For many years, brand value was not a managerial issue for industrial brands. There was no excepted methodology and there were no examples to follow. Since 1999, Interbrand is publishing its Best Global Brand list and had established a common standard. MillwardBrown has followed soon after. Since 1990, CoreBrand was measuring for GE brand equity value. Jack Welch had asked James Gregory to analyze the advertising impact on the image and value of General Electric corporate brand. Since that time, many brands have been analyzed and these companies used the insights to improve their brand management. It all started as a B2B measurement. Today it is more about the consumer brand.
In 1999, Interbrand had only 5 industrial brands in the global 100 list: IBM, GE, Intel, Xerox and Microsoft. MillwardBrown had 14 on their 206 list. Microsoft in both lists stuck out. It had a higher brand value, than its revenue. This amount of brand value could so far only be found with large consumer brands, like Coca Cola or McDonald. Microsoft and also Intel were communicating directly with the consumer; even when the consumer could only indirect purchase most of their products. That ingredient branding approach required heavy investments in branding, but paid off.
Google got on the list in 2005, and became in 2013 the most valuable brand. No consumers are paying directly for the services of Google. Is Google therefore a B2B brand? Probable not too many experts would answer the question with yes. Therefore, if you exclude Google out of the Interbrand list, Interbrand evaluated 23 industrial brands. In 2014, MillwardBrown listed 20 B2B brands.
Fig. 1 B2B brand value comparison 2014 MillwardBrown – Interbrand
By comparing the top 20 of both lists, it is easy to recognize that the differences are huge. Position 1, 2, 3 is occupied by the same company’s: IBM, Microsoft and GE. But their brand values differ and their position in the global ranking system differ. This is obvious, because of the different valuation methods used by these companies (we will not elaborate on that here). Both systems stage different priorities and therefore the outcome creates different winners. The rest of the brands show even wider variances. Surprisingly two corporate brands end up at the same position: no. 10 Accenture and no. 12 Siemens. The brand value from MillwardBrown is almost double than the Interbrand ones. In the MillwardBrown list appear the large oil companies ExxonMobil, Shell, Sinopec and PetroChina; at Interbrand appear Caterpillar, Xerox or John Deere. The only Chinese brand on the Interbrand list is Huawai.
IBM has consistently topped the lists of most valuable B2B brands; its brand value increased with the Interbrand method from 43,4B$ in 1999 to 2014 72,8B$ in 2014 and MillwardBrown from 36B$ in 2006 to 107B$ in 2014. The revenues oscillated between 90 – 100B$, but its net income jumped from 8 – 16B$ in 2014.
Source: IBM Annual Reports
Figure 2: Comparison of Net Income and Annual Revenue since 1999.
In recent years, IBM refined its strategy and brand communication. IBM brand communication became more sophisticated at targeting the clearly defined segment audience with appropriate messaging which truly resonated. They established a sophisticated measurement and feedback system, which was heavily linked to the increased digital marketing efforts.
Other high-tech companies from the top global brand lists were following a similar approach. The flexibility, accountability and cost saving benefits of digital marketing represented for this companies a genuine opportunity to forge much deeper connections with customers and stakeholders. Accenture, Cisco, Oracle and SAP were also in the position to create an additional competitive advantage through their brand and communication management at the beginning of the era of ‘big data’.
The two ranking systems showed that there are some corporations with exceptional good brand management skill out there.
Figure 3: Comparison of Interbrand Brand Value 2014 and Annual Revenue 2014.
Figure 4: Comparison of MillwardBrown Brand Value 2014 and Annual Revenue 2014.
Even when B2B branding is not so glamorous than fashion or luxury branding, it attacked some of the best talents, some of them have even moved from the consumer marketing to industrial good. Powerful CMO have emerged and helped to propel their companies to the top, such as Chris Capossela, Executive Vice President and Chief Marketing Officer at Microsoft, Jon C. Iwata, senior VP-marketing and communications, IBM, Beth Comstock, senior VP-CMO General Electric Co., Maggie Chan Jones, CMO, SAP, Blair Christie, senior VP-CMO, Cisco Systems, and Judith Sim, CMO, Oracle Corp..
Thanks to their efforts the top brands improved their positions over the years. Only Xerox’s brand value is declining. In both valuation systems (Interbrand and MillwardBrown) two companies seem to be the top performer: IBM and Microsoft. In our analysis we only considered high-tech companies. We did not include banks and other financial institutions and also petro companies.
Since B2B products, systems and services, particularly with high value, are bought in the so called buying center. So decisions are made by real or virtual committees. These people making the purchase decision tend to be particularly knowledgeable when it comes to price points, product specifications and service offerings thanks to constant monitoring of the market place. Understanding what a brand means to them is crucially important because sometimes the ‘brand’ is the only differentiating factor. Therefore, B2B branding became an additional dimension of management and crucially important for establishing differentiation and maintaining unique competitive advantages. Increasingly corporate businesses are tapping into the value of their brand. It’s surely no coincidence that the number of B2B brands in the top 100 has risen in the Interbrand analysis from 6 in 1999 to 23 and from 14 in 2006 to 20 today at MillwardBrown as corporations seek to leverage the corporate brand as one of their key differentiators in an increasingly global and competitive market place.
Interbrand (2014): Best Global Brands, London
MillwardBrownOptimor (2014): BrandZ Top 100 Most Valuable Global Brands, London
Kotler, Philip Pfoertsch, Waldemar (2006): B2B Brand Management, Springer Publishing, Heidelberg
Salinas, Gabriela (2011): The International Brand Valuation Manual: A complete overview and analysis of brand valuation techniques, methodologies and applications, John Wiley & Sons, New York