Star Wars deal propels Disney to top of the ‘most powerful brands’ list 01 Feb 16
Walt Disney has supplanted Lego as the world’s most powerful brand, according to the Brand Finance Global 500 2016. Acquisition activity has played a key role, with Marvel and Lucasfilm properties propelling the Walt Disney brand up the brand strength league table.
Walt Disney has long been in the elite group of AAA+ rated brands on the Brand Finance list, being ranked as the 19th most valuable brand – and 12th most powerful – on last year’s list. However, in much the same way that The Lego Movie propelled Lego to the top of ‘most powerful brand’ list last year, the success of Star Wars: The Force Awakens has similarly seen Walt Disney make the (lightspeed?) jump to the top of this year’s list.
While backed up by a rich IP portfolio, drawing on many well-loved films and characters, Walt Disney’s acquisitions have proven real success stores in recent years. First came the 2009 acquisition of Marvel for $4.24 billion, followed by the 2012 $4bn deal for Lucasfilm and the Star Wars franchise. Both have clearly paid off. In 2015 alone, Marvel universe film releases combined for a global box office of almost $2bn (at the time of writing, Avengers: Age of Ultron has brought in $1.405bn and Ant Man $519.3m). The cinematic juggernaut of 2015, though, was Star Wars: The Force Awakens, which (at the time of writing) has a global box office of $1.871bn. Add in merchandise sales (Star Wars merchandise alone was predicted to contribute $3bn in sales in 2015) and it is easy to see why the ‘house of the mouse’ has moved up the list, the ‘most powerful’ brand table being based on a Brand Strength Index which analyses marketing investment, brand equity (the goodwill accumulated with customers, staff and other stakeholders) and the impact of those on business performance.
The ten most powerful brands (brand value in $m in brackets) were:
- Walt Disney ($31,674m)
- Lego ($4,520m)
- L'Oréal ($14,990m)
- PWC ($18,569m)
- McKinsey ($4,881m)
- Nike ($28,041m)
- Johnson’s ($15,115m)
- Coca-Cola ($34,180m)
- NBC ($16,103m)
- Google ($94,184m)
While Walt Disney may have the power, Apple has the value, the latter once again identified as the world’s most valuable brand. The company’s brand value rose 14%, attributed to the success of the iPhone 6 and recently released iPhone 6s. While sales are predicted to slow in the current quarter, revenue for Q4 of the fiscal year 2015 was a record-breaking $51.5bn (with profits at $11.1bn) bringing overall revenues for the year to $233.7bn.
Elsewhere, it’s been a good year for companies in the online services world. Google has been held down in 3rd place by Samsung since 2012, but this year the two have switched positions. New parent company Alphabet announced revenue growth of 13% this year (due to increasing mobile search revenue) and, alongside a 3 point improvement in brand strength, this has resulted in a leap in brand value of 27% (to $94.2bn). Meanwhile, Amazon has leapfrogged Microsoft, Verizon and AT&T to take fourth place (factors such as the success of its ‘Prime’ next-day delivery services and the popularity of original streaming programming contributing to the company beating financial analyst expectations in three of the last four quarters). For its part, Facebook jumped 12 places to become the 18th most valuable brand (at $34bn) making it one of the fastest rising brands over the last three years. This year’s jump was partly attributable to its monetisation efforts – in Q3 2015 revenues was up 41% on the previous year, driven almost entirely by mobile advertising growth.
By contrast, Volkswagen had a difficult year due to the emission scandal it was engulfed in. Illustrating how impactful to both reputation and value that such an incident can be, the companies brand value plummeted by nearly 40% (down $12bn to $18.9bn, leading to a fall in rank from 17th to 56th.).
The ten most valuable brands (with last year’s rank in brackets) were:
|Rank||Brand||Brand value 2016 ($m)||Brand value % change|
|9 (11)||China Mobile||49,810||4%|
|10 (15)||Wells Fargo||44,170||26.5%|
For many, brand values remain abstract, and in some instances it is hard to evidence the financial payback. An interesting dimension of this year’s report, then, is its look at the correlation between share price and brand value.
In December, Brand Finance took a retrospective look at the share price of the brands they have valued and their subsequent stock market performance. This research found that an investment strategy based on the most highly branded companies (those where brand value makes up a high proportion of overall enterprise value) would have led to a return almost double that of the average for the S&P 500 as a whole.
Between 2007 and 2015, the average return across the S&P 500 was 49%. However, Brand Finance contends that, had investors looked solely towards companies with a brand value to enterprise value (BV/EV) ratio of greater than 30% (brands such as Allstat, Audi, Burberry, Dove, Fujitsu, Gucci, Ikea, Ralph Lauren and Shinhan), they would have generated returns of 94%. Investing exclusively in the 10 companies with the highest BV/EV ratios would have nudged this up to a 96% return.
There was a similar effect for brands rated as AAA or AAA+. A strategy based on investment in all AAA and AAA+ rated brands would have led to a return of 54% over the eight years from 2007. However, according to the analysis, if only top-rated US brands were targeted, the return would have been 87%.
For those struggling to obtain budget for corporate brand valuation activities, evidence that positively links brand value with economic performance can only be a help. For trademark counsel tasked with protecting key brands, it also shows how their efforts can directly contribute to company performance.
The next issue of World Trademark Review will feature exclusive, in-depth analysis of the Brand Finance Global 500 2016.
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