World's 2 most valuable brands: Coca-Cola, IBM By Emily Fredrix/The Associated Press/September 18, 2009
Consumers lost trust in brands this year as the recession deepened, according to an industry report released Thursday, although longtime staples Coca-Cola and IBM retained their spots as the world's two most valuable brands.
This is the first time the combined value of the world's top 100 brands as ranked by Interbrand, a branding agency, has fallen in the 10 years Interbrand has assessed them.
The list's total value, including brands like Google Inc., Nintendo and Sony, fell 4.6 percent to $1.15 trillion, Interbrand estimates.
“That says something about the environment that we're in, especially when you consider that brands are by nature less volatile than business valuations,” said Interbrand CEO Jez Frampton, who called a company's brand its most valuable asset.
The environment — a recession the likes of which the world hasn't seen for decades — has eaten away at people's trust in specific brands, starting with financial companies, he said. Consumers even started to question retail brands as stores slashed prices to get sales, leading consumers to wonder about pricing, and why they had to pay so much before.
“All of these things lead you to re-evaluate the nature of the relationships that we have with brands and indeed how confident we feel in brands to live up to the promises they make,” he said. “Brands are promises which we value and are prepared to pay for and if we feel those promises have been broken we're less likely to trust.”
Brands are more than just names, colors or logos — think Coca-Cola's red or McDonald‘s golden arches. A brand includes all the elements of a product or service from its design, ingredients and manufacture to its marketing, advertising and logo.
A well-honed brand evokes in consumers an emotion and a promise of what it will deliver, without the consumer having to do much — if any — research, said Allen Adamson, managing director at branding firm Landor Associates. Brands are important for all businesses, and critical in categories that have direct consumer contact, like autos, he said.
Each year, Interbrand ranks companies by the amount of their revenue that is attributable to their brands, using a formula that takes into account the brand's future strength and its role in creating demand, whether among consumers or business customers or both.
The firm assigns a monetary value to each brand and measures annual growth, in this case from July 1, 2008, to June 30, 2009.
The value of online giant Google's brand grew the fastest in the world again.
Deborah Mitchell, executive fellow at the Center for Brand and Product Management at Wisconsin School of Business, thinks Google already has found balance by earning consumers' trust.
That's partly due to Google's value statement — “Do no evil” — which resonates with consumers, especially in a downturn, she said.
“There's been a shift in the focus on values and not just economics to consumers,” she said. “They're looking more closely at who is selling them what.”