Google vs Apple in the Battle for Most Valuable Brand
Google has replaced its rival Apple atop the annual Millward Brown annual BrandZ ranking.
Nobody will need to plan a telethon for the deposed longtime leader on the survey -- even though Apple's brand value fell by 20% in 2014, the company still came in second with a brand value of $148 billion. The new king, Google, gained nearly 40% for a brand value of nearly $159 billion.
The rankings are determined through data taken from interviews with 150,000 consumers from around the world, along with financial data and earnings prospects. Millward Brown also factors in the idea that in all markets a small number of consumers account for a large proportion of sales. This means that loyal consumers are more valuable to a brand than occasional users, which is taken into account when processing the data.
"The Top 100 also confirms that more favorable economic conditions have helped traditional Western brands improve their valuations, which means fewer brands from fast-growing economies are represented. Brands that are in business for reasons beyond the bottom line are also more likely to have increased their value," according to a write-up accompanying the rankings.
The just-released 2014 edition of the rankings shows that the combined value of the BrandZ Global Top 100 has almost doubled in eight years with technology companies leading the way. But some surprise stalwarts held on despite losing popularity in the United States.
McDonald's , Coca-Cola , and certainly Marlboro have all faced issues maintaining U.S. market share, but their brands are still thriving globally.
Innovation is key for tech companies
Part of the reason Google was able to end Apple's three-year run at the top was the fact that while Apple may still be making tons of money, consumers don't see the company innovating new products in the way it once did.
"Apple is performing well but is it still redefining technology for consumers?" Millward Brown wrote. "What is obvious is that the value of technology brands reiterates how they are now an integral part of our lives."
The survey also found that the most valuable technology brands had heavy social media presences fueled not by the company's efforts, but through third-party actions. Those are "primarily driven by new product launches and to a lesser extent, corporate observations (including investments and litigation)." Apple lost some ground in this survey because all its product introductions were incremental -- new versions of existing items -- rather than the company entering a different space.
The top of the chart could change quickly if Apple or another company makes a bold move -- in Apple's case, that could involve wearables, its long-rumored television, or something we haven't considered yet.
Is brand value equatable to real value?
What is a brand and why does having a valuable one make it easier for a company? Millward Brown defines it simply. "At the heart of a brand's value is its ability to appeal to relevant customers and potential customers."
Put simply it's easier for Apple to launch a new product or enter a new market than it would be for an unknown or less trustworthy company to do the same. A potential customer likely is more willing to examine an iWatch from Apple if he has experiences with iPhones, iPads, or other Apple devices than if Samsung released the exact same product.
Does brand value fuel real growth?
The top 100 brands on the 2014 Millward Brown study increased their brand value by 12% to $2.9 trillion, following a 7% increase rise last year. Part of that was fueled by the improving global economy. The 12% increase in the BrandZ Top 100 Most Valuable Global Brands 2014 shows a resurgence of growth following the financial downturn in 2008, and a 98% increase in value since the ranking was introduced in 2006.
Having a top brand does not guarantee success, but it makes everything easier. Look at how Marlboro -- a brand whose key product has been under fire for years -- has weathered global bad press to remain a top brand. Yes, that brand is largely coasting on non-U.S. sentiment now and a future fall seems inevitable, but a strong brand gives the company time to make changes. The same can be said of McDonald's and Coca-Cola, which may be slightly tarnished brands right now in the U.S. but their cachet makes it somewhat easier to course correct.
Apple and Google could very well swap places again next year or Amazon , which has been growing its ecosystem globally while building its device portfolio, could swoop in and take take the top spot. Amazon is a prime example of a company that has prized building its brand over building profits. This survey shows that strategy might be working and it could pay off in the long run.
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The article Google vs Apple in the Battle for Most Valuable Brand originally appeared on Fool.com.Daniel Kline is long Microsoft. The Motley Fool recommends Apple, Coca-Cola, Google (C shares), and McDonald's. The Motley Fool owns shares of Apple and Google (C shares) and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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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