by Alyssa Oursler | October 3, 2013 11:21 am
While most investors look to specific metrics — be they fundamentals such as earnings growth or technical indicators such as moving averages — to pick stocks, some companies boast qualities that aren’t quite as quantifiable. These are intangibles like customer loyalty, a deep moat or a strong brand.
Of course, that’s where corporate identity and brand consulting company Interbrand comes in: It takes the vague term “brand” and looks at it as an asset — and thus something you can stick a number on.
Interbrand releases brand rankings every year, with its 2013 list of “Best Global Brands” stealing headlines last week. For this particular list, Interbrand uses markets, brands, competition and financial data to analyze brands it considers “truly global.” (The full methodology can be found here, and is worth a read).
The bottom half of the top 10 for Interbrand’s Best Global Brands of 2013 include Toyota (TM), No. 10, $35.3 billion; Intel (INTC), No. 9, $37.3 billion; Samsung (SSNLF), No. 8, $39.6 billion; McDonald’s (MCD), No. 7, $42 billion; and General Electric (GE), No. 6, $46.9 billion.
Now, let’s take a closer look at the big-name brands making up the top five:
Value: $59.5 billion
YOY Change: +3%
The fact that Microsoft (MSFT) managed to hold its No. 5 spot — the same spot Bill Gates’ baby snagged in 2012 — is both good news and bad news.
On the one hand, it’s promising that the stalwart has managed to stay relevant in the always-changing tech world … especially considering recent flops like the Surface tablet and mobile.
But on the other hand, Microsoft’s brand is barely growing and has been slowly slipping during the past decade. At the turn of the century, Microsoft was sitting pretty in second place, and held onto that spot until 2007. MSFT slipped one spot in 2008 and two spots in 2012, though — as you can see in this awesome Businessweek visual.
With that in mind, Microsoft should celebrate its status while it can. Unless the company makes some bold, successful moves, there’s a good chance another downward move is on the horizon.
Value: $78.8 billion
YOY Change: +4%
The IBM brand has evolved quite a bit over the past decade-plus, but that hasn’t stopped it from finishing near the top every year.
At first, IBM was a consumer tech brand, selling personal computers like its ThinkPad line. In 2005, though, it sold than division to Lenovo (LNVGY) and is a now more of a corporate brand.
Despite that transition, IBM snagged the third-place spot for seven straight years, beginning in 2000. It then jumped as high as second for a couple years before tumbling to 2013′s fourth-place finish.
IBM might not be first to many consumers’ minds, but Interbrand points out that it’s still clearly innovating. “The brand continues to set records in innovation, generating 6,478 patents in 2012, the most U.S. patents for the 20th year in a row.”
Value: $79.2 billion
YOY Change: +2%
Coca-Cola — the soda brand owned by Coca-Cola Co. (KO), obviously — posted the second-weakest brand value growth of the top 10, behind only Intel’s (INTC) 5% drop.
That weak growth, combined with eye-popping growth from the brands in the top two spots, was enough to knock Coca-Cola from a throne it was quite comfortable sitting in. Before earning its 2013 bronze medal, Coca-Cola had enjoyed a 13-year run in the top spot.
The reason for its dominance is obvious, if you ask me: Coca-Cola has a huge footprint, a classic red logo and used cute polar bears in its marketing.
Unfortunately, sugary soda has been under a microscope lately, with consumption falling here in the states. Translation: Coca-Cola might be a bit tarnished these days.
Still, Interbrand maintains that Coca-Cola remains the most recognizable brand in the world. Plus, KO also has a top-1oo brand with Sprite, but its growth was just as meager.
Value: $93.3 billion
YOY Change: +34%
Silicon Valley star Google (GOOG) was one of the tech brands that blew by good ol’ Coca-Cola this year. In fact, its 34% year-over-year growth in brand value was the second-highest rate behind only Mark Zuckerberg’s social media site Facebook (FB), which enjoyed a blistering year-over-year gain of 43%.
Google, which recently turned 15, broke into the top 10 back in 2008 and has been slowly but surely climbing ever since. It’s easy to see why, considering Google essentially owns search, and also has its hand in groundbreaking technology like self-driving cars and Google Glass, and boasts features that many folks use every day, including YouTube, Chrome, Gmail and more.
As Interbrand put it: “Tech-savvy or not, anyone who has continuous, or even intermittent, access to the internet is aware of the brand, and likely a user of at least one of its numerous offerings.”
That brand has investors excited too, with GOOG stock up a market-beating 25% so far this year. Sure, Google is facing privacy concerns and many think it’s shifting away from the “Don’t Be Evil” mantra, but so far, that hasn’t slowed down its global brand.
Value: $98.3 billion
YOY Change: +28%
While a strong brand has correlated with a strong stock in Google’s case, the same can’t be said for the new king. Apple (AAPL) enjoyed a strong 28% improvement in its brand value for 2013 — stronger growth than every on the list save tech rivals Google, Facebook and Amazon (AMZN).
Makes sense. Apple products are more than just simple phones and tablets — they’re an ecosystem, and arguably are a lifestyle for many.
Still, Apple stock hasn’t been rising with the brand, and investors seem to think the company is lacking “the next big thing.” AAPL shares fell off a cliff in the latter half of 2012 and have yet to fully recover … even despite the record-breaking launch of the latest iPhone. Year-to-date, AAPL remains down 8%.
But it’s hard to argue with a brand worth nearly $100 billion. And hard to argue with Interbrand, which explained: “For revolutionizing the way we work, play, and communicate — and for mastering the ability to surprise and delight — Apple has set a high bar for aesthetics, simplicity, and ease of use that all other tech brands are now expected to match.”
As of this writing, Alyssa Oursler was long MCD.
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