What happens to brand equity during a recession? One might think that getting a deal is more important than the brand when the market gets soft, and that consumers dispense entirely with concerns about things like a brand's trustworthiness.
But the latest annual Interbrand report on the Best Global Brands says that ideas like trust, loyalty, familiarity and innovation matter more -- not less -- in an economic brown-out.
The ranking, in its 10th year, arrives at its list from an alchemical mix of publicly available financial data, including current financial health of the business and brand, the brand's role in creating demand, and the future strength of the brand as an asset to the business.
In the latest study, the top 10 brands are the same as last year -- but some are heading up, while others have seen worsening scores. Coca-Cola, IBM, Microsoft, GE, Nokia, McDonald's, Google, Toyota, Intel, and Disney are on top. Of those, Coca-Cola, IBM, McDonald's, and Google are the only brands that have seen their brand value improve versus 2008.
Andy Bateman, CEO of Interbrand in New York, says the leading brands have been insulated to some extent by their brand equity. "Stock market declines and earnings declines have contributed 10% and 30% to overall decline in brand value among all brands, but for the top 100 brands the overall decline was only 4%," he says.
"It's very well when the tide is coming in and all brand values go up, but when the tide goes out and there's a reset, what we see is that first, trust is the number one driver of any brand at the most fundamental level. We buy what we trust and keep buying; familiarity and trust are big, big drivers of loyalty and brand value."
No. 1 again was Coca-Cola, which has been busy with a raft of new beverages and new marketing initiatives. Interbrand notes that Coca-Cola is the number one producer of sparkling beverages by volume and dollars, and has launched more than 700 products in 2008 worldwide. Coke expanded Coke Zero to 107 countries and launched the "Open Happiness" campaign.
Among all brands on the Best Global Brands list, the biggest gainers in the study were Google, up 25%; Amazon, up 22%; Zara, up 14%; Nestle up 13%; Apple, up 12%; and H&M, up 11%.
Big surprise: the financial sector made a sucking noise, with UBS' brand value down 50%, Citi down 49%, American Express down 32%, and Morgan Stanley down 26%. Bateman says evaporating trust has hurt the financial services. "It's interesting how we tend to forget that trust really matters until it's gone," he says.
While finance was fallow, consumer packaged goods were golden, benefiting from consumer loyalty: Nestlé's score improved by 13% versus last year; Wrigley by 10%; Danone was up 10%; Heinz was up 9%; and Kellogg's was up 7%. So did tech companies that consumers judged as innovative: Google was up 25%), Apple (up 12%), BlackBerry (up 7%), Nintendo (up 5%), and HP (up 2%). Dell fell 12%, as did Sony, and Yahoo fell 7%.
Bateman says innovation drove gains for those tech companies whose brand value improved, but also for some non-tech companies. "You expect it from tech brands like Google, IBM and Apple, but not from retail brands like Azara and Amazon, which are continually coming up with innovative ideas," he says. "What's also interesting is brands that are embracing the Internet and driving engagement with an online audience. One that is probably less obvious is Coca-Cola, which has three million users on Facebook."