For the third year in a row, Apple and Google claimed the top positions in Interbrand’s Best Global Brands report. Technology brands represented more than a third of the table’s $1.7 trillion total, making technology the leading sector by value.
Worth an estimated $170 billion last year, Apple increased its brand value by 43%. Google came in at #2 up 12% on 2014 and valued at $120 billion. Microsoft edged ahead of IBM, Samsung was a non-mover at #7, valued at $45 billion, and Amazon entered the top 10 for the first time with a brand value of $37 billion.
“The report examines what it takes for brands to succeed in today’s hyper-fragmented world. Many of the brands in this year’s top 100 are so intuitively aligned with people’s priorities, that they are able to seamlessly integrate into their everyday lives,” said Jez Frampton, global CEO, Interbrand.
Indeed it is a combination of their global reach, culture and integration into users’ lives that has helped the technology brands increase their brand value and claim the top positions. This makes them a considerable disintermediation threat to payments industry incumbents for consumers’ minds and wallets.
Only 4 bank brands made the top 50 — JP Morgan at #33, HSBC at #37, Citi at #45 and Goldman Sachs at #46 — half as many as the number of automotive brands. The top-placed card scheme was Amex at #25 valued at $18 billion, followed by Visa at #61 worth $6 billion, and MasterCard at #76 worth $5.5 billion.
Brand value matters because intangible assets are making up an ever-increasing proportion of overall company value. Intangible assets contributed around 17% of a company’s value in 1975. By 2009, this had jumped to around 80%, according to data from the Reputation Institute.
In fact, such is the shift from tangible to intangible, that it is no longer unusual for a company’s intangible value to outstrip its book value several times over. For example, Philip Morris acquired Kraft in 1988 for $12.9 billion, 4 times its book value. Philip Morris had long been trying to diversify its portfolio from tobacco products and the CEO, Hamish Marshall, justified the premium by saying: “The future of consumer marketing belongs to the companies with the strongest brands.”
Fast-forward 25 years and consumer-facing technology companies are not only building strong brands but leveraging them along with their other intangible assets (e.g reputation, intellectual property, R&D pipeline, IT and data) to grow their businesses. Neither Apple, nor Google, nor Samsung has a heritage in payments, yet all launched or expanded mobile payment solutions in 2015. Arguably, it is their brands, reputations and the trust consumers have in them that has enabled them to diversify into new products. Perhaps worryingly for banks and card schemes, the technology companies front these products to consumers with their own brands (e.g. Apple Pay, Android Pay), although they run on bank and card scheme rails.
Focusing on customer needs
Consumer-facing technology brands in general specialise in understanding consumers as well as technology. They are experts in understanding what consumers need and value and delivering it. And then finding new and better ways to deliver it. There is scope for the payments industry to learn from the technology giants in this regard.
Banks, financial institutions, card issuers and acquirers need to put the customer proposition and customer experience front and centre of their development activities. It is critical to the adoption and success of any product. This may sound obvious, yet perhaps the payment industry has been guilty in the past of too much technology for technology’s sake.
Sometimes the technology has been in need of a problem to solve. Or put another way, the technology solves a problem but it is not one the consumer has (or thinks they have), or couldn’t have solved more effectively with something that already exists. Electronic purse schemes could fall into this category as they cannot effectively compete with the ubiquity, simplicity and anonymity of cash.
In the inevitable trade-offs between utility, security and acceptance, sometimes technology has played a trump card, which has resulted in the proposition not being correctly balanced. It either lacks functionality, or is too secure which impacts convenience and ease of use, or it is not accepted in the places the consumer wants to use it — which has impeded take-up. On other occasions, the communication to the customer has been too technology-heavy without sufficient focus on the customer benefits.
The real prize
The technology brands have understood the real prize. Apple, Android and Samsung Pay are not really about payment, or compartmentalising all consumer spend on a mobile device. They are about creating deeper, more profitable relationships with customers through their mobile devices.
The mobile is and will become the always-on, always close-at-hand communication channel to the customer. This will create new use cases and new business models for monetising data, cross-selling to customers, serving them appropriate advertising and so on. Brand value is an enabler as the future of consumer marketing belongs to the companies with the strongest brands.
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