apple-tops-the-brand
1 May 2014

Apple tops the brand charts

There's no escaping from smartphones. Everywhere you look, someone is glued to one and, more often than not, it carries the name Apple or Samsung. It comes as no surprise, therefore, to learn that these technology heavyweights have the two most valuable names on the planet. According to Brand Finance, which released its annual list of the world’s 500 most valuable brands in February, Apple leads the way, being worth nearly $105 billion, followed by its South Korean rival on $79 billion.

Alongside the two warring smartphone rivals, other tech firms dominate the rankings. Google and Microsoft take the next two spots, ensuring the top four are unchanged from last year, while telecoms company Verizon comes fifth, leaping five places since the previous report. Walmart is the only non-tech brand to cement itself in the top 10, but its impressive showing masks a slide down the table in recent years.

“Once the world’s most valuable brand, Walmart now sits in ninth place, having been overtaken by Amazon,” says David Haigh, chief executive of Brand Finance. “The usurpation of the world’s biggest retail brand by the biggest online retailer represents yet another coup for tech brands over ‘real world’ businesses.”

Brand Finance evaluates a brand by using standard ISO10668, which first requires the company to conduct an audit of legal rights to establish whether it is strong or weak.

“We look at each major sector in the world; we go to all the major stock markets and pull down all the companies in the individual sectors, so we have a long list of businesses in each particular sector,” says Haigh.

“We then get equity analysts’ data on each of them, allowing us to see the financial forecasts for each company in that particular sector, and we look into their financials and try to understand what proportion of turnover goes against a particular brand.

“Coca-Cola, for example, has a very high turnover but only about 25 to 30 percent of that is actually under the Coca-Cola brand. So when we value it we split the revenue and attribute only the revenue for Coca-Cola itself to that valuation,” he says.

The third and final step involves using a ‘royalty relief’ method, which determines the royalties a company would have to pay in order to license its brand if it did not own it.

“You say ‘here is the royalty I avoid paying because I own the brand, but if I didn’t own the brand and I had to license it I would be paying five per cent of my turnover and the net present value of that against my future model’,” says Haigh.

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