News Analysis: PR's role in the 'World Cup' of brands

Google, eBay, HSBC, Samsung and UBS were the biggest gainers in this year's Interbrand ranking of global brands. But what part does PR play in helping firms climb up the value table? Alex Black investigates.

Brand perception determines whether hordes of consumers will beat down the shop door or shy away from buying a product. This perception is not driven exclusively by advertising - PR is crucial for placing a brand in front of customers and shoring up its reputation in times of crisis.

Coca-Cola, for example, is the world's most valuable brand, worth $67.5bn (£38.2bn) according to Interbrand. 'Imagine how many customers purchase a can of Coke in the world on a daily basis,' says Killa Communications founder Richard Lamballe. 'What individually branded medium can claim that level of interaction and engagement for itself?'

Interbrand has a strict set of criteria for considering companies for inclusion in its survey. First, a company must have a brand value greater than $1bn. It also must generate at least a third of its earnings outside the UK and have financial data in the public domain. The all-important ratings are then calculated via a complex financial formula (see box).

The above criteria, explains the editorial team behind Interbrand's latest top 100 survey, exclude household names such as Mars, CNN, Visa and Wal-Mart. Similarly, parent companies do not qualify (Marlboro appears, but Philip Morris does not), and airlines are ignored - their global routes are adjudged to place an unfair skew on the rating.

All eyes on the brand

The exercise is undeniably an excellent showcase for Interbrand's analysis methods, but the surveys are studied closely by industry. The Red Consultancy chief executive Mike Morgan likens the ratings to a World Cup for brands.

'The Interbrand survey echoes through boardrooms,' he says. 'It is the only global arena where Coke is head-to-head with Volkswagen and Apple is pitted against HSBC.'

Over the past five years, Korean electronics manufacturer Samsung has increased its brand value by 186 per cent. UK head of marketing and communications Eamon Collins says a high position in the table has given the company extra clout in the B2B market: 'The fact that we are now the top-placed electronics firm has increased our standing.'

Interbrand director of brand evaluation Nick Liddell says the survey is also important because it answers a question posed by senior executives: what is the value of the brand at point of contact with customers? 'The brand is a vehicle for justifying the current price and price rises,' he adds. 'It is also an indicator of trust, which affects the stability of future earnings.'

However, given the occupiers of the top five this year are the same as last year, The Fish Can Sing partner Dan Holliday argues the top end of the list does not offer much in the way of new information.

'There's little news in the fact that monolithic brands such as Coca-Cola, Microsoft, Intel and McDonald's have shored up their top-ten placings in this year's list,' says Holliday. 'But a glance at the fastest risers tells us more.'

In fact, one of the biggest stories of this year's table surrounds a company that makes the chart for the first time - the apparently 'media shy' Google, in 38th place. Online auction giant eBay, meanwhile, has moved five places to 55th and seen its brand value rise to $5.7bn, an increase of 21 per cent.

The 'wow factor'

Banking group HSBC - at 29 the highest-ranked British brand - moved up four places, while Samsung managed a 19 per cent value rise to beat market rival Sony. Collins says: 'Over the past 18 months we have designed our PR strategy around the "wow factor" of products. Media coverage, product placements and high-profile sponsorship programmes have all been vital in raising the brand's value.'

According to Holliday, the common denominator for the fast-rising brands has been recognition of the 'simple truth that among the ad-zapping, media-literate audiences of today, fewer of us are content simply to swallow the high-impact marketing practices of yesteryear'.

He agrees with the declaration by the Interbrand report's authors that 'the era of building brands namely through mass-media advertising is over'.

He adds: 'The non-movers of the top ten should be quaking in their boots. Audiences consume content from hundreds of new communication channels - mobiles, blogs, virals, ambient and guerrilla - alongside proliferating but increasingly outdated formats such as TV, radio, cinema and outdoor advertising. It hardly needs pointing out that PR can play an increasingly significant role in connecting brands with consumers.'

Killa's Lamballe agrees that the report proves there are more ways to reach and engage with an audience than through advertising or column inches. 'Reputations and perceptions are not built, maintained or changed solely by what we read, listen to or watch,' he says. 'Although the media remain a central part of it, popular culture in its broadest sense has a much deeper impact on our lives, and the brands that are profiting are the ones keeping on top of this.'

INTERBRAND TOP 100 2005 - RISERS, FALLERS AND NEW ENTRIES Brand Ranking Brand value % change on Risers (dollars bn) last year RISERS eBay 55 5.7 21 HSBC 29 8.6 20 Samsung 20 14.9 19 FALLERS Sony 28 10.7 -16 Morgan Stanley 33 9.7 -15 Volkswagen 56 5.6 -12 NEW ENTRIES UPS 32 9.9 n/a Google 38 8.4 n/a Novartis 43 7.7 n/a Zara 77 3.7 n/a Hyundai 84 3.4 n/a Bulgari 94 2.7 n/a LG 97 2.6 n/a Source: Interbrand

HOW BRAND VALUE IS CALCULATED

Each brand's earnings and sales over the next five years are projected using data from Citigroup, Morgan Stanley and JP Morgan Chase. A total figure is then worked out for operating costs, taxes and capital charges and then subtracted from the projected earnings. Intangibles such as patents and management strength are deducted to arrive at the present brand value.

The final stage is risk assessment. Market leadership, stability and global reach are all assessed, giving a 'discount rate' that produces the final net present value of the brand. This, the analysts say, is the best indicator you are likely to get of a brand's economic value.

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