, Google Ad Exchange, Google+ social network, and Chrome browser services evidence this. Continued acquisitions will likely propel growth for Google.
On the other hand, both Apple and IBM lost brand value last year. Apple's iconic brand, loyal customer base, solid balance sheet, and improved cash allocation plan weren't enough to keep the company at the top spot. Apple has been recently criticized for its lack of innovation prowess and has been losing market share to Android operating system. The iDevice maker lost 20% of its brand value last year. As a result, Apple slipped one big spot in the rankings and now holds the No. 2 position. Going forward, Apple must increasingly rely on innovative new products and categories like wearables and TVs to reignite revenue and profit growth. Apple also hopes its China Mobile deal will help boost sales in the world's largest smartphone market.
Even though IBM lost 4% of its brand value last year, the company retained the No. 3 spot. The longevity of its brand has helped Big Blue gain traction with billions of customers and build worldwide exposure. Yet IBM has had to change its product offerings to stay current and relevant. It's in the midst of transforming its business by divesting lower-growth, lower-profit businesses like PCs and printers and acquiring businesses in higher-growth, higher-profit software and services.
How the best brands stack up
These companies' shareholder returns have been nothing short of astonishing during the course of their publicly traded lives. Yet the past several years have evolved very differently for stockholders of these five companies.
Apple and Google performed most impressively during the past five years, boasting extraordinary 412% and 180% total returns, respectively. Meanwhile, Microsoft and McDonald's returned 129% and 116%, respectively. By comparison, IBM -- the only company of the five listed that underperformed the Dow Jones Industrials Average -- returned 98% versus the index's 100% during the same period.
Foolish final thoughts
It's never a smart idea to invest in a company based solely on one data point. Yet, more often than not, company performance is helped by a solid, well-recognized brand. But a great brand is worthless in the absence of other successful company traits like a sustainable competitive advantage, solid financials, and great leadership.
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The article 5 Most Valuable Global Brands of 2014 originally appeared on Fool.com.Nicole Seghetti owns shares of Apple, Google (A and C shares), and Microsoft. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends and owns shares of Apple and Google (A and C shares). It recommends McDonald's and owns shares of International Business Machines and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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