In preparation for this week’s Marketing Strategy Meets Wall Street, I expanded my analysis of how the importance of brands varies across industry.
My earlier analysis was based on the 150 companies that were the owners of the brands that appear on the BrandZ, Brand Finance, Forbes and Interbrand lists. I calculated what proportion of their business value was represented by their brands.?The answer – based on data from 2015 to 2018 – was 19.3%
This percentage varies by industry – below are my calculations for the 9 of the 20 GICS industry groups in which there were a sufficient number of companies to create a meaningful average:
For this week’s conference, I wanted to get a broader perspective on the economic significance of brands.?Specifically, I wanted to answer three questions:
- Which industries are economically most significant (measured in terms of revenues, assets, profits and enterprise value)?
- How do industries vary in terms of their B2B vs. B2C orientation?
- In which industries is brand value concentrated?
Answering these questions required three discrete analyses:
- Aggregate the data from the 12,000+ public companies with revenues or market value of more than $50MM to calculate the economic significance of different industry sectors
- Review the financial accounts of the three largest companies in each of the 128 GICS sub-industries based to determine how much of each company’s revenues derived from selling to other companies (B2B) versus selling to end consumers (B2C)
- Consolidate the brand value data from the three most recent annual league tables published from BrandZ, Brand Finance and Interbrand lists to calculate the average value for each brand
The table below summarizes my findings from this analysis:
- The three largest industries in the world (measured in terms of revenues, assets, profits and enterprise value) are Capital Goods, Energy and Materials – together they represent 33% of economic value but account for only 7% of brand value
- 54% of brand value comes from four industries (Media, Software, Retailing and Tech Hardware) that represents only 18% of economic activity
- Industries can be classified into three main categories - those which are predominantly B2B or B2C (more than 85% of revenue from sales to other companies versus to end consumers) and those where revenues are more of a blend
- B2B represents around 65% of economic activity; and B2C accounts for 35%
- As we should expect, brand value is concentrated in industries that derive a substantial proportion of their revenues from sales to end consumers
Chief Communications Officer at The National Academies of Sciences, Engineering, and Medicine
2 年You always ask interesting questions, with thought provoking answers.
I help business managers to generate more impact. A 360° analyse directly provides coherent insights and drives support. Do you wonder how?
2 年Thanks Jonathan, what happened to the 'materials' sector. Are that only commodities? Or are other intangibles massive compared to the brandvalue?
The Coca Cola Company Chair Professor of Marketing
2 年This is a cool finding. Branding relevance at the industry level
Unearthing and communicating your uniqueness. Founding Member The Sharp End. Brand and Communications Strategy.
2 年Extraordinary detail as usual Jonathan Knowles. Well done. I have always been concerned, as you know, with how undervalued B2B brands are. Especially as the buying process for B2B brands is so different and more complex. Brand Power has to work harder across multiple technical and purchasing specifiers. Thoughts Dr. James Gregory , Erich Joachimsthaler Ph.D. ?