The Secret to Brand Dominance? Diversification

While brands and agencies gird themselves for greater economic and regulatory uncertainty, the world's biggest brands can take comfort in that even in the volatility of 2021, they all got bigger. But it's the ways in which Apple, Google, Amazon, Microsoft and Tencent maintain their respective order as the top five most valuable marketers, according to Kantar BrandZ's annual ranking, that matter in a churning world. Granted, up until recently, corporate profits were ballooning. But even the threat of a bear market is unlikely to dent the Kantar BrandZ top 10, which is rounded out by McDonald's, Visa, Facebook, Alibaba and Louis Vuitton. These brands' greatest challenge—and opportunity, Kantar's report suggested—is being able to prove their often lofty and misleading sustainability goals. Sustainability Applies to Your Employees, Too How big brands stay that way Apple unseated Amazon at top of the Kantar BrandZ Most Valuable Global Brands 2022 ranking, as the ecommerce giant slipped from No. 1 in 2021 to No. 3, just behind Google. Apple is on track to become the first trillion-dollar brand, the report noted. With a brand value of $947.1 billion, Apple represents the single most important difference between brands that dominate versus ones that fade: It has a high degree of differentiation and continued diversification across its hardware, software and services portfolio. Google's second place showing is noted as one of the fastest risers in Kantar BrandZ's ranking. The search giant increased its brand value by 78% to $819.6 billion between 2021 and 2022. But contrast, Apple's brand value grew by 55%, while Amazon's gained a mere 3% with $705.6 billion. Despite everything being thrown at it, from online advertising's shift to a cookieless future to U.S. and European lawmakers' regulatory saber-rattling on privacy issues and monopolistic practices, Google remains an essential part of consumers’ lives worldwide whether they approve of it or not. Overall, the combined value of the world’s Top 100 most valuable brands jumped by 23% to $8.7 trillion over the past year. So what does this say about 2022 and the troubles brands face in a potential recession? "We have seen six new brands break into the Top 100, a similar proportion to most years," Martin Guerrieria, head of Kantar BrandZ, told Adweek. "There is very good evidence that continuing to invest in strong brands, through effective marketing that connects with more consumers, adds value to businesses." The value of diverse revenue sources There were some differences between this year and last. Thirty-seven brands improved their ranking this year, the report found. Individual categories such as Media & Entertainment, Business Solutions & Technology Providers and Retail accounted for over half of the total value of Kantar BrandZ's Top 100. Consumer technology and luxury brands rose the fastest: 46% and 45% respectively. Also up were automotive (34%) and banking (30%). Decent gains were found in apparel (20%) and personal care (17%). At a category level, Wells Fargo was the only new No. 1 brand, moving from second to first place in the Banking category and replacing China’s ICBC. The key factor in the disparate growth rates is that industries like tech and banking have the option of expanding their services and areas of interest. A clothing brand can only keep up with fashion trends and costs. "We’ve seen this year that the continued diversification of these brands into new territories and product areas, not only related to b-to-c growth—think Amazon’s AWS—and Google Cloud within b-to-b, have fostered continued growth despite a challenging backdrop," Guerrieria said. He called Apple the "ultimate diversifier, one of Kantar BrandZ’s best differentiated brands." The Cupertino tech giant has shown an ability to forge powerful brand associations with consumers. And while Apple watchers yawn at the putative lack of major advancements from the iPad, iPhone, Apple Watch, Music and News, those areas have all contributed to the brand's growth this year. In the face of challenges The Kantar BrandZ report isn't a crystal ball. Its purview is not to imagine what effect regulators will or won't have on brands. Its brand valuations are based on current expectations of future earnings potential. "We have seen that brands that diversify create more value and spread the risk that increased regulation might have," Guerrieria said. He did offer one potential example for other, not-so-globally dominant brands navigating tough times recently. India's Airtel managed to preserve and renew its brand strength and consumer equity in the face of massive disruption from cut-price challenger telecom brand Jio, Guerrieria noted. "This year, Airtel returned to the top 10 most valuable telecom brands ranking," he said. "Even TikTok has maintained its multibillion-dollar value despite the changes it has undergone in the U.S." As for large segments of the public appearing to sour on Amazon, Google and Facebook, Guerrieria said Kantar BrandZ pointed to a "value-action gap" when it comes to consumers acting on what they say. "It’s very easy to say that, 'I will no longer engage with the likes of Apple, Google, Microsoft, Facebook and Amazon,' but the sheer scale of their success and the seamless ecosystems they’ve built make their services embedded in our lives," he said. "Facebook is a good example—some previous users have ‘switched’ away from using Facebook to socialize online via Instagram or Whattsapp, without realizing they are still engaging with Meta owned brands." One hard truth of lasting brand power: If consumers perceive a company's products and services as an essential utility, it's enormously difficult for people to cast them off. That's true even in the face of waning brand affinity. However, there is one area that even the most invulnerable brands need to tread carefully on. There's no gaming sustainability The most important thing for brand marketers to focus on is their own company behavior. It's axiomatic, sure. But to Guerrieria, it's a view worth stating and restating. And it's especially true when it comes to the ways brands practice and communicate their intentions regarding sustainability. "There’s no point talking sustainability if your company practices are open to valid criticism," Guerrieria said. "If you have an established brand with a legacy of ESG [Environmental, Social, Governance] challenges, then face up to them—but don’t expect credit just for correcting historic problems." If a marketing leader wants to make sustainability part of their brand’s platform, they have to make sure it’s relevant, that it’s meaningful to their audience, that it’s credible in terms of business operations and partnerships—and that it fits with the brand’s core, the Kantar BrandZ head noted. "Some brands have a higher purpose baked in from the start and can use it to communicate widely," Guerrieria said. "Others need to judge the time and investment required. They might be better off continuing to communicate—mindfully—on their brand’s core strengths, consistently." No matter what, sustainability credentials are fast becoming what Guerrieria called a "hygiene factor" of brand value that can no longer be ignored. According to Kantar BrandZ, perceptions of sustainability currently account for 3% of consumer decision making. Granted, that's not all that substantial. But this figure is rising fast, and will surely continue to do so. "Consumers are clearly demanding more—the definition of ‘value’ is evolving and brands need to bake this into their long-term strategies," Guerrieria said. "Delivering dollars will no longer be enough for consumers, a board of directors or the investment community—behavior will play an increasing role. Brands need a sustainability strategy—and they need a realistic one quickly. Transparency and progress will be key." Adweek Releases First Sustainability Special Report

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The Secret to Brand Dominance for Apple, Google and Amazon? Diversification

Inflation, recession and privacy rules shouldn't worry the top marketers too much

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