Diversification helped propel Amazon ahead of Apple and Google to top Brand Finance’s “Global 500” rankings for 2018, jumping from the number three spot in 2017 to become this year’s most valuable brand.
The term “brand value” is defined here as the value of the trademark and associated marketing IP within the branded business. Amazon’s brand value increased by 42 percent year over year to $150.8 billion, which allowed it to leapfrog over its competitors.
With the acquisition of Whole Foods, Amazon has expanded far beyond its roots as an online bookstore to electronics manufacturing, cloud infrastructure and now brick and mortar retail. All eyes are on the brand as it experiments with AI-powered retail through Amazon Go.
“The strength and value of the Amazon brand give its stakeholder permission to extend relentlessly into new sectors and geographies,” Brand Finance CEO David Haigh said the report. “All evidence suggests that the amazing Amazon brand is going to continue growing indefinitely and exponentially.”
Holding its number two spot for two years running, Apple rebounded to $146.3 billion in brand value, but lacks the diversification seen by Amazon. In its report, Brand Finance said that Apple has grown over-dependent on sales of its flagship iPhones, which are responsible for two-thirds of the company’s revenue. With Poor fourth quarter 2017 sales of iPhone X at only 29 million handsets, Apple may soon feel pressure from emerging brands like Huawei and will have to expand its horizons in order to become the most valuable brand again.
“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,” said the report.
Dropping from number one to number three, Google experiences relatively slow brand value growth of 10 percent over 2017 to $120.9 billion. With aggregated paid clicks rising 47 percent in the third quarter of 2017, Google online ads generated more traffic than expected, Brand Finance observed, adding that 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,” said Brand Finance. “Google’s investments in self-driving cars and handsets still lack the scale and audacity demonstrated by Amazon’s new ventures.”
Disney is Brand Finance’s strongest brand of 2018 with a brand strength index (BSI) score of 92.3, up from 91.3 last year. Brand Finance says Disney is one of the most interesting brands to watch in the coming years in light of its recent purchase of a majority stake in 21st Century Fox, allowing it to further develop its brand for more consumers worldwide.
The Mouse House, like Amazon, is continuously expanding through acquisition and diversification. Disney has a 60 percent stake in Hulu and with the acquisition of 21st Century Fox comes Star India and Sky—granting the company even greater international exposure in the digital entertainment space.
Rounding out the top five strongest brands for 2018 are Visa, Ferrari, Neutrogena and Facebook.