The World's Most Valuable Brands 2018 by Ukpono Etuk

The world’s biggest tech companies have consolidated their power in recent years, driving huge profits and soaring market values. Apple (phones), Google (search), Microsoft (software), Facebook (social) and Amazon (retail) dominate their respective sectors thanks to winning products and services. But perhaps their most prized and valuable attribute: strong brand names.

A robust brand helps drive demand and pricing power. The five tech brands above do it better than anyone else and are the five most valuable brands in the world by Forbes’ count, worth a combined $586 billion, up 20% from last year.

Leading the pack as the world’s most valuable brand for the eighth straight year is Apple, with a value of $182.8 billion, up 8%.

Only Apple, thanks to its hard-core fan base, could get away with pricing a phone at $999 and proceed to sell 29 million of them in less than two months, as Apple did at the end of 2017, per Canalys research. Nearly one-quarter of those sales were in China, which hints at Apple’s global reach. Despite some gloom-and-doom forecasts for China ahead of its earnings announcement this month, Apple announced 21% revenue growth for the quarter in the world’s most populous country.

Samsung Electronics actually sold more phones than Apple during the fourth quarter of 2017, but Wall Street firm Canaccord Genuity estimated Apple captured 87% of smartphone industry profits, thanks to the introduction of the pricey iPhone X to its phone lineup. The profit disparity is reflected in their brand values, with the Apple brand worth four times as much as Samsung ($47.6 billion and ranked seventh overall).

Google ranks second overall among the top brands for the third straight year, with a value of $132.1 billion, up 30%. Apple has a 38% lead on the search brand in terms of value, but Google has closed the gap in recent years, as the difference was 121% three years ago.

Google’s parent, Alphabet, dabbles in other sectors with smart-home technology, self-driving cars, aging research and more. But almost all of those “Other Bets” lose money. It is the search business that pays the bills, with operating profit margins 26% last year. Google is the ubiquitous term for search despite the best efforts of Yahoo, Baidu and Microsoft’s Bing to cut into Google’s 80%-plus global market share. It is Google with a lower case “g” that appears in the Oxford Dictionary as the term for search on the Internet.

The fellow tech brands that round out the top five most valuable brands all had big gains, including Microsoft ($104.8 billion, up 21%), Facebook ($94.8 billion, up 29%) and Amazon ($70.9 billion, up 31%).

Amazon overtaking Coca-Cola was the only change in the top five this year. Coca-Cola’s brand value inched up 2% to $57.3 billion, and it was the only non-tech brand in the top seven. Coca-Cola branded sales represented 45% of the company’s total last year, with 13 billion cases sold. Changing drinking habits globally are impacting Coca-Cola, but brand remains uber-important in a sector where you are selling sugar and water. Coca-Cola continues to lead the pack.

Forbes evaluated more than 200 global brands to determine our final list of the 100 most valuable. Brands were required to have a presence in the U.S., which knocked out some big brands like China’s Alibaba and Tencent. The top 100 includes product brands like Proctor & Gamble’s Gillette, as well as brands marketed under their corporate name like American Express.

Forbes valued the brands on three years of earnings and allocated a percentage of those earnings based on the role brands play in each industry (e.g., high for luxury goods and beverages, low for airlines and oil companies). We applied the average price-to-earnings multiple over the past three years to these earnings to arrive at the final brand value (click here for the complete methodology).

The 100 most valuable brands are worth a cumulative $2.15 trillion, up 10% from a year ago. They range from Apple at nearly $200 billion to No. 100 KFC at $7.4 billion. Credit climbing profits for the jump in values overall. Earnings before interest and taxes rose 14% on average for the 100 brands.

Tech brands are the most prevalent, representing 20% of the final list, including the top five. Financial services, led by Visa ($24.5 billion), had 13 brands make the cut, followed by autos with 12 brands. Toyota ($44.7 billion) ranked ninth overall and was the top auto brand.

The top 100 is a global list with brands from 16 different countries, but the U.S. dominates with 54 entries, down from 56 last year. Germany (12 brands), along with France and Japan (7 each) were the next best-represented countries.

Netflix ($11.5 billion, up 35%) and PayPal ($7.5 billion, up 33%) were the biggest gainers in the top 100. Netflix doubled its global subscriber base over the past three years to 125 million. Netflix’s premium brand helped push through a U.S. price increase last year and still add to its subscriber base. PayPal's subscriber base hit 237 million this year, up 43% versus 2015. Customer engagement is high, with 35 transactions per account over the last 12 months.

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