Great brands thriving in interesting times
Welcome to the third annual edition of the BrandZ™ Top 100 United States Brands report. Good things come in threes, and brand rankings are no exception. The existence of three years of data allows us to make longer-term comparisons of what has been helping US brands build an astonishing amount of value.
Before digging into the central findings of this year’s report, however, it would be good to get caught up on the United States market itself. The only problem with that is that the country’s political situation is so unsettled that a single week can upend any generalization one might want to make.
Nonetheless, let’s take a shot. The United States is nearly three years into an experiment in governance unlike any other in the country’s history. It has a president revered by a minority of the population and reviled by a larger, if less passionate group of citizens. Egged on by news media that has long forgotten the difference between facts and opinions, these two sides (which by no means constitute all Americans) can see the same situation in entirely different lights. The end result is equal parts chaos and paralysis, with a possible impeachment looming over it all.
Luckily, the country couldn’t have chosen a better time to lose its collective mind. Economically, it has been on the 10-year tear. Today, the United States enjoys a historically low unemployment rate at roughly 3.5 percent. Its GDP growth may have slowed in the past year, but it’s still hovering around 2 percent. Venture capital investment is at an all-time high, with an astonishing 8,383 startups raising money in the previous year.
However, all is not perfect in the state of the States. The stock market has largely stalled in the past year. Escalating trade wars are threatening a variety of sectors, and especially agriculture and manufacturing, which has seen a contraction in the past two months. Treasury yields have fallen, and in August the yield curve inverted, which has historically predicted a recession. In September, consumer sentiment fell to its lowest point of the Trump presidency.
More interesting for brands is that rosy employment data aside, the median household income did not rise in a statistically significant way in the past year. This points to a long-term, cyclical problem with the American market. While more and more Americans may be working, their buying power has not changed appreciably for a long time. Meanwhile, US consumers continue to be under pressure on a variety of fronts, notably housing, healthcare, and education.
Americans are also living in two different worlds. In places like the Northeast corridor or in the Pacific Northwest, you can find wealthy and middle-class cities, where families drive new SUVs to places like Whole Foods, where they stock up on local, organic produce. One hundred miles inland, people are more likely to frequent dollar stores and to find friends and community in local cafés and churches. In 22 states, including nearly all of the Deep South, Walmart is the largest private employer.
Americans are also divided generationally. People over the age of 60 are far more likely to have grown up white, without debt, and in a time of increasing optimism and prosperity. Younger people, by contrast, have grown up in a multicultural context. They are alarmed by global warming, scarred by the Great Recession, and facing a world in which the American dream of owning their own homes is increasingly remote. Education today saddles them with debts unknown to earlier generations. Not surprisingly, they are far more likely to be concerned about the environment, gun-control, LGBTQ rights, free college education, and similar issues than older people. What might seem alien and un-American to one generation often looks familiar and comforting to the other.
As a result, brands seeking to connect with valuable younger consumers are finding themselves under pressure to make bold statements on a variety of social causes close to their hearts. Many are proactively reducing their carbon footprints far beyond what they would legally be required to do. Some are embracing purposes that can impact their bottom lines in the short term but are necessary to prove to young people that they share their values. For some, like Nike, the choice is easy, and the brand has been highly supportive of controversial figures like Caster Semenya and Colin Kaepernick. For others, finding a voice has been difficult.
So, with a country divided and facing uncertainty, where does that leave its brands? The answer: in a very good place.
The envy of the world
The performance of US brands over the last three years has been exemplary. Top US brands are not only worth much more than their global counterparts (second place China’s are less than one third of their value), they also contribute far more to their businesses than top brands in other countries. Fifty-four of the top 100 brands in the world are US-based, a number that is currently at an all-time high. If you add up the total value of a country’s top 30 brands and adjust it for GDP, most countries fall into a predictable range. If you do this for US brands, they sit well above the curve. And on every metric of brand health, US brands rank either #1 or near the top.
The immense strength of US brands has translated into impressive results. Over the three years that BrandZ™ has ranked US brands, 88 of its brands have remained consistently in the top 100. As a result, we can compare their performance over time, and that performance demonstrates without question the value of having a strong, meaningfully different brand.
During that time, top US brands have grown three times faster than brands in the global Top 100. They are not just rankings warriors either; they have also shown fantastic financial results in the real world. The 88 consistent brands in the ranking have delivered a 135 percent higher return than the S&P 500 since November 2017. Their average brand value also grew 21 percent, which is massive when compared to average brand value growth in other countries.
2020 marks a pause
This year, however, America’s brands took a slight breather—for them. The Top 100 rose a respectable 5 percent to $3.8 trillion, which was roughly double the country’s GDP growth. And some brands did exceptionally well. Instagram grew an astonishing 98 percent in brand value, the largest such jump in the history of BrandZ™ US rankings. In addition, Amazon, in spite of its already massive value, grew 20 percent to overtake Google and Apple as the top US brand. This shouldn’t come as a surprise. It also sits atop the world rankings and is now worth more than one third of a trillion dollars, the most of any brand in the history of the BrandZ™ rankings.
A final point to notice is that in most countries a few large categories, notably banks and telecoms, dominate the rankings. Not so in the US. Top American brands come from almost every conceivable walk of life. Twenty-two different categories are represented in the rankings, from technology and alcohol to baby care and apparel. This shows that practically any brand in the United States can become a top brand so long as it invests wisely and establishes a clear Meaningful Difference in the marketplace.
Up next? Who knows.
What’s up next for brands in the world’s largest economy? It may be a cliché, but uncertainty is the only certainty in the US today. While the country used to be a powerful force for stability in the world, it has increasingly become a source of volatility. Policy can be made by tweet, a constitutional crisis can erupt up overnight, and long-held conventions are trampled on a daily basis. That may make for interesting times, but not necessarily the right kind of interesting.
What is certain is that barring a major financial shock, top US brands will likely continue to grow in value. Even if economic headwinds mount, their strong scores for Meaningful Difference indicate that they will weather the storm better than most and emerge faster from any downturn. Because in the United States, branding is not just a job. It’s the country sport.