Brands and Wealth
Brands and other intangible assets are at the heart of the modern industrial policy agenda.
Conventional indicators, such as share of GDP and employment, confirm the well-known thesis that the services sector has become the largest and most influential activity in modern economy. But less conventional indicators also reinforce this hypothesis. Consider the case of brands. The latest ranking of the world’s 100 most valuable brands have been dominated by technology, financial services, entertainment, logistics, telecommunications and other services companies.
Nine of the ten most valuable brands are in the services sector. But that was not always the case: In 2006, the first year of the ranking, the share of brands of services companies was substantially lower. Valuable brands are generally associated with dynamic and innovative companies in growing sectors with strong, coordinated investments. On the one hand, brands in this sector associated with the 21st century are gaining relevance, while brands associated with the twentieth century are losing ground. In 2006, 13 car makes were among the 100 most valuable brands. In 2019, only three were on the list; and in 2019 only three were ranked. The biggest climbers in the past year are brands that offer an ever-widening range of solutions to customers and with a strong appeal in the areas of user experience and loyalty.
Explanations for substantial growth in the share of services company brands include increased platform economy, growth in cross-border service trade, increased importance of B2B services in production chains, and management and changes in consumer preferences.
In 2006, the top 100 brands were valued at USD 1.4 billion; in 2019, at USD 4.7 trillion. This whopping appreciation reflects, on the one hand, globalization and market consolidation. On the other hand, there have been structural changes in the way we create wealth. In fact, many brands have become the most valuable component of goods and services by projecting value and confidence to consumers and based on the notion of reputation. Renowned brands open and create markets and even control value and distribution chains. Valuable brands reflect the position of companies and countries in the “food chain” of global value aggregation and are associated with their ability to influence and raise income. It is no coincidence that brands and other intangible assets are at the heart of the modern industrial policy agenda and behind many of the most compelling recent government measures, including geopolitics, to defend the interests of companies and their intangible assets.
