by Ellis Malovany
The aggregate value of the BrandZ Top 40 Most Valuable Australian Brands 2018 is $101,564 million. Not surprisingly, the “Big Four” banks occupy four out of the top five positions in BrandZ’s Australia Top 40, and two Australia brands feature in the BrandZ Top 100 Most Valuable Global Brands (Commonwealth Bank and ANZ). Unlike most other leading countries, Australia does not feature any technology brands in its ranking.
Banking sector dominates
Banks and Retail dominate the BrandZ Rankings accounting for half of the BrandZ Top 40 Australian brands. Commonwealth Bank alone accounts for 16 percent of the Top 40’s value, 38 percent above the next ranked brand, ANZ. The impact of the current banking crisis from April to May 2018 resulted in a significant drop in the sector’s value as the Big 4 have lost an aggregate of nearly $8 billion or on average 14 percent, representing about 90 percent of the industry’s $8.8 billion loss. The average top 40 bank brands lost $987 million in value. These losses stemmed mainly from falling share prices rather than further damage to already weak brand equity.
Banking’s glaring weakness - Trust
The Big Four banks along with the entire sector, suffers from a major lack of trust. Of the 25 categories measured, Australia’s banking industry ranks lowest in trust and highest in perceived dishonesty, the lowest and highest rankings across all industries. Relative to 24 other countries, Australia’s banks have the third lowest Trust score amongst its domestic consumers, and the sixth highest score in perceived Dishonesty. Global brands that are perceived as dishonest suffer from long-term declines in value by an average of 19 percent. Australian banks need to quickly address these trust and dishonesty concerns, especially following the Royal Commission reports, if they are to prevent even greater short and long term damage to their brands.
Brand Metrics - Vitality & Meaningful Difference
Brands that meet consumer needs while building emotional connections are ‘Meaningful’ and meaningfully different brands grow at faster rate than others. Brand value is created through brand purpose, innovation, communication, and brand experience, which then translates to a sense of love. These five key health indicators can be combined into a single score we call a brand’s Vitality Quotient, or its vQ.
The average score of all brands is a vQ of 100. Those with a score over 110 – making them at least 10 percent above average – are those we say are healthy overall. A vQ score of 95 or under means it’s time to call emergency services.
A high vQ score benefits a brand in several ways. Brands with a high vQ have more than double the Brand Power, which is an indicator of their ability to drive sales. They are better positioned to be able to justify a premium or to feel “worth it” to consumers.
Healthy brands tend to develop a personality type that further reflects well on them. Those brands with a high vQ score are more likely to be described as trustworthy, “in control”, desirable, creative and friendly. They under-index on negative brand personality traits, such as being uncaring or arrogant.
VQ scores show a very clear relationship to its Meaningful Difference to consumers. Global brands with high Meaningful Difference have demonstrated 5x value change since 2006 and are a strong predictor of success. Highly Meaningfully Different brands in the Australian Top 40 are 146% more valuable than those with low scores. The Top 40 brands are significantly more meaningfully different than the other 325 brands reviewed.
Brands can look at how they perform on the five individual indicators when they are seeking clues to improving their brand. When one or more of the indicators is flagging, overall brand health – and brand value – can suffer.
Brands with a high vQ are more strongly positioned for future value growth
Health, Frailty, & Differentiation
Collectively, the Top 40 most valuable Australian brands have the highest proportion of “Frail” brands compared to the most valuable brands in markets around the world, based on BrandZ rankings. Where most markets have industries including food, technology, others featured in their top brands, Australia’s food brands represent just 1% of the total Top 40 value with only Hungry Jack’s and Arnott’s making the cut.
Fortunately, Retail brands including Woolworths, Bunnings, and Coles are relatively healthy and in general, Australia’s group of highly differentiated brands like Dan Murphy's & Foxtel are over 50% more valuable than those that are weakly differentiated. For frail brands, brand equity and brand health can be improved through better differentiation, innovation, and strong communication.
Brand value is a local phenomenon
Only 13 of the Top 40 brands report any overseas income (most notably, Foster’s, Westfield, Qantas/Jetstar and Westpac) and only Foster’s reports nearly all its revenues in foreign markets 97.5%. When it comes to globalizing its best brands, Australia exhibits a relatively low tally of top brands relative to other countries. The average brand that reports overseas sales generates just 18.6% of their revenues from global markets. Healthy global brands typically experience growth and derive strength from global markets. Many of Australia’s Top 40 brands have the opportunity to expand into other markets and further improve their brand health, power, and value.
Bunnings, ahead of the pack
Though not the largest brand in terms of brand value, in almost all categories that measure brand strength, Bunnings ranks as the best of the best in communicating uniqueness, garnering love that consumers have for the brand, and implementing innovative retailing strategies. Based on our metrics, Bunnings is quantitatively the healthiest brand in Australia and a great example for other companies in how to improve on the key indicators for brand health, meaningful difference, and overall brand value.
Brands that effectively communicate their uniqueness stand apart from their competitors. Australia’s largest brands suffer from a lack of clear differentiation and perceptions between brands become muddied and therefore prime for competitive threats. On average, the top 40 brands only score a little higher than an average brand indicating there is plenty of work to be done by the top brands to differentiate themselves from the typical Australian brand.
Mind the Innovation Gap
Perception of innovation drives value in Australia. Brands in the Top 40 considered the most innovative are over 140% more valuable than those perceived to the least innovative. Only a handful of the Top 40 brands are currently ranked as Australia’s top 10 innovative brands (Dan Murphy’s, Bunnings, Westfield, Arnott’s, & Telstra). Other innovative brands like Tim Tam, Billabong, and Chadstone are strong and primed for future growth. Collectively, the Australian Top 40 are not seen to be particularly innovative indicating risks for disruption but simultaneously, also opportunity for improvement.
Australia vs. the World
How does Australia stack up against the rest of the world? Australia’s average brand is only marginally better than an average global brand. Compared with other major countries, Australia lags in almost all key metrics, though its average Top 40 brand’s communications are on par with other markets.
THE KEY RESULT
The most valuable Australian brands are centuries old and yet still have opportunities to further build their equity. Australian attitude, beloved by the world, has barely broken outside the country’s isolation. The message is clear. Innovate, communicate, and deliver the adventure, fun, and humor that the world expects from Brand Australia!