Amazon is the world’s most valuable brand, ahead of Apple and Google, according to the latest Brand Finance Global 500 report. The e-commerce giant’s brand value increased by 42% year on year to US $150.8 billion. Since the brand’s humble beginnings as an online bookstore, Amazon has become the world’s largest internet business by both market capitalisation and revenue.
It is no longer just an online retailer, but also a provider of cloud infrastructure and a producer of electronics. Now, it is moving beyond the digital space, as last year’s takeover of Whole Foods for US $13.7 billion gave the brand a foothold in the realm of bricks and mortar. Amazon is also present in shipping, music and video streaming, alongside industry speculation on an impending bank acquisition in 2018.
David Haigh, CEO of Brand Finance, commented: “Jeff Bezos once said that ‘brands are more important online than they are in the physical world’. He has proved himself right by choosing the name Amazon, known as the largest, most powerful river in the world, as 23 years later the Amazon brand carries all before it as an unstoppable force. The strength and value of the Amazon brand gives it stakeholder permission to extend relentlessly into new sectors and geographies. All evidence suggests that the amazing Amazon brand is going to continue growing indefinitely and exponentially.”
Amazon’s expansive growth strategy leaves Apple and Google behind
Although Apple defended second place in the ranking, with brand value rebounding to US $146.3 billion after the 27%-decline last year, its future looks bleak. Apple has failed to diversify and grown over-dependent on sales of its flagship iPhones, responsible for two thirds of revenue.
Poor Q4 2017 sales of iPhone X at only 29 million handsets fell short of expectations, and the model is predicted to be discontinued later this year. With the advent of emerging world brands like Huawei, Apple’s increasing focus on what are effectively luxury products may cost the brand a fair share of the global mass market, limiting the potential for brand value growth.
Google has dropped from 1st to 3rd position, recording a relatively slow brand value growth of 10% to US $120.9 billion. Google’s online ads generated more traffic than expected as aggregated paid clicks rose by 47% in Q3 2017, boosting revenues. However, to compete with the world’s most valuable brands, presenting a solid performance is not always enough. Google is a champion in internet search, cloud and mobile OS technology but, similarly to Apple, its focus on particular sectors is holding it back from unleashing the full potential of its brand. Google’s investments in self-driving cars and handsets still lack the scale and audacity demonstrated by Amazon’s new ventures. Nevertheless, the acquisition of 2,000 HTC smartphone staffers for US $1.1 billion indicates a shift to a more expansive approach.
Digital era is now as technology brands make their way up the ranks
For the first time since the inception of the Brand Finance Global 500 study, technology brands claim all top 5 places in the league table. Samsung (4th , US $92.3 billion) and Facebook (5th, US $89.7 billion) both recorded impressive year-on-year brand value growth of 39% and 45% respectively, overtaking AT&T (6th , US $82.4 billion). Change at the top is reflective of a wider global trend as the technology sector accounts for more than twice as much brand value as telecoms.
The dominance of digital is set to grow even more in the coming years as other brands make their way up the Global 500. Google-owned YouTube more than doubled its brand value to US $25.9 billion, jumping 70 places to 42nd . Chinese technology brands, taking advantage of captive market conditions, can also boast high brand value growth, with Alibaba (12th ), Tencent (21st ), WeChat (49th ), Baidu (57th ), JD (65th ), and NetEase (121st ), going up by an average of 67% year-on-year.
Chinese brands narrow the gap with global counterparts
The growth of Chinese brands extends beyond the technology sector as the country continues to narrow the value gap with the United States at an impressive rate. Since 2008, China’s share of global brand value has increased from 3% to 15%, growing 888% to US $911.5 billion in 2018. It comes as no surprise that State Grid, a state-owned utilities company from China, is the largest new entrant to the Brand Finance Global 500 this year, claiming 19 th place with a brand value of US $40.9 billion. In addition, the fastest-growing brand of 2018 also comes from China.
The spirit industry champion Wuliangye grew a striking 161% to US $14.6 billion year on year, rising 184 ranks to 100th.
Haigh commented: “The growth of Chinese brands is once again the standout story in our annual study of the world’s most valuable brands. Since the 19th Party Congress in 2017, there has been a renewed emphasis on brand development by Chinese companies in all sectors. Interestingly, while China had been pursuing a dual strategy of building home-grown brands but also acquiring underperforming international brands, like Volvo and Pirelli, the emphasis is now firmly on home-grown brands. Brands like Huawei, Ping An, State Grid, Evergrande, ICBC, Yili, Haval,
Wuliangye, and many others are now being recognised worldwide as quality brands. We expect to see this develop rapidly in more and more sectors.”
Every year, Brand Finance values the world’s biggest brands during which the 500 most valuable brands in the world are included in the the Brand Finance Global 500 league table. Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.