The 2023 Brand Value League Tables Compared

Yesterday Interbrand released its 2023 list of the best global brands.  Here is how the brand values compare with those of Kantar BrandZ and Brand Finance:

There is limited consensus about which are the world’s most valuable brands:

• The three lists contain 179 unique brands
• Only 35 brands are common to all three Top 100 lists
• 51 brands feature on two of the three lists
• 93 brands appear on only one list

Divergence in the aggregate total of brand value and its concentration:

The total value of the brands on each list ranges from $3.27 trillion (Interbrand) to $4.60 trillion (Brand Finance) to $6.91 trillion (Kantar BrandZ)

The proportion that the top five brands represent of this aggregate value varies from 26% (Brand Finance) to 38% (Kantar BrandZ) to 44% (Intebrand)

Divergence in the value of the same brands:

The aggregate value of the 35 brands that are common to all three lists varies between $2.24 trillion (Brand Finance), $2.44 trillion (Interbrand) to $4.41 trillion (BrandZ) – a difference of nearly 200%

Apple has a value that ranges from $297bn (Brand Finance) to $503 billion (Interbrand) to $880 billion (BrandZ)

For other brands, the divergence is even more extreme – there is a 9x difference between the minimum and maximum values ascribed to VISA; 7x for Huawei; 5x McDonald’s; 4x for Louis Vuitton; and more than 3x for Samsung, Coca-Cola, IBM, Accenture, UPS and Starbucks.

Consistency of sign change for the common brands

31 brands are common across both the 2022 and 2023 lists.  For 24 of these brands there was a disagreement about whether the brand had increased or decreased in value relative to the prior year.

Here are the top 30 brands on each list:

 Here is the comparison of the minimum and maximum values given to each of the 35 brands that are common to all three lists:

Here is the data on whether the individual brands were deemed to have increased or decreased in value in 2023 versus 2022:

To anticipate the criticism that this analysis may generates from those with a vested interest in promoting brand valuation as a discipline, let me begin by saying that I believe passionately in the value of brands but I am not a believer in brand valuation. The reason is that I regard brand valuation as an artificial and subjective exercise (for reasons I explain below) with harmful side effects for how brands are viewed outside of marketing.

A brand is an essential element of any successful business model because it impacts multiple aspects of the business – how effectively the business attracts and retains customers, how it recruits and engages employees, how it aligns its operations around a clear value proposition, and how it reduces its vulnerability to substitution.

As such, brands work to enhance the overall effectiveness of a company’s business model. That is, brands improve the performance of the system. If their financial impact is to be evaluated, it should be expressed in terms of the change in multiple at which the business is valued (whether of revenue, earnings, invested capital or customers). This would be a more accurate way to characterize the impact of brands on making businesses operate more efficiently and impactfully.

Perhaps an analogy is useful here – if we think of the business as a car, and strategy as the engine, then the brand represents the drivetrain. The drivetrain determines the degree to which the power of the engine is transferred to the wheels.

Valuing brands is like valuing the drivetrain. It focuses our attention in the wrong place. It requires us to ignore that the performance of the drivetrain can only be understood in the context of the engine (the quality of the products and services) and the wheels (the quality of the service experienced by customers). By focusing on the drivetrain as a standalone asset, we conflate brand with design and communications. And we attribute to the drivetrain the improvement in the total customer experience (even though this improvement may actually come from the engine or the traction of the tires).

Brand valuation is a subjective exercise in deciding what proportion of the overall value created by a company (the performance of the car) is solely and uniquely attributable to the brand (the drivetrain). Given this subjectivity, it is to be expected that different providers will have different estimates for the value of the same brand, just as equity analysts have different opinions about the value of a specific company (the car).

But the enormous range in the brand values that we observe in practice leads business leaders to question whether brand valuation is a credible exercise - especially when the different provider disagree most of the time about whether a given brand has increase or decreased in value relative to a year earlier.

In summary, I have three major reservations about brand valuation:

1.     First, the discipline is predicated on the assumption that brands can be valued as standalone assets whereas I believe that their value is largely contextual

2.     Second, this causes marketers to focus on the value of the brand (the drivetrain) as opposed to how they can best contribute to the effectiveness of the business (the car)

3.     Third, it leads to a divisive relationship between marketing and other disciplines (such as product development, supply chain and customer service) that play a major role in the overall customer experience because marketing is now seen to be taking credit for their contribution

The last point is the one that is most detrimental to the value of the business. Brand valuation causes "brand" to be conflated with "what the marketing function does" (i.e. frequently, just design and communications). It serves as a mechanism for marketers to demonstrate their value, but in doing so, they cause the rest of the business to become more skeptical of the true value of branding.