B2B value growth
outpaces Top 100
Brand transformations gain traction
The BrandZ™ Business-to-Business Top 20 rose 26 percent in value, outpacing the growth of the BrandZ™ Global Top 100 overall, and more than doubling the 11 percent B2B growth rate of a year ago. Value increases varied by category, with many technology and global and regional bank brands rebounding and hitting their stride after years of adjustment to economic and industry disruptions.
The B2B ranking includes the highest-value brands in the BrandZ™ Global Top 100 that generate over half of their revenues from business clients. Half of the B2B Top 20 are technology brands, four are banks, and three brands are in the logistics category, added to the BrandZ™ global ranking this year. In addition, two B2B Top 20 brands are in the oil and gas category and one is a conglomerate.
Many of the B2B technology brands have substantially transformed their business models to cloud-based operations. The increasing number of partnerships between B2B and business-to-consumer technology brands has increased expertise and customer access on both sides of the increasingly porous B2B-B2C divide.
A decade after the financial crisis, global banks have emerged, finally, from the overhang of fines and regulatory changes. A strong global economy and profitable businesses serving high-wealth individuals helped drive strong financial results, as brands also built awareness among a new generation of customers more inclined to turn to fintechs for financial service needs.
The rise of the logistics brands was one more example of the “Amazon Effect,” which crossed many categories, usually as a challenging and disruptive force. In contrast, the logistics category benefited from the increase in package delivery driven by e-commerce. Amazon’s test of its own delivery system portends future logistics category disruption, however.
After three years of cost cutting by oil and gas brands, profits flowed at a lower price-per-barrel of oil, and profits increased for some brands when the oil prices rebounded from historic lows. The shift from oil to gas, and the challenge of hydraulic fracking in the US, created new disruptions and costs, and a need to strengthen the image of these B2B brands among consumers.
Transformation and growth
Adjusting to change has been challenging for B2B brands, which operate in a more complex world than B2C brands, often selling solutions rather than products. In oil and gas, smaller and more agile companies provided cheaper exploration and production services. Technology leaders with businesses based on extensive, long-term customer relationships, encountered smaller disruptive brands able to provide narrow, cloud-based, lower-cost solutions.
Microsoft illustrated the ability to successfully navigate these changes, having opened the company to collaboration with other brands and developed a cloud storage business, now second in size only to Amazon’s. Microsoft was among the fastest-rising B2B brands, with value increasing 40 percent. Adobe, led in B2B value increase, rising 53 percent, with cloud subscription services producing the vast majority of revenue. Salesforce rose 39 percent, as it continued to expand its cloud-based services and partnered with Google.
Change has been especially challenging for the large scale, heritage B2B brands, such as IBM in technology and ExxonMobil in oil and gas, both of which have progressed through category disruption. GE, a 126-year-old brand, and the only conglomerate ranked in the BrandZÔ Global Top 20, was in the midst of a major restructuring. These brands declined in value.
Over the past 12 years, B2C technology brands increased 568 percent in value, compared with a healthy but much lower 163 percent increase for B2B technology brands. However, the growth rate gap is narrowing. And over the past year, B2C technology brands increased 22 percent in value, and B2B brands almost matched them, with a 19 percent increase.
The decision-making process has changed as more millennial generation workers move into executive positions and bring different values. To appeal to younger workers, the requests for proposal (RFPs) increasingly ask not only about product and functional capabilities, but also about purpose-related criteria like sustainability and inclusion.
Responding to pressure from customers, consumers, and government regulators, B2B brands have focused beyond the immediate concerns of providing products and solutions to adopt a values-based approach to run their businesses with policies governing sustainability, supply chain ethics, and other issues.
The B2B businesses have been skilled at the rational part of the sale—presenting what they do—but sometimes less effective at differentiating—explaining how they operate. The B2C brands are better at emotional communication, which can be an advantage for brands like Apple and Google as they move deeper into the B2B space. Amazon’s AWS is already the No. 1 business cloud service, followed by Microsoft and Google. But building brand and reputation are vital for B2B companies.