Interbrand, one of the world’s largest and most successful brand consulting firms, recently released its annual “Top 100 Global Brand” rankings, highlighted by a new number one brand for the first time since it created the list 13 years ago. During that time, the ubiquitous, 127-year-old purveyor of soft drinks, Coca-Cola, had held the top spot with a brand value that has hovered in $70 billion range for the last several years.
Of course, $70 billion is a lot of carbonated water and high fructose corn syrup, but as with any top brand, the real value is not in the physical assets, it’s in the elusive concepts of brand, brand equity, brand experience and brand loyalty. Coke has led the Interbrand list since its inception, selling a product with a single serving price of less than a dollar at the supermarket, generating billions of transactions, and eking out a few cents’ profit and value with each sale.
This year, the Interbrand formula (which isn’t explicitly published, but includes valuations for brand strength, brand preference and financial performance) has vaulted two brands ahead of Coke, even as the beverage giant’s estimated brand value increased by 2 percent to $79 billion. Apple and Google both leaped from the number two and number four positions, respectively, to numbers one and two with brand values of $98 billion for Apple and $93 billion for Google.
So, the technology brands didn’t so much as defeat a traditional, century-old brand as they simply blew by in the passing lane going as much as $19 billion faster than the Coke brand juggernaut. Yet, while the new leaders both fall into the technology category, they could hardly be more different. Apple, with a 28 percent one-year gain in brand value, sells a manufactured product (although, like Coke, they own very few production facilities) with proprietary operating software and premium production values. Their gross margin per sale for phones and computers can be measured in the hundreds of dollars. Their brand loyalty is astonishing and the envy of the nearly any marketer. Their leaders are well-known, sometimes legendary.
Google, on the other hand, sells users very little. The vast majority of their users (not their true customers) utilize their search engines, email, mobile operating systems, etc. for free. Google’s users create value for the company by supplying their attention, which puts their eyeballs in the proximity of advertising. Google’s real customers are the ones who pay for that advertising. Google dominates the search industry with an estimated 66 percent share, and yet how many of its billions of users would say they are “loyal” to the brand? How many of those users could name the CEO or another prominent person in the company?
So while Apple extracts a huge dollar commitment at a premium price from its customer base, Google maintains a “user base” that requires no financial transactions whatsoever. Google has fundamentally changed information gathering and the advertising that supports it. Apple has led innovation in personal computers and tablets, mobile music and mobile phones. Apple loyalists have been described as a cult. Google users haven’t even been described as anything, except possibly as “everybody.”
This is, perhaps, the most remarkable element of Google’s rise to number two most valuable brand: They have done it without charging their users and without generating demonstrable brand loyalty. We use Google because it is just there, and ready to help.
Years ago, the world champion brand of its time, Coke, used the widely remembered slogan, “Coke is it.” Google could easily co-opt that tagline for itself, except it is so busy creating products like Google Earth, Google Docs, Google Reader, Google Groups, Google Plus, Google Toolbar and Google Translate, it doesn’t bother with a slogan. Of course, not all of these products have been successful, but that matters little as long as Google is able to secure our attention with something that can carry an ad.
There are now six technology brands listed in the top ten of the Interbrand list, including IBM and Microsoft at fourth and fifth, and Samsung and Intel at eighth and ninth. GE, McDonald’s and Toyota are also on the list, showing that appliances, hamburgers and cars can still command a spot in the top tier. Yet, the youngest brand of them all by far, with a business model built on commanding attention rather than delivering an actual product, with a ubiquitous-yet-tenuous position in our minds, the very antithesis, really, of a badge brand, sits poised to become the number one brand in the world. Google that this time next year, and the answer is likely to be, well, Google.
As published in the Central Penn Business Journal.