BrandZ™ Top 50 Most Valuable UK Brands 2017

Editor's Notes

1. MARTIN: Hello everyone and welcome to the launch of the very first BrandZ Top 50 most valuable UK Brands…
2. MARTIN: We’ll start with a quick introduction to the study and how we create BrandZ’s brand valuations. Then we’ll reveal our first ever UK Top 50 most valuable brands and summarise some of our key findings. Finally we’ll run through some lessons for building strong and sustainable brands. As I mentioned earlier, we will answer your questions at the end of the session so do please type them in as we go!
3. MARTIN: Firstly to introduce ourselves – I’m Martin Guerrieria, BrandZ Global Research Director and with me today is Peter Walshe, BrandZ Global Strategy Director (PETER: Hello!) Feel free to tweet us using these Twitter handles or using #BrandZUK
4. MARTIN: The scale and history of BrandZ is unparalleled in the industry and gives us unique insights based on very robust data. The UK ranking is supported by data on over five and a half thousand brands and the study interviews ten and a half thousand consumers per year, covering 35 categories annually. The Top 50 brands in the UK Ranking span 19 different categories, showing that any type of brand, provided it is big enough and strong enough, can be one of BrandZ’s most valuable. Over to Peter to briefly explain how we value brands…
5. PETER: Thanks Martin. To be included in this Ranking the brand must have ORIGINATED in the UK. So for example, Guinness is an Irish brand and ineligible even though owned by a UK corporation (Diageo) but O2, originated in the UK and so is in the Rankings even though it is now owned by a Spanish company (Telefonica). We also need publically available financials, so the company owning the brand needs to be listed somewhere or, if not listed, have published financials. ‘private’ companies we consider such as e.g. the BBC, Dyson, Waitrose, tend to publish their financials with Companies House and on Bloomberg
6. PETER: So how do we arrive at a dollar value for a brand? (All our Rankings are in US dollars to be consistent.) Three simple steps. Determine from published data the financial value that anything named the brand has. Then from the BrandZ data apply the proportion that is brand driven (the Brand Contribution). Multiplying these together produces the brand value. A more detailed explanation is contained in the Report, which we will give you details on how to access towards the end of this Webinar.
7. PETER: So let’s stop the suspense and reveal the first BrandZ UK Top 50 Most Valuable Brands. (PLAY VIDEO COUNTDOWN)
8. PETER: Huge congratulations to all of the brands! No one underestimates the hard work and support that goes into creating and sustaining strong brands that are hugely valuable.
9. PETER: You can see the brands that also made the Global Top 100 list earlier this year: Vodafone, HSBC, Shell, and BT. Let’s have a closer look at the Top 3 most Valuable UK brands
10. PETER: Vodafone is a relatively modern UK brand (established in 1984) and has been No.1 UK brand in the Global Rankings since they began in 2006. It is a driver in creating value overseas: 87% of its brand value compared to the average UK Top 50 brand at 54%. Our BrandZ diagnostic data suggests that part of its success is behaving as a Leader, backed by good online presence and services and a strong sense of Responsibility. The result: high recommendation, a pathway to continued success.
11. PETER: No.2 in UK Ranking HSBC, is a ‘heritage’ brand from 1865. It is also a strong exporter of value for Brand Britain. It scores highly on: Brand Power and is seen as being Wise personality, and offering investors a good financial return. As a result it is also highly recommended. Whist the banking category faces many challenges, this is an example of the brand having a positive effect and as such is probably one of the most valuable assets for the corporation.
12. PETER: Shell is another ‘heritage’ brand and value exporter. Leadership is a key characteristic, evidenced by the recent announcement of putting charging points in petrol stations, which also underlines its Environmental Responsibility credentials. As a brand it is hugely differentiated and distinct – no mean feat in a commoditised category such as Oil & Gas. The result is high trustworthiness that helps to create and maintain a premium for the brand. Martin….
13. MARTIN: The rankings together with other metrics from the BrandZ database allow us to isolate overall trends, as well as determine important criteria for brand success and potential barriers to that
14. MARTIN: Clearly this is our first UK ranking but our global valuations have included some UK brands since 2006 when our first Global Top 100 of the most valuable brands in the world was published. So this enables us to look at the progress of our ten most valuable UK brands over a twelve year period
15. MARTIN: Let’s look at the pace of growth of the Global Top 10 most valuable brands versus the UK Top 10 over that 12 year time period. As recently as 2009, the UK Top 10 were growing in value in line with the Global Top 100 but since then there has been a slow down for the UK top 10, while the global 10 have accelerated away. In the last 12 months the Global top 10 have grown by 13% compared to a 2% decline for the UK top 10
16. MARTIN: This trend is also illustrated if we look at our 3 core equity measures, which have also declined since 2006 – Power, which measures the ability of a brand to generate consumer demand, Premium, which measures a brand's ability to command a price premium and perhaps most concerning of all, Potential, which predicts a brand’s likelihood to grow in future Notice that Potential has dipped below the average of 100 for the first time in the last few years
17. MARTIN: Similarly when we look at the three key building blocks of brand equity – Meaning, Difference and Salience, each has also declined, particularly Meaningfulness
18. MARTIN: The UK top 10 are also unique in the fact that they are much more salient than they are Meaningfully Different… …and we know that salience alone does not sustain a strong brand in the long term…the key is to build and retain Meaningful Difference to stand apart from the competition and drive value
19. MARTIN: So why have we seen this weakening of brand equity and Meaningful Difference in particular? These are the most valuable UK brands after all…
20. MARTIN: Let’s look at some data from our 50 most valuable GLOBAL brands to begin with The brands that are perceived to be most Innovative (on the left of the chart) are worth, on average, two and a half times more than the less Innovative on the right. So this shows that Innovation is a vital driver of brand value
21. MARTIN: When we look at the age of the UK Top 50 versus the Global Top 50 we see that the UK group tends to be much older – an average of a third older in fact – the UK’s oldest brand in the top 50 is Royal Mail, which was founded in 1516 but others were also founded well over one hundred years ago: Bank of Scotland 1695, RBS 1727, Lloyds 1765, Johnnie Walker 1820, Cadbury 1824, Legal & General 1836, Prudential 1848, Boots 1849, Burberry 1856, HSBC 1865 The average age of the Global Top 100 has been trending downward due to the rise of technology brands, which were founded comparatively very recently – the average age of this year’s 7 new global Top 100 entrants. Which were Xfinity, YouTube, HPE, Salesforce, Netflix, Snapchat and Sprint was 1997…
22. MARTIN: and its in presence of technology brands where we see another big difference between the UK and Global Top 50s In fact there are NO PURE TECHNOLOGY BRANDS in the UK Top 50 - Half are Telecom, Finance or Utilities brands that account for Two-Thirds of the total value [DO NOT READ OUT: ‘Technology’ includes business to consumer and business to business providers of hardware, software, portals, consultation and social media platforms. The diversity of the tech category reflects the convergence occurring as brands develop integrated systems of products and services]
23. MARTIN: This comparative lack of tech brands is likely to be a key contributor to what we’ve called the ‘Innovation gap’ in the UK. If we look at the average perceived Innovation scores for the Global Top 100 and brands featuring in our other country level rankings, UK comes bottom of the list [DO NOT READ OUT: Germany and France Rankings to appear shortly – we know the brands so we can calculate their Innovation scores, but the Ranking values yet to be finalised]
24. MARTIN: BUT that’s not to say that perceived innovation doesn’t add value to UK brands…..it clearly does. If we repeat the global innovation analysis from earlier but this time use data for the UK’s Top 50 most valuable brands, the same insight holds true – the most innovative UK brands are the most valuable and innovation is a driver of growth in the UK. However, given that we’ve just seen that even the most valuable UK brands underperform as perceived innovators versus brands from other markets, this feels like a current missed opportunity for the UK and an area for focus in the future Peter….
25. PETER: Martin has shown the importance of being Meaningfully Different (which as slipped amongst the Top 10 UK brands over time). He has also illustrated the value of being perceived as an INNOVATIVE brand. Our BrandZ data shows that the five pillars of Meaningful Difference include INNOVATION. If a brand is thought to be Making people’s lives better it has PURPOSE. (And global validation of brands with Purpose show they grow more and faster). If that Purpose is then underlined by an Innovation that supports why the brand is making people’s lives better, it is in a much stronger position. Then amplify with great communications the innovation, and people are much more likely to try or re-try the brand. If the resulting brand experience lives up or exceeds to the promise, then Love is enhanced, enabling the brand to sustain itself until the next innovation comes along. The AVERAGE score across these five components is what we call the Vitality Quotient for the brand (the vQ score). Purpose - Making Peoples’ lives better Innovation Average of all statements then indexed to category average Disruption = Shaking things up Creativity = Creative CharacterZ statement Leadership = Leading the way (RepZ statement) Communications = Have great advertising Brand Experience Average of all statements then indexed to category average 2017 = Meets needs/Better online experience/Stand for something unique (NOT MDF Q) 2016 also included ‘Are trying to make people’s lives better’ (RepZ statement) Love – MDF Affinity
26. PETER: And a comparison of the UP Top 50 with the Global Top 50 shows that the UK lags generally, but particularly in INNOVATION
27. PETER: That’s not to say we don’t have innovative brands in the UK…..there are some clearly very innovative brands….but some are yet successfully to scale globally – being ‘tech savvy’ is a vital ingredient of success. In fact only four of the most innovative (Dyson, Dulux, Sky and Virgin Media) are in the UK Top 50
28. PETER: When a brand is strong on all five of these attributes (105+), they have healthy ‘Vitality’; if they are lacking in any one area, they are at risk of damaging their brand health and underperforming in the market. If they fail on all five measures (99 or less), they are classed as being ‘Frail’. (Average vQ of Healthy 120, OK, 101, Frail 93)
29. PETER: And so you will not be surprized to see that Healthy brands (those with a high vQ score) are much more valuable than less healthier brands across the UK Top 50 (High vQ 110+, Low vQ 99 or less)
30. PETER: In fact only a quarter of the UK Top 50 (on the left) have above average scores on all five of the Vitality aspects and are therefore Healthy. 12% are Frail. Their average VQ score is 105 compared to (on the right) all brands which average 100. These 1,763 brands, on the right, have only 6% that are healthy and many more (29%) that are Frail, showing the relative power of the Top 50.
31. PETER: But the UK Top 50 are significantly less healthy than the Global Top 50 The UK Top 50 compares poorly with the Global Top 50 mainly because of a lack of Innovation. Martin….
32. MARTIN: But please don’t think it’s all doom and gloom for the UK – far from it! Amongst the UK Top 50 we have some very good examples of strong and Healthy brands. Each of these five score well on all five aspects. But in particular: The Body Shop after its recent demerger from L’Oreal is likely to begin to reassert its Purpose credentials, which had begun to slip. Dyson flies the flag for British invention and innovation. M&S is supported (particularly on the food side) by some literally mouth watering advertising. The BBC continues to deliver a quality experience online and in real time, and we are seeing the recovery of Tesco evidenced by the love that its brand generates. But one British brand stood out as performing very well in all five areas….
33. MARTIN: Congratulations to Dulux, which is the healthiest UK brand and also happens to be in the Top 50 The brand’s Iconic communications emphasise its purpose, innovations and brand experience, giving us one of our most loved brands. Back to Peter…
34. PETER: So let us hypothesise…. WHAT IF>>>
35. PETER: So we have seen that Innovation is a weak link in the UK at present. But What If Innovation could be equal to that of the Global Top 50? It’s a big ask but shows the influence of Innovation….
36. PETER: Here we see again the slippage over time of the Top 10 UK brands. What happens if we up the Innovation ratings ….
37. PETER: The UK would not have slipped and would be marginally ahead of where it was in 2006. The implications and effect of this on brand value is quite dramatic…
38. PETER: The Top 50 would be worth 17.6% more on average. Showing an ‘innovation gap’ of $41bn, or about $0.8bn per brand. That is a great opportunity. Martin…
39. MARTIN: So let’s sum up what we’ve seen today….
40. MARTIN: As we’ve seen, a wide range of brands are represented in the UK Top 50, which includes brands from a massive 19 categories in total Even within individual categories there is huge variation. For example car brands include the prestigious Jaguar alongside the more economical Mini; within fashion there’s the luxury of Burberry and more affordable Next and Asos. Retailers, logistics suppliers, food brands and big names in entertainment also feature. BUT There’s no doubt that infrastructure brands dominate at the top Financial services brands, telecommunications providers and utilities occupy many of the top positions in the ranking, and account for a disproportionately high level of the value of the entire Top 50. Many of these are global brands, and reflect the UK’s role as a global centre for financial services and its historical role in energy exploration, as well as consumers’ current appetite for connectivity. That said, even large infrastructure brands need nurturing – As we’ve seen, some of the most valuable UK brands are neglecting their brand health, and their financial performance and future prospects are being undermined as a result. Scale has sustained these brands in the past, but their increasing lack of Meaningful Difference is making them vulnerable. This is important because there are many smaller but potentially highly disruptive brands from within the UK and beyond, poised to exploit any weaknesses. As we’ve seen, innovation is a key value driver and one of the key components of brand health. Yet the brands that are seen as the most innovative by UK consumers are largely outside the UK Top 50. This should serve as a sign of a healthy competitive market in which progress is in the pipeline – but also as a word of warning to any brand that thinks a long history guarantees future longevity.
41. MARTIN: So to wrap up before we take some questions, here’s where you can find the full BrandZ Top 50 most valuable UK brands report to download for free. The report contains not only the ranking but over 200 pages of analysis thought leadership and insights so be sure to download and share it with your teams and clients alike
42. MARTIN: Please also remember that there are many other BrandZ ranking reports available from our website – including the Global Top 100 we launched in June, as well as reports for China, India, Indonesia, Latin America, Brazil, Saudi Arabia and Spain, which we launched in Madrid just last month
43. MARTIN: BUT EVEN THAT’S NOT ALL! Watch this space as we launch the first ever US Top 100 and France Top 50 by the end of the year, Followed by the Germany top 50 and Italy Top 30 early in Q1 2018
44. MARTIN: so now let’s answer some of the many questions we’ve had coming in over the course of today’s session. Feel free to keep adding them as we talk and we’ll answer as many as we can in the time we have left MARTIN AND PETER TO ANSWER QUESTIONS LIVE FROM THIS POINT