Point of View, Millward Brown, 23 June 2016
Brand Building: An Investment in Future Financial Success
Our WPP sister company Millward Brown highlights the key drivers of long-term brand value growth and explains why investing in your brand is so important.
Winning a place in the BrandZ™ Top 100 Most Valuable Global Brands is statistically more difficult than winning an Academy Award. It’s certainly more difficult than it was 10 years ago, when the ranking was first launched: newcomers have put enormous pressure on established brands, demonstrating their ability to grow their brand equity at an impressive rate.
Brand strength leads to superior shareholder returns. At BrandZ, we've proved this connection: if you'd invested $100 in the stock market (the MSCI world index) in 2006, your return in 2015 would be $30. However, if you'd picked your portfolio from the BrandZ Top 100, the return would be $103 – three times greater. Brand building also brings resilience in challenging times. While the share price of all brands dropped during the economic downturn, it took strong brands just six months to recover versus three years for average brands.
It's getting harder to enter – and remain in – the BrandZ Global Top 100. A total of 58 of the brands ranked in 2006 are still there, while 42 have been replaced. And these newcomers have raised the bar. Between 2006 and 2015 the average score for Brand Power, Millward Brown's measure of a consumer's predisposition to purchase a particular brand has increased from 142 to 170 – and the newcomers to the ranking score 176 on average.
Many of these new brands are from fast-growing markets. The number of Chinese brands in the BrandZ Global Top 100 has risen from just one in 2006 to 14 in 2015, and their total Brand Power has increased 1,004%. Chinese brands have learned from and followed Western brands, then all of a sudden have started to lead. The majority are not yet truly globalized, but they're ambitious and growing in value extremely fast – and they will change the global competitive landscape.
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