A brand is defined as a distinguishing symbol, mark, logo, name, word, sentence or a combination of all of the above that companies use to distinguish their product from others in the market. A trademark or trade name are similar terms that describe how a company reaches customers and wants to be identified. It turns out that the brands of some of the most successful companies in the world have significant value in the billions. In other words, brands matter for both their look and value to the underlying firm.
The Look of a Brand
Ideally, a brand will be noticeable and evoke a particular emotion in the mind of the customer. A brand or logo could simply catch the attention of passersby and inspire them to enter a store and make a purchase. Over time, brands can earn value and come to represent a company’s qualities and ethics in the mind of consumers.
How to Value a Brand
Brands that qualify as intangible assets do have dollar values. For global companies, these can easily run into the tens of billions of dollars. The full value of a ubiquitous brand, like Apple or Coca-Cola, will not properly be reflected on the company balance sheet. This is primarily because accounting conventions emphasize historical cost over the market value for most intangible assets (like the brand). A widely used method for putting a dollar value on a brand is to estimate a royalty cost that a company would have to pay for the right to use the brand. Of course, there is much more to a brand than just its dollar value. Qualitative factors, such as the role of the brand (for example, whether it's attached to a specific product, service, or company in general), as well as brand strength, which covers things like how well the brand is identified across the world and how this helps the company rack up sales, are closely examined.
The Most Valuable Brands
Many marketing firms and market-research organizations, like BrandFinance and WPP's Brandz for example, rank brand values every year. Brandz recently released their 2018 ranking of the most valuable brands in the U.S.
|1||Alphabet Inc (
|2||Apple Inc (
|3||Amazon.com Inc (
|4||Microsoft Corp (
|5||Facebook Inc (
|6||Visa Inc (
|7||AT&T Inc (
|8||McDonald's Corp (
|9||IBM Corp (
Source: Brandz Top 100 Most Valuable Us Brands 2018
The Google (GOOG) brand is by far the most valuable at $286.25 billion. Apple (AAPL) claims second place, with an estimated brand value of $278.9 billion. Apple’s logo helps consumers identify its computers, tablets, and mobile. It's interesting to examine both brands - their power in reach, utility and indeed necessity in today's landscape, despite their vast differences.
Tech companies dominate the top 10 most valuable brand lists and demonstrate the power of the Internet. Only three companies in the top ten are not tech companies — McDonald's (MCD), Marlboro (MO)(PM), and Visa. These three companies demonstrate staying power and a willingness to innovate, whether in product or in ad spend to stay at the forefront of consumers.