Social media andtechnologyFacebook’s brandvalue soars68 per centPage 2

Inside »

TelecomsHigh­speedbroadband andbetter servicehelp boost BTPage 3

Retail therapy afinancial tonicApparel sellers addvalue with storerevampsPage 3

Promotion viaworthy causesCharitablecampaigns demanda leap of faithPage 4

OpinionAndrew Hill looksat the power ofpeer­to­peerpersuasionPage 4

FT SPECIAL REPORT

Global BrandsWednesday May 21 2014 www.ft.com/reports | @ftreports

The world’s “sexiest” brandsin 2014 were high-fashionlabels Gucci and Prada, whilethe most “fun” were Face-book and clothing retailer

H&M.The findings, says Millward Brown

Optimor, which compiled this year’sBrandZTM top 100 brand rankings,reflect the fact that the developedworld is recovering from the financialcrisis and confidence is returning toconsumers in its markets.

The top 10 brands in the US, conti-nental Europe and the UK grewstrongly in value over the past 12months, while brands from manyemerging markets suffered. No brandsfrom India and only one from the Afri-can continent made the rankings thisyear, and there were fewer fromChina than in 2013.

“We are seeing signs of consumerconfidence returning and this hasbeen exploited by strong brands,”says Peter Walshe, global director ofBrandZ. “These brands got a realwake-up call in the recessionaryperiod after 2008. Strong brands havetaken on that message and havethought hard about their customers,and how to be relevant to them.”

Steve Wilkinson, managing partnerof UK and Ireland markets, Ernst &Young, says consumer products com-panies led the way over the past fiveyears. “But we’ve had a tectonic shiftin the last twelve months. We’ve beenreminded of the natural volatility ofemerging markets.”

Overall, the combined value of thetop 100 brands grew 12 per cent from$2.6tn to $2.9tn, beating the averagegrowth rate of 9 per cent a year sincethe rankings began in 2006. Duringthe recession, the value of the top 100brands grew 8 per cent a year on

average. Only 18 of the top 100 brandslost value this year, compared with anaverage of 30 each year since 2006 and38 a year during the recession.

“The ‘power’ of brands has grownsubstantially since the recession, thatis, more consumers are purchasing

solely based on the brand,” says MrWalshe. “There really is somethingdifferent about this top 100.”

Mr Walshe points out that thosejoining the list for the first time –such as Twitter and PayPal – havemore than two-and-a-half times the

‘brand power’ of an average company.“Newcomers are really playing thebranding game,” he says.

“One of the themes is that thesebrands are becoming part of ourlives,” says Elspeth Cheung, head ofBrandZ valuation at Millward BrownOptimor. “The other big theme isglobalisation as western brands arecoming back this year.”

Despite the new entrants, thenames at the top are familiar. Tech-nology companies dominate the top10, although their order in terms ofbrand value has shifted.

Google has bounced back as themost valuable global brand, with abrand value of $159bn, up 40 per centsince 2013. Google held the numberone slot from 2007 until 2010, but fellto second or third place in the yearssince 2010.

Apple, in turn, has slipped down tosecond place. Its brand value of$148bn has fallen by a fifth over theyear, while the brand value of thetechnology sector as a whole hasgrown by 16 per cent. “Differentbrands have different strengths,” saysMs Cheung. “Google performs particu-larly highly on being meaningful toconsumers.”

She argues that the more powerful abrand a company has, the greater apremium it can charge for the sameproduct compared with competitors.

The growing power of social mediais demonstrated by the appearance forthe first time in the top 100 of Twitter– 71st with a brand value of $13.8bn –and LinkedIn – 78th at $12.4bn. Thefastest riser in the top 100 is the Chi-nese portal Tencent, whose value rose97 per cent over the year, making itthe most valuable Asian and Chinesebrand globally. Facebook was the nextfastest riser, up 68 per cent.

Overall, just under a fifth of the top

Continued on Page 3

Google pips Apple in popularityCompanies that arepart of our livesdominate the top 100,writes SarahGordon

Hit

andr

unM

edia

2 ★ FINANCIAL TIMES WEDNESDAY MAY 21 2014

Global Brands

Rank2014

Rank2013 Change Brand

63,460

56,685

54,262

53,615

49,899

47,738

42,101

39,497

36,390

36,277

35,740

35,325

34,538

34,430

29,768

Verizon

GE

Wells Fargo

Tencent

China Mobile

UPS

ICBC

MasterCard

SAP

Vodafone

Facebook

Walmart

Disney

American Express

Baidu

Brand value2014 ($m)

53,004

55,357

47,748

27,273

55,368

42,747

41,115

27,821

34,365

39,712

21,261

36,220

23,913

23,514

20,443

Brand value2013 ($m)

Value change2014 vs 13

20%

2%

14%

97%

-10%

12%

2%

42%

6%

-9%

68%

-2%

44%

46%

46%

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

12

11

13

21

10

15

16

20

19

17

31

18

26

28

33

1

-1

0

7

-5

-1

-1

2

0

-3

10

-4

3

4

8

Rank2014

Rank2013 Change Brand

29,598

28,756

27,051

25,892

25,873

25,779

25,730

25,008

24,579

24,414

23,356

23,140

22,620

22,598

22,165

Toyota

Deutsche Telekom

HSBC

Samsung

Louis Vuitton

Starbucks

BMW

China Construction Bank

Nike

Budweiser

L’Oréal

Zara

RBC

Pampers

The Home Depot

Brand value2014 ($m)

24,497

23,893

23,970

21,404

22,719

17,892

24,015

26,859

15,817

20,297

17,971

20,167

19,968

20,594

18,488

Brand value2013 ($m)

Value change2014 vs 13

21%

20%

13%

21%

14%

44%

7%

-7%

55%

20%

30%

15%

13%

10%

20%

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

23

27

25

30

29

44

24

22

56

34

42

35

38

32

41

-3

0

-3

1

-1

13

-8

-11

22

-1

6

-2

0

-7

1

Rank2014

Rank2013 Change Brand

21,844

21,535

21,020

21,001

20,913

20,809

19,950

19,745

19,469

19,367

19,072

19,025

19,005

18,235

18,105

Hermès

Mercedes-Benz

Subway

Com’wealth Bank of Australia

Oracle

Movistar

TD

ExxonMobil

HP

Ikea

ANZ

Gillette

Shell

Agricultural Bank of China

Accenture

Brand value2014 ($m)

19,129

17,952

16,691

17,745

20,039

13,336

17,781

19,229

16,362

12,040

16,565

17,823

17,678

19,975

16,503

Brand value2013 ($m)

Value change2014 vs 13

14%

20%

26%

18%

4%

56%

12%

3%

19%

61%

15%

7%

8%

-9%

10%

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

40

43

51

48

36

66

46

39

54

74

52

45

49

37

53

-1

1

8

4

-9

20

-1

-9

5

24

1

-7

-4

-17

-2

Source: Millward Brown Optimor (including data from BrandZ, Kantar Retail and Bloomberg)

Global brands Top 100

3 29%

Brand value ($m)

2013

4

7

Microsoft

201490,185 69,814

0 -4%

Brand value ($m)

2013

3

3 2014107,541 112,536

-1 -20%

Brand value ($m)

2013

2

1

Apple

2014147,880 185,071

Rank 2014

Rank2013

Change 1 40%

Brand value ($m)

2013

Value change 2014 vs 2013

1

2 2014158,843 113,669

-1 -5%

Brand value ($m)

2013

5

4

McDonald’s

201485,706 90,256

The world’s most valuablecompany no longer owns theworld’s most valuable brand.

That fact alone underlinesthe challenges that faceApple, as 2014 shapes up tobe the most important yearsince the death of its co­founder Steve Jobs in 2011.

Apple’s brand value fellby a fifth last year,allowing it to beovertaken by aresurgent Google.

It is still attractingnew customers indroves. In the sixmonths to the endof March, the

company attracted some60m first­time buyers.However, even Apple’s ownexecutives and ad agencyhave admitted that its brandhas suffered against stiffcompetition from the likes ofSamsung.

After watching Samsung’s2013 Super Bowl ad, PhilSchiller, Apple’s marketingchief, compared its Koreanrival to “an athlete who can’tmiss because they are in azone . . . while we struggle tonail a compelling brief oniPhone.

“Something drastic has tochange. Fast.”

Much will depend onApple’s next product launch.

Apple fans are hoping thatthe rumoured release of an“iWatch” this year will endthe speculation that it can nolonger innovate in the way itcould under Mr Jobs.

But matching the successof the iPhone will be tough.

“I think that the wearablesmarket will be very difficultto dominate in the same waythat Apple dominated thesmartphone market,” saysGadi Amit of San Franciscotech design agency New DealDesign.

Tim Bradshaw

Apple Stiff competition from the likes of Samsung forces a radical rethink

In a world dominated bytechnology companies,McDonald’s remains proofthat a man – or woman –has to eat.

What people eat under theGolden Arches is gettinghealthier. But not toohealthy, and that is areflection of one ofMcDonald’s greateststrengths as a brand, itsability to adapt to changingcustomer needs: people wantthe option of a salad, even ifthey’re going to order theburger.

Even as fast foodconsumption growth slows –

and higher­incomeconsumers switch to fastcasual dining spots such asChipotle – McDonald’s globalfootprint remains the envy ofthe industry.

It succeeds, says GaryKarp, of food industryconsultancy Technomic,because the companylocalises its menus, with thepotato­based McAloo Tikkiburger in India and theMcKebab in Israel, forexample.

“It isn’t exporting Americanfood,” he says. “What it’sdoing is addressing thevarious marketplaces

it is operating in andcomplementing its offeringswith local favourites.”

McDonald’s has fallen aplace in the rankings, butcontinues to be a top global

brand because of its highratio of hits to misses.

Despite its size –which is itself a big

supply chainadvantage –

McDonald’s remainsnimble, able to

adapt its menusto the whims ofthe market.

Neil Munshi

McDonald’s Adapting to customer tastes has helped secure a top 10 spot

Fan base:the iPhonewasinnovative

Local fare: theMcKebab inIsrael

Social media companies havespread beyond teenagers tobecome an integral part ofthe lives of billions, withbrands such as Facebook

and Tencent becoming as familiar asthe telephone and the newspaper were50 years ago.

Almost a fifth of this year’s top 100brands are from the technology sec-tor, but the fastest risers are thosewhose mission is to make social net-working, in the words of Facebookfounder Mark Zuckerberg, a “utility”like “electricity”.

Facebook, the world’s largest socialnetwork, saw its brand value soar 68per cent to take the number 21 spot,but even it was outshone by Tencent,the Chinese internet brand that ownsWeChat, the chat app that has takenAsia by storm.

Tencent’s brand value almost dou-bled and, ranked 14th, it was the high-est valued brand from outside the US.It also beat China Mobile, the tele-coms provider, whose industry isbeing disrupted by WeChat’s fast andeasy communications tool. ChinaMobile’s first drop in profit for 14years was blamed on competitionfrom the likes of WeChat.

The Chinese internet conglomeratealso beat rival Baidu, which, likeGoogle, started as a search engine. Itis a sign that the mobile web isbecoming far more dominant than thedesktop.

Tencent has been on an acquisitionspree, buying nine companies sincethe start of the year, from ecommercesites to games makers, as it tries tobolster its position in the era of thesmartphone.

Facebook is also keen to secure itsdominance in new areas. With 1.2bnusers, more than 1bn of them onmobile, it is starting to use its brandrecognition – and soaring stock – toachieve longer-term ambitions.

The company bought chat appWhatsApp this year as a way to keepyounger users and further challengethe telecoms companies in a $19bndeal. It also spent $2bn on Oculus VR,a virtual reality headset monitor thatMr Zuckerberg thinks could one dayoffer schools lessons and consulta-tions with doctor’s on Facebook.

The company is also preparinga move into financial services by

talking with companies about puttingmoney transfer services on theplatform.

In the past, the brand has sufferedfrom the perception that it has playedfast and loose with people’s privacy,including high-profile battles overchanges to its terms and conditionsthat saw personal pictures used inadvertisements.

However, Facebook has tried toaddress these concerns with tweaks tothe site and the “log in with Face-book” feature which make it clearerwhat a user is sharing. It evenlaunched an “anonymous log in” func-tion last month to allow people to trynew apps without handing app devel-opers their Facebook data.

It is a testament to the strength ofthe brand that Facebook was able tomake acquisitions that could haveraised questions about privacy – achat app where it sees personalmessages and a virtual reality headsetthat could allow it to see pretty much

anything – without a debilitating out-cry from the press or privacy cam-paigners.

Jan Rezab, chief executive of Social-bakers, which helps brands market onsites such as Facebook, said thatSheryl Sandberg, Facebook’s chiefoperating officer, had been particu-larly good at portraying the networkin a positive light.

“She always opens conferences withthese really good, positive storiesabout how Facebook has helped peo-ple become more social and commit-ted,” he says. “Social media have suf-fered from not having a positiveimage when, in fact, they bring somany positive things to the worldbecause, through dialogue, peoplecommunicate more effectively.”

But, he added, Facebook could dobetter at using its own site to commu-nicate with its users. For example, itcould have communicated its recentacquisitions in the Facebook newsfeed rather than relying on the

conventional media. Other social sitessuch as Twitter and LinkedIn haveentered the top 100 brands index forthe first time. Twitter, the messagingplatform that went public last year,came in at number 71, while LinkedIn,the network for professionals, wasplaced at number 78.

Twitter’s value on Wall Streetsoared last year, but investors havebegun to question whether the brandcan become truly mass market. Thecompany, which has 241m users, hasfaced problems communicating howand why people should be sendingand reading the fast-moving stream of140-character messages.

Mr Rezab says that of all the socialsites Twitter was the “least well com-municated”.

“It is a real time social network,consumable, quick content, but I don’tsee it saying that over and overagain,” he says. “People, companies,marketers and users are a little bitconfused.”

Social mediaadd value andbecome evermore mobileTechnology Almost a fifth of the top 100come from the sector, writesHannahKuchler

BrandZ uses a mixture of financialinformation and consumer surveys tocome up with its rankings for the top100 most valuable global brands.

The research covers 2m consumersand 10,000 brands in more than 30countries.

Three characteristics of a brand aresubject to measurement.

First, how “meaningful” it is; thebrand’s appeal, its ability to generate“love” and meet the consumer’sexpectations and needs.

Second, how “different” it is; itsunique features and its ability to “setthe trends” for consumers.

Finally, the research measures how“salient” the brand is; that is whetherit springs to mind as the consumer’sbrand of choice.

The financial information used as aninput to the valuation is based onwhat each company earns. If thecompany owns only one brand, all itsearnings are attributed to that brand.

For banks and insurancecompanies, the earnings metric usedis net income, for all other companiesit is operating profit. Otherwise,earnings are attributed across thecompany’s portfolio of brands usinginformation from annual reports andother sources.

The next step is to predict “brandearnings” using inputs, includingmarket capitalisation, taken fromBloomberg, to derive a ratio similar toa current price/earnings ratio. Current“brand earnings” are then multipliedby this number to arrive at thebrand’s “financial value”.

BrandZ then uses customersurveys, either online or face­to­face,to assess a brand’s ability to standout from the crowd, generate desireand cultivate loyalty.

The output from this research isthen multiplied by the financial valueto arrive at the brand value. Brandvalue is the dollar amount BrandZestimates a brand contributes to theoverall value of a company.

Sarah Gordon

Method How the brandsachieved their ranking

For a company whose name ranks asthe world’s most valuable brand,Google has never shown muchinterest in the traditional ways ofconsumer marketing.

Like many Silicon Valleycompanies, it almost disdains theidea that competitive advantage canbe conjured up through superiormessage making, betting instead onits ability to transform everydayexperiences through the applicationof technology.

“It has won because ofengineering: it has built a bettermousetrap and the world has beatena path to its virtual door,” says TomBedecarre, chairman of Akqa, adigital marketing unit of WPP. Thecompany’s leaders are “geeks, notmarketers”.

That Google’s brand value hasovertaken that of Apple is testamentto its engineering brains trust, aswell as to where value is moving inconsumer technology. It has becomeharder to gain an edge with coolhardware. Internet-delivered servicesare the path to differentiation, abusiness where Google is second tonone. A single, powerful idea haspropelled the Google brand – to“organise the world’s informationand make it universally accessibleand useful”.

The attributes that lay behind itssearch dominance – simplicity, easeof use, creativity and fun – haveproved adaptable to changing times.

These qualities were establishedalmost at the outset, with the use ofbright colours to spell out thecompany’s name and an unclutteredsearch page. And they have enabledthe brand to be stretched across anever-expanding array of services,from Google Play (its mobile appstore) to Google Wallet (a digitalpayment service) and Google Glass(its “smart glasses” project).

Through acquisition, it has alsonurtured new brand names that havegone on to dominate large slices ofthe tech world: YouTube, the leadingdigital video service, and Android, astart-up acquired at the dawn of thesmartphone revolution, has gone onto become the world’s leading mobilesoftware platform.

The extended reach of both itsbusiness interests and its brand havechallenged conventional businesswisdom, which celebrates the virtuesof focus. But the risk taking andunorthodoxy have become a valuablepart of the brand, and a key toappealing to an important group: theengineers Google needs to attractamid a fierce war for talent inSilicon Valley.

Engineeringinformationof qualityProfileGoogle

Bypassing conventionalmarketing wisdom served itwell, says Richard Waters

Networks: social media sites such as Facebook are an important part of the lives of billions of people of all ages Getty

FINANCIAL TIMES WEDNESDAY MAY 21 2014 ★ 3

100 brands are in the tech-nology category and – with18 brands valued at $827bncombined – account fornearly a third of the totalvalue.

The next most valuablesector is finance, which hasmany more brands but, at$584bn, less than three-quarters of the value.

Brands that have earnedconsumers’ trust scorehighly in the rankings. Glo-bal banks, unsurprisingly,scored particularly badly onthis metric, while the threeleading logistics businessesUPS, FedEx and DHL –boosted by the rise in inter-net shopping and thus par-cel delivery – scored partic-ularly well.

Consumers also trustSamsung – maker of thepopular Galaxy mobilephone – to deliver goodproducts at a reasonableprice, even if they are notregarded as truly original.

The brand which hasgrown most in value since2006 is Subway, the USsandwich franchise com-pany, albeit from a lowbase. Subway’s brand valuehas risen more than 7,000per cent over that period,considerably outperformingthe next highest growthbrands – AT&T and Ama-zon – whose value hasgrown by less than 1,000 percent each.

BrandZ has identifiedsome themes common tothe ranking’s most success-ful brands. One key deter-minant of success, it says,is how a company createsor maintains “positive dif-ferentiation” of its brand.

One example it cites isBT, up from 94th to 64th inthe rankings and the UK’stop riser this year. It offersa “triple play” to UK con-sumers which includes tele-vised sports.

Amazon, Mr Walshe says,has “insinuated” its brandinto more and more aspectsof consumers’ lives. It hastaken a place in the top 10for the first time this year,with a brand value esti-mated at $64.3bn.

Other companies, BrandZsays, have achieved successthrough careful long-termnurturing of their brand.Visa’s brand, for example,is worth more than those ofMasterCard and AmericanExpress combined.

This year also saw a goodperformance by Microsoft,which benefited from con-sumers’ perception that thecompany’s aim is not solelythe pursuit of profit.

The work of the Bill andMelinda Gates Foundationcontributed to the value ofthe company’s brand.

Similarly, Google’s “DoNo Evil” corporate mottoboosted its brand value.

Continued from Page 1

GooglepipsApple inpopularity

Global Brands

Rank2014

Rank2013 Change Brand

17,668

17,341

17,002

16,800

16,131

15,587

15,580

15,557

15,367

14,926

14,842

14,269

14,177

14,174

14,085

Colgate

Citi

FedEx

Siemens

Gucci

eBay

Orange

H&M

BT

US Bank

Tesco

Sinopec

Bank of China

Yahoo!

Honda

Brand value2014 ($m)

17,250

13,386

13,732

12,331

12,735

17,749

13,829

12,732

9,531

13,716

16,303

13,127

14,236

9,826

12,401

Brand value2013 ($m)

Value change2014 vs 13

2%

30%

24%

36%

27%

-12%

13%

22%

61%

9%

-9%

9%

-0.4%

44%

14%

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

50

64

62

72

68

47

60

69

94

63

55

67

58

92

71

-6

7

4

13

8

-14

-2

6

30

-2

-11

0

-10

23

1

Rank2014

Rank2013 Change Brand

13,837

13,710

13,687

12,871

12,637

12,413

12,409

12,407

12,356

12,175

12,026

11,953

11,910

11,812

11,743

Twitter

Cisco

DHL

BP

Sberbank

Petrochina

Ping An

LinkedIn

JPMorgan

MTS

China Life

Woolworths

KFC

Ford

Westpac

Brand value2014 ($m)

new

11,816

8,940

11,520

12,655

13,380

10,558

new

9,668

10,633

15,279

11,039

9,953

7,556

10,070

Brand value2013 ($m)

Value change2014 vs 13

new

16%

53%

12%

-0.1%

-7%

18%

new

28%

14%

-21%

8%

20%

56%

17%

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

New

77

98

78

70

65

84

New

93

82

57

80

91

New

88

n.a.

5

25

4

-5

-11

7

n.a.

14

2

-24

-2

8

n.a.

3

Rank2014

Rank2013 Change Brand

11,667

11,663

11,476

11,351

11,104

11,060

10,873

10,221

10,149

10,041

9,985

9,833

9,771

9,683

9,584

Intel

Chase

Pepsi

Scotiabank

Nissan

Santander

Red Bull

MTN

Bank of America

NTT DoCoMo

Prada

PayPal

ING Bank

UBS

Aldi

Brand value2014 ($m)

13,757

10,836

12,029

10,396

10,186

9,232

10,558

11,448

new

10,028

9,454

new

7,596

7,429

8,885

Brand value2013 ($m)

Value change2014 vs 13

-15%

8%

-5%

9%

9%

20%

3%

-11%

new

0.1%

6%

new

29%

30%

8%

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

61

81

75

85

86

96

83

79

New

90

95

New

New

New

99

-25

-6

-13

-4

-4

5

-9

-14

n.a.

-5

-1

n.a.

n.a.

n.a.

-1

Global brands Top 100 (continued)

-1 -3%

Brand value ($m)

2013

9

8 201467,341 69,383

-2 3%

Brand value ($m)

2013

8

6 201477,883 75,507

2 41%

Brand value ($m)

2013

7

9 201479,197 56,060

Rank 2014

Rank2013

Change -1 3%

Brand value ($m)

2013

Value change 2014 vs 2013

6

5 201480,683 78,415

4 41%

Brand value ($m)

2013

10

14 201464,255 45,727

Coca-Cola brand value includes Lights, Diets and Zero. Budweiser brand value includes Bud Light. Pepsi brand value includes Diets. Red Bull brand value includes sugar-free and Cola

The turning point for manyat BT was felt during thebalmy summer nights of theLondon Olympics in 2012,where an exclusive sponsor-ship was turned into a cele-bration for a companyemerging from a tough fewyears of restructuring andcost-cutting with aggressiveplans for the future.

Little could temper the

excitement around theOlympics, which went offwithout a hitch for BT’scommunication network.Some of that magic was feltto have rubbed off on theformer national monopoly.

“The Olympics gave us arallying cry,” says GavinPatterson, BT chief execu-tive. “That began to changepeople’s perception outsidebut had an even greaterimpact inside.

“It gave people some con-fidence that after a coupleof difficult years where wewere resetting the business,there was the potential togrow again.”

BT had for many yearslaboured under the stigma of

being a former state mono-poly, with sluggish customerservices and a bloated,unmotivated workforce.

The Olympics were a sig-nal that things were chang-ing within BT, positioningthe group away from a tra-ditional role in providinghome phone calls to creat-ing the future infrastruc-ture of Britain for high-speed internet.

The BT board had made acrucial decision a few yearsearlier to invest more than£2bn in building a fibre net-work that would deliverfast broadband even in themidst of a widespread cor-porate restructuring thatslashed thousands of jobs.

“We had to reset the busi-ness in 2008-09,” says MrPatterson, referring to a dif-ficult period when hugelosses resulted from deep-rooted problems at the glo-bal services division.

On the back of theadvanced fibre network anda more streamlined work-force, BT could think aboutmoving from a defensiveposition of protecting tradi-tional business from rivals

to an offensive strategy.“The success of the fibreprogramme has been criti-cal,” says Mr Patterson. “Wehave been rebuilding thebusiness over the past fiveto six years and have madea number of strategic movesthat have been well exe-cuted. These have impactedon the brand. A brand with-out substance doesn’t work.”

The shift in perception hasbeen shared by investors.The share price doubledbetween 2012 and 2014, evenas the company was makingthe sort of costly invest-ments that shareholderstend to treat with distrust.

While the benefits tothe BT brand of the fibre

rollout have been gradual,Mr Patterson acknowledgesthe more instant impact ofits shock decision to enterthe pay-TV market.

Sky had previously seenoff competition with ease,given its strong position infootball rights in particular.BT took on the satellitebroadcaster at its own gamewith a £2bn investment tosecure rights to show someEnglish Premier Leaguefootball games, as well asother sports such as rugbyand tennis.

“The move we made intosport caught everyone bysurprise,” says Mr Patter-son, who was part of thecovert team that acquired

the football rights packages.“It has demonstrated thereis more than one way tolook at this company – tak-ing on a company of thequality of Sky and doing avery good job in creating analternative. It has reallyshaken up how people lookat the business.”

There is still work to bedone, Mr Patterson admits.BT remains a large, sprawl-ing company with a lot oflegacy businesses that needto be maintained. The bigbets on sports rights andTV still need to be provenright, while a fierceresponse is always a possi-bility from such aggressivecompetitors as Sky.

High­speed broadband and better service help boost BTTelecoms

Network investmentsets up company forpay-TV launch, saysDaniel Thomas Gavin

Pattersonsays theOlympicsgave BT arallying cry

volume of clothing acquired. Manyretailers, particularly at the valueend, had relied on selling large vol-umes of garments at low prices

There were some casualties, such asPeacocks, the UK value fashion chain,which collapsed in early 2012,although it was later rescued fromadministration.

Others, such as Primark in the UK,and Zara sought to differentiate them-selves further. Primark, which hasexpanded across continental Europeand is preparing to enter the US, con-centrated on having up-to-date fash-ion at very low prices.

Primark has also improved itsstores, and Richard Hyman, an inde-pendent retail consultant, says it isdeveloping a stable of brands underthe Primark umbrella, moving frombeing a purely commoditised clothingretailer to “a great exponent of brand-ing”.

Zara, meanwhile, backed by Inditex’smodel that can get the latest looks tostores within two weeks, has concen-trated on interpreting fashion trendsat what customers perceive to be verygood value, as well as opening large,state-of-the-art stores in locations suchas New York’s Fifth Avenue, andforging into markets such as China.

Mr Hyman says that with the end ofvolume-driven growth, “the marketwill become polarised between the vol-ume players at one end and the moreniche, narrow and deep in terms ofcustomer penetration retailers at theother. And it is all about branding”.

Experts say that in the apparel mar-ket that has emerged from the globaleconomic downturn, differentiatingone’s product from the competitionwill be crucial to sales and profits.

“Having a brand is to do with differ-entiation and demarcation,” says MrHyman. “It’s about understandingwhere it begins and where it ends,and it’s about understanding that ifyou take it beyond where it naturallyends, you will be devaluing it.”

Yet, he says, some retailers have apatchy record when it comes to man-aging their brands: “Retailers’ under-standing of brands and branding isvery poor.

“Over the next five years, the for-tunes of a lot of retailers will be deter-mined by how quickly they can learnabout it, because they have an awfullot to learn,” says Mr Hyman.

Those apparel retailers that havealready learned how to create valua-ble brands will have a natural advan-tage in this new fashion reality.

Apparel sellers add value with store revampsRetail High street chains boost brand values by emulating luxury sector with new-look f lagship stores, writesAndrea Felsted

For a time, Nike ran ringsaround the competitionwhen it came to a winningfoothold in the wearabletechnology market.

Its $149 FuelBand,launched in 2012, offeredcustomers a thin rubberbracelet that would tracktheir biorhythmic data,upload it to Apple devicesand then make thatinformation both accessibleand shareable.

In less than two years,the network’s fan base grewto almost 30m members, asusers embraced Nike as afacilitator of their continuingfitness as well as fashion­focused workout wear.

Trainers and runningshorts this was not. Butindustry observers were alsoquick to suggest that thegroup’s expansion over anew digital frontier was partof a broader trend emergingamong the world’s mostsuccessful fashion brands.

Other companies offeringaccessories relating to – butseparate from – theiroriginal raison d’être seemrapidly to have gainedcustomer loyalty andadditional market share.

The BrandZ ranking of theTop 100 Most ValuableGlobal Brands placed Nike at34th on its list for 2014, aspectacular jump of 22places since last year, withits brand value spiking by 55per cent.

But, for a company thatspent a staggering $733mon advertising in its latestquarter, has the much hypedFuelBand helped when itcame to concrete sales?

Perhaps not. Shockwavesrippled through theindustry this month,when Nikeannounced itwas canningthe FuelBand’sdevelopment.

The marketwas gettingincreasinglycrowded as rivalssuch as Jawbone,Samsung and FitBitlaunched comparablemodels – but Nike insisted it

had not bowed out of therace.

“We are focusing more onthe software side of the(FuelBand) experience,”Mark Parker, Nike chiefexecutive, said, asspeculation rose that itsactivity tracking softwarewould end up on therumoured Apple iWatch,expected to be unveiled thisyear.

Sales figures of physicalbands were always keptunder wraps, but werethought to be less than 5m,leaving a question mark overtheir success.

But if return oninvestment is measuredbeyond just immediateshort­term cash in hand,and instead on the long­term value of having beinglinked to your customers –and having accessible dataon their behaviour andfitness – then Nike couldstrike gold.

Amid the explosion of thewearables market and theprobable dominance of techgroups such as Apple andAmazon – the latter justopened an online wearabletech store – the step awayby Nike from its trend­focused fitness apparelproduct roots may turn outto be a savvy one.

As it seeks to leverage itsbranding equity as a leadingforce in sports and fitness inthe minds of millions ofconsumers, Nike’s movefrom clothing andaccessories to digitalconnectivity may provelucrative, but for the timebeing remains high risk.

Elizabeth Paton

Sportswear Going digital may put thetraining shoe icon Nike on the front foot

Fashion conscious:Zara can get thelatest looks tostores within twoweeks Bloomberg

Data fit: atrackingband

‘A strong physicalpresence establisheswhat the productis about’

As many retailers struggle toregain their poise after fiveyears of consumers reiningin their spending, the big-gest increases in brand val-

ues have been among apparel sellers.According to the BrandZ Top 100

Most Valuable Global Brands ranking,compiled by Millward Brown Optimor,the value of apparel brands has rock-eted 29 per cent over the past year,outstripping such sectors as cars, lux-ury, telecoms and technology.

Retailers are being lifted by improv-ing consumer confidence, which hasbolstered equity valuations andencouraged a wave of initial publicofferings.

But experts say there is more to theincrease in brand values than confi-dent consumers: apparel retailershave been raising their brand valuesthrough their own strategic actions.

Maureen Hinton, group researchdirector at retail consultants Conlu-mino, says retailers such as Inditex-owned Zara have been emulating thestrategies of luxury brands and elevat-ing their brand values accordingly.

“They have spent a lot on develop-ing flagships, rather like Burberrydoes, bigger stores that show all theirrange and look really good.”

This is an approach that works wellin fast-growing international markets,such as China, where consumers wantwestern brands, not only at the lux-ury end of the market but also at themore affordable price points.

Apparel retailers have also beenworking on the look and feel of stores,says Ms Hinton, and have been con-solidating smaller outlets into state-ment stores, augmenting the strategywith a strong presence online.

Consequently, the leading apparelretailers have “a very strong physicalpresence that establishes what theproduct is all about, what the brand isall about. That will be inspiring if yougo and visit. But you have the capabil-ity of buying online as well,” she says.

This approach has been paying off.According to Millward Brown Opti-mor, the brand value of Uniqlo, theaffordable fashion brand owned byJapan’s Fast Retailing, rose 58 percent year on year. The value of Nike’sbrand was up 55 per cent, whileAdidas’s brand value rose 47 per cent.

Elsewhere, the brand value of Next,the UK-based fashion retailer, rose 39per cent, while Hennes & Mauritz(H&M) of Sweden was up 22 per centand Zara of Spain up 15 per cent.Even the brand value of Marks andSpencer, the UK-based high streetretailer that has been making effortsto improve its clothing business, wasup 16 per cent year on year.

But there is also an element ofnecessity about developing an apparelretailer’s brand. The global economicdownturn saw a reduction in the

4 ★ FINANCIAL TIMES WEDNESDAY MAY 21 2014

Global Brands

If your business isthreatened by the biggesteconomic cataclysm for 75years, you will probablynot spend as much time asusual worrying about yourbrands. That seems to beone lesson of the aftermathof the financial crisis.

The Conference Board,the US businessorganisation, asks chiefexecutives every year torank a series of challengesfor the coming 12 months.

It reckons that in its 2012and 2013 surveys, bossestreated brand andreputation more as“afterthoughts thanupfront issues”. Quiteunderstandably, they gavepriority to areas such aspolitical and economic riskor government regulation.

No wonder that,according to the BrandZreports covering the sameperiod, the value of brandsstagnated or only edgedforward in many sectors.

Yet when the ConferenceBoard asked chiefexecutives to assess thechallenges for 2014, brandand reputation leapt intotheir top five priorities asone of “the keys to drivingenterprise growth andachieving betterperformance”.

But the world haschanged while thosecompanies were fightingfires and letting theirbrands take care ofthemselves. In fact, thelatest BrandZ top 100ranking contains the seedsfor the destruction of many

traditional brands – and asharp reminder to theirowners that brandmanagement needs to keepevolving.

Take technology. ThatGoogle has switchedpositions with Apple as theworld’s most valuablebrand signifies little. Moreinteresting are the rapidrise of Tencent, theChinese owner of theWeChat mobile chatservice, and Facebook; thedebut in the top 100 ofTwitter; and the arrival inthe top 10 of Amazon.

These companies arevaluable brands in theirown right, of course. Butthey are also the vectorsfor discussion of others’products, services andreputation. The“Twitterstorm” – almost abrand in its own right – iscapable of tearingapart acorporate namein a matter ofhours. Tencent,through itssocial media,Alibaba inecommerce,and Baidu(itselfranked 25),in internetsearch,have thepotentialto makeor breakbrands inChina andbeyond.

Facebook,Google, andAmazon are theintermediaries forproduct reviews, pricecomparisons and

discussion betweencustomers that can leavebrand and marketingmanagers looking leaden-footed.

It is hard to navigatethis new landscape usingold-fashioned and staticconcepts of brand, trustand customer loyalty. AsItamar Simonson andEmanuel Rosen havewritten in their recentbook Absolute Value, thearts of top-downpersuasion, whichprevailed for so long, areno longer so potent. In thisnew world, customers havemore confidence in bottom-up assessment of the valueof a product or service, bytheir friends or evenunknown fellow shoppers.

Consumer electronics,mobile phone or carmanufacturers, for

instance, are only asgood as their lastmodel, becausecustomers will judgeany replacement onthe basis of what

peers are sayingabout it and itscompetitors.

This is anopportunityfornewcomers,who maybe able toestablishtheir brandwith a

product thatgeneratesstrong word-of-mouthapproval,but apotentialthreatto

incumbents who havetended to rely onlongstanding customerloyalty. Mark Fields,recently named chiefexecutive of Ford, thesixth-fastest rising brand inthe BrandZ ranking, andSatya Nadella, new chiefexecutive of Microsoft,ranked number four andnow the owner of Nokia’sailing mobile handsetbusiness, spring to mind.

All this presages morevolatility for brands. Iwould not be surprised tosee more shifts at the topof the BrandZ ranking overthe next five years thanover the past five.

Companies will placegreater emphasis on howto make customers – andnon-customers – trust theiroverall brand and speak upfor it, to mitigate the riskof infidelity. No brandowner will be able to standstill. As Mr Rosen and ProfSimonson wrote this year:“Success will come tocompanies that can closelytrack the sources ofinformation theircustomers turn to and findthe combination ofmarketing channels andtools best suited to theways those consumersdecide.”

The good news for brandand marketing managers isthat their discipline isnever again likely to be alow-priority “afterthought”for their bosses. The badnews is that they will haveto work harder to justifytheir position.

The writer is the FT’smanagement editorandrew.hill@ft.com

The power of peer-to-peer puts thecorporate persuaders in their placeOpinionANDREW HILL

Sarah GordonEurope business editor

Andrew HillManagement editor

Andrea FelstedSenior retail correspondent

Hannah KuchlerSan Francisco correspondent

Duncan RobinsonUK companies correspondent

Daniel ThomasTelecoms correspondent

Richard WatersWest Coast editor

Tim BradshawSan Francisco correspondent

Elizabeth PatonUS fashion & luxurycorrespondent

Neil MunshiChicago and Midwestcorrespondent

Aban ContractorLeyla BoultonCommissioning editors

Andy MearsPicture editorSteven BirdDesignerChris CampbellGraphic artist

For advertising, contactIan Edwards on+44 (0)20 7873 3272 orian.edwards@ft.com, or yourusual FT representative.

Contributors »

Gillette spends the bulk ofits time trying to persuademen to be clean shaven.To this end it has signedup smoothly shavedsportsmen such as tennisplayer Roger Federer andformer England footballerPeter Crouch.

But for one month ayear, the razor blade makerswitches its aims andencourages men to grow afull moustache. Why?

Movember, when menforgo shaving their tashesfor November to raisemoney to fight prostatecancer has grown to be apopular feature of officelife.

It has ballooned inpopularity since it began inAustralia a decade ago.

Gillette has beeninvolved since 2012,becoming a global partnerlast year. Procter &Gamble, which ownsGillette, sends seniormarketing executives towork with the charity,helping raise its profile.

“P&G has a longstandingcommitment to corporatesocial responsibility,” saysa senior P&G executivewho was seconded to thescheme last year.

“So, it is not unusual forpeople to invest time inthese causes.”

Last year, the charityraised more than £75m.

But Gillette has notreceived much corporatekarma for its good deeds.In fact, Movember hascome at a cost to thecompany. This year, P&Gexecutives blamedthe charity drive for adecline in sales of Gilletterazors.

Duncan Robinson

Case studyGillette

Dirty nappies are bigbusiness. In 2012, Pampersbecame the first brand inProcter & Gamble’s stableto reach $10bn in annualsales. To reach that point,it had to win over lots ofmums and dads.

It achieved this not justthrough heavy marketingbut via other methods,such as offering newparents advice andbecoming involved inchildren’s charities.

Pampers has alsolaunched charity driveswith organisations such asUnicef, for example,donating a tetanus vaccineto a developing countrywhenever a pack ofPampers was sold.

Pampers has also triedto make itself a source ofparenting advice with itsPampers Village website.

Not all the advice iswelcome. One user ofMumsnet, the onlineparenting forum, wascritical of a free magazine.

“Yes, I know thatdisposable nappies are aneco­nightmare, but at leastthey serve a usefulpurpose,” the user said.“However, if anyone cantell me about a biggerwaste of trees than the. . . Pampers magazine, I

want to know about it.”But overall, offering

advice is a net benefit toPampers, says PeterWalshe, a retail analyst atMillward Brown Optimor,the branding consultancy.

“A brand like that – withgenuine information that isuseful and a mission tomake motherhood andbabies safer – reflects wellon the product.”

Duncan Robinson

Case studyPampers

Movember: Peter Crouch Charitable work: vaccinesOn 14 October 2012, FelixBaumgartner climbed outof his balloon capsule at analtitude of 39km andjumped. He hurtled

towards the ground, breaking thesound barrier in the process fornearly four minutes before openinghis parachute. Written on it in a large,red font were two words: Red Bull.

Mr Baumgartner’s descent to earthwas just one of myriad heart-stopping ways that Red Bull promotesits brand. The Austrian drinks com-pany sponsors everything from theRed Bull Air Race World Champion-ship, in which highly trained pilots flyaerobatic planes round a course, tothe Red Bull Flugtag, in which fool-hardy men and women jump off piersin homemade gliders. It also has aFormula One team.

When it comes to building a brand,buying a full-page ad in a newspaperand a few slots on prime time, or evenjust sponsoring a football team, do notcut it any more.

Ian Stephens, principal at Saffron, abrand consultancy, says: “It hasreached a tipping point, where it is alegitimate strategy to create thingsthat get talked about”. When the then43-year-old Austrian Mr Baumgartnermade his jump, he was watched by 8mpeople on YouTube – at the time, thebiggest live online audience ever.

None of Red Bull’s sponsorshipdeals have much to do with creating ashort-term fillip in sales of its sugary,caffeinated drinks. Instead, the com-pany is investing heavily to give itsbrands a longer-term boost.

Other brands are starting to use thesame tactic. “It is not done purely forprofit,” says Peter Walshe, a retailanalyst at Millward Brown Optimor, abrand consultancy. “It is done for adifferentiation aspect.”

Other brands have used more pro-saic methods to boost their standing.Dove, the personal care brand, hasrun a decade-long campaign basedaround “real beauty”, putting outvideos to stimulate debate about whatbeauty is and how the cosmeticsindustry portrays it.

In one Dove advert, women aredrawn by a police sketch artist basedfirst on a self description and then onthe description of strangers who havejust seen them for the first time (the

second version turns out to be moreattractive than the first). Theseadverts have been viewed tens of mil-lions of times on YouTube, providinga longer promotional shelf life than astandard advertising campaign.

Meanwhile, Gillette, the shavingbrand owned by US consumer goodsgiant Procter & Gamble, has spon-sored Movember, the prostate cancerawareness drive in which men do notshave their moustaches for a month.

But differentiation has its risks. InRed Bull’s case, extreme sports are bytheir nature very dangerous. When

Mr Baumgartner did his jump, for afew stomach churning seconds theAustrian seemed to lose control andstarted to spin uncontrollably.

Thankfully, he landed successfully.But other Red Bull-sponsored athleteshave not. Shane McConkey, a skierand base jumper paid by the drinkscompany, died in 2009 while base-jumping in Italy.

In general, though, when brandinggoes wrong it does not have lethalconsequences.

Some online ribbing is a risk, asDove found with its “real beauty”campaign, which included an advertin which ordinary-looking womenwere told to wear a beauty patch thatwas actually a placebo. One spoofmocking the revelatory tone of Dove’sadverts ended: “You fell for our weirdpsychology experiment and it showedyou you’re not actually a hideousmonster, so where’s our Nobel peaceprize or whatever?”

Any effort to stand out must becoherent and complement a brand’sday-to-day work. Brands can lookclumsy when they try to change howthey are perceived, says Mr Stephens,who cites the efforts of confectionerymaker Cadbury, fast-food companyMcDonald’s and drinks maker Coca-Cola to sponsor sports in an attemptto divert attention from the high calo-rie count of their products.

“What’s an antidote to fatness?Sports days! Let’s sponsor sports day!It looks a bit guilty,” says MrStephens.

The day job can overshadow otherefforts. “McDonald’s did some lovelywork,” says Rita Clifton, chairman ofBrandCap, an international brandingfirm. “But it was divorced in people’sminds from its main work.”

Likewise, corporate owners ofbrands have to make sure the ethos ofseparate brands do not overlap or jartoo sharply.

Some have criticised Unilever fordouble standards because it ownsboth Dove, with its wholesome “realbeauty” campaign, and Lynx, whichadvertises via the more traditionaldevice of scantily clad models throw-ing themselves at teenagers.

This is an important considerationfor large consumer goods groups, suchas P&G and Unilever, that have triedto build more visible corporate brands.

Campaigns demand a leap of faithBeyond profit Promotions often seek to be stories in themselves, writesDuncanRobinson

Creative energy: Red Bull stunts areaimed at generating a longer-termboost Garth Milan

‘[Sponsorship] is notpurely for profit but for adifferentiation aspect’