Strong brands across categories prove resilient to extreme stress
Report examines pandemic impact and implications for future growth
If I’d wanted to invent a stress test for brands, I couldn’t have imagined a global pandemic that in just a few months shut down a vibrant global economy and challenged the fortunes of brands across categories.
If I’d wanted to predict the impact on the BrandZ™ Global Top 100 Most Valuable Brands would I have estimated the that the Top 100 would increase by a steady 6 percent compared with 7 percent year ago?
The healthy growth rate didn’t surprise me because, to use current terminology, we follow the science. Our BrandZ™ analysis consistently shows that strong brands provide resilience during periods of market volatility. They decline less in value and recover faster.
That lesson was clear during the global financial crisis over a decade ago. And it is clear today. During the five weeks from February 14 to March 20, when the MSCI World Index and the S&P 500 dropped 75 percent and 51 percent, respectively, our portfolio of brands with the highest equity, the BrandZ™ Powerful Brands Top 10, dropped only 37 percent before turning upward.
Communicating these strong results is important, but insufficient. To be really useful to marketers and brand builders we need to illuminate all the brand building factors that produce strong shareholder returns and inspire consumers to select one brand over another. We supply these insights in our 2020 BrandZ™ Global Top 100 report, although this year was challenging.
We began preparation for the 2020 Global Top 100 report in Shanghai during October 2019, meeting face-to-face with our China-based WPP and Kantar brand experts. During January and February, we continued with similar meetings in London, Paris, New York, Chicago, and San Francisco, where we finished during the week Covid-19 received its official name.
We came away from these thought leadership engagements with a deep understanding of the cultural shifts and trends impacting brand performance across multiple categories worldwide. Simultaneously, our valuations team was nearing the end of a months-long process of computing brand value with a complicated analysis of financial data and the impact of consumer attitudes.
But it quickly became apparent that we needed to consider another factor. We needed to revisit all our assumptions about the year and look at all the evidence again through a wider lens that included the impact of the global pandemic. In other words, our routine over the past several months probably was not unlike your own.
The result is the most jam-packed report we’ve produced since launching the BrandZ™ Global Top 100 in 2006. We began with our renown brand and category rankings and analysis and pushed further, adding two additional sections. We investigate a cultural shift that has touched all categories—Sustainability. And we examine the brand and category repercussions of the Covid-19 pandemic.
Also new this year, we’re launching our BrandZ™ Global Top 100 Digital Virtual Experience app, an easily-accessed immersive experience where you can dive deeper into the analysis, hear from our brand experts, and watch video interviews about useful brand building topics that elaborate on the insights contained in the report.
From the vast amount of knowledge and insight contained in this report, I’ve extracted a few key findings.
Lessons past and present
Brand strength is key. History won’t repeat itself exactly, but it is an important guide. Coming out of the global financial crisis over a decade ago, strong brand equity was the key to recovery. Between 2006 and 2020, our BrandZ™ Powerful Brands Top 10 Portfolio increased 285.2 percent in value, while the S&P rose only 120 percent. The most important driver of that growth was Meaningful Difference—relevantly meeting consumer functional and emotional needs in ways that stand out and are trendsetting.
Looking at how Covid-19 impacted shopping during the pandemic, here are three key conclusions from our observations and the Kantar Covid-19 Barometer research across 50 markets: (1) the coronavirus drew many newcomers to e-commerce; (2) value-shopping increased; and (3) buying local moved from a sustainability practice to mainstream.
Among the important finding from the Kantar Brand Footprint report on FMCG categories, it is clear that despite sales variations by category, people were open to trying new things, which presented opportunities in difficult times. Traditional marketing levers ignited sales even in slow-growing or declining categories.
No one knows how long this pandemic will last and what the recovery arc will look like. What we do know is that for brands to gain share during the recovery they need to start planning now.
Corporate reputation, especially environmental and social responsibility, will have an impact on brand choice, according to our BrandZ™ analysis. Online and O2O will be even more important channels post pandemic.
And of the more than 20 BrandZ™ brand personality characteristics, one stands out as most correlated with high brand value and rapid brand value growth—creativity. I’ll explain shortly how we can help you with creativity, but first let me introduce you to the report.
This is just a taste of the valuable details we’ve packed into over three hundred insight packed and actionable pages. How you read the report, front-to-back or skipping around, depends your needs and time available. Whatever way you read the report, I guarantee that your time will be well spent. To help you navigate through it, I’m providing a rundown of the contents:
Part 1 Introduction: Here we connect the dots, summarizing the developments and findings and the cross-category trends, and we also suggest brand building actions.
Part 2 The Global Top 100: Here you’ll find the year-on-year brand changes and the analysis that explains which brands did well and why.
Part 3 Sustainability: New this year, we’re providing a deep dive into a cultural shift that is changing how consumers shop and brands behave across categories.
Part 4 The Categories: Here we examine the dynamics and brand performance of 14 categories and explain the impact of Covid-19.
Part 5 Covid-19: Unique this year, we’ve devoted an entire section to the impact of the pandemic on brands worldwide and the prospects for post-pandemic recovery.
Part 6 Resources: The report concludes with all the contact details and other relevant information needed to go from reading the report to taking the next constructive steps.
To create this expanded report, we engaged our WPP and Kantar resources worldwide to gather the knowledge and on-the-ground perspective required for effective brand building. We amplified findings throughout the report with Thought Leadership articles and Insights from our brand building experts. Also, new this year, we’ve added interviews in which C-Suite executives from three BrandZ™ Global Top 100 leaders—PepsiCo, Haier, and Ping An—reflect on the challenges facing their brands and the impact of Covid-19.
We can help
Despite this year’s challenges, and because of the urgent need to understand the altered brand landscape, we were determined to publish the 2020 BrandZ™ Global Top 100 report without delay. But I need to add a caveat: We are gaining more knowledge and insights constantly because the economic impact of Covid-19 is so fluid.
This report is a starting point. I urge you to follow up with the experts who contributed to the report. They continue to monitor the impact of the pandemic on brands across categories and around the world. We have an extensive library of annual BrandZ™ country reports along with our annual Global Top 100 report. I invite to you access the reports with our compliments at BrandZ.com.
One of our key WPP strengths—and a benefit for our clients—is that when we say we cover the world of brands, that’s exactly what we mean. The WPP and Kantar proprietary BrandZ™ database includes information from over 3.7 million consumers about their attitudes about (and relationships with) 14,000 brands across over 450 categories in more that 50 country markets. All that produces more than 5 billion data points.
Finally, I said that in the new world we’re all about to enter, creativity will be key for building valuable brands. Creativity drives the innovations in products and services, packaging and communications that can excite consumers and lift a company’s fortune. Creativity is what we offer. We can help you create the transformative ideas and outcomes necessary for building valuable brands.
To learn more about how to harness our passion to work for your brand—especially during these uncertain and trying times—please contact any of the WPP companies and Kantar divisions that contributed expertise to this report. Turn to the resource section at the end of this report for the contact details of key executives. Or feel free to contact me directly.
David Roth, CEO
The Store WPP, EMEA & Asia
Chairman, BrandZ™ and BAV Group
Learn much more about building global brands
Each year we produce the BrandZ™ Top 100 Most Valuable Global Brands, an exhaustive report that delivers knowledge and insight about brand building developments, category-by-category, worldwide. We also produce annual BrandZ™ reports about the most valuable brands in these countries and regions: Australia, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Latin America, the Netherlands, South Africa, Spain, the UK, and the US. To learn more about our vast library of reports and other tools for building and sustaining valuable brands, please visit us at brandz.com.