Davis Brand Brief: February 2014

Strategic

This month, Davis released the fifth annual Davis Brand Capital 25 (DBC 25), which evaluates brand management and performance comprehensively. It is the only annual ranking of companies that demonstrates overall, balanced approaches to managing the full spectrum of brand and related intangible assets, providing an indicator of total business strength and effectiveness.

The DBC 25 mirrors big trends in the marketplace more broadly. It recognizes companies at their best when it comes to brand management. But, even among the ranked companies, a few stood out: Apple, Google, IBM, Microsoft, Amazon and GE.

Technology companies consistently top the ranking, a testament to their loyalty-driven strategies. Apple, Google, IBM and Microsoft have leapfrogged back and forth over one another the past three years to claim the top four spots. Amazon made the biggest jump, ranking at number six in 2013 (after holding number 17 in 2009). This is a clear reflection of the company’s commitment to new and bold customer-centric services, such as Prime, anticipatory shipping and drones – all of which raise the bar in consumer expectations.

Apple, #1 on the DBC 25 for the past three years, may be expanding its technology into the automotive market. A potential collaboration with Tesla to develop the iTesla, along with other innovations could help the brand hold its reigning position, even as rival Samsung gains considerable ground in the rankings. At the same time, Apple continues to pay close attention to its retail experience, placing former Burberry CEO Angela Ahrendt at the helm.

While Google receives consistent praise for its internal culture, commitment to employees, management practices and insightful hiring, it is equally important to note the company’s continued focus on consumer data and its commitment to innovation. Google continues to change the way we see things and pushes the boundaries of possibility.

GE and Amazon Web Services, the world’s leading cloud computing provider, are forging a strategic alliance, leveraging the launch of GE’s “Predictivity” Big Data and Analytics Platform to advance the Industrial Internet. As the Internet of Things for big machines, the Industrial Internet will redefine the way we work. Our eyes are on GE as it continues to pursue such significant innovations.

IBM and Microsoft are the only two brands in the DBC 25 to rank in the top five every year. IBM and the #11-ranked AT&T are teaming up “to rule the Internet of Things” by combining their core competencies to build smarter cities. Microsoft’s new CEO, Satya Nadella, recently told The New York Times, “Longevity in this business is about being able to reinvent yourself or invent the future.”

Strategic reinvention: it’s just one of the amazing things that these winners in managing intangibles get. 

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Economic

In pure economic terms, companies on the DBC 25 are ahead of the curve. For three consecutive years, they have outperformed major public company indexes. The fact is: well-managed brands perform better. In 2013, a hypothetical stock portfolio consisting of DBC 25 companies traded on U.S. stock exchanges, weighted by rank, would have returned 33.8 percent, outperforming the Dow Jones industrial average by 7 percent and the Standard & Poor’s 500 index by 4 percent. With technology companies representing five of the top six on the list, the DBC 25 also closely tracks NASDAQ performance, as expected.

Wanting to stay on top, tech companies made interesting financial moves this month. Microsoft invested $15 million in Foursquare, giving the company access to location-based data. In return, the app now has the opportunity to evolve from a hit-and-run destination into a full platform. Google teamed up with comScore with the goal of collecting data to better inform brand marketers about the success of their campaigns. At a time when reaching the right audience counts more than amassing clicks, this partnership will allow brands to make real-time campaign adjustments. Google hopes that this capability lures brands to spend more money on digital marketing over television advertising. Given Google’s strategic and economic efforts, it is likely no coincidence that the company’s stock rose 53 percent in the past year.

Offline in the consumer products world, Coca-Cola made one of the boldest moves this month. In the face of declining soft drink sales, the company announced plans to increase media spend by as much as $1 billion by 2016. While some analysts question whether this will solve the problem or just slow the inevitable decline, it will be interesting to watch the iconic brand navigate new advertising territory as it also prioritizes content excellence.

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Cultural

Some consider the Olympic brand sacred. It is a global event about sport, not a place to debate social issues. The world’s biggest brands sponsor the athletes, the teams and the event, investing in the notion of athletic competition. This month in Sochi, however, brands and social change intersected on the global stage.

Google made a cultural statement with its Google Doodle, protesting Russia’s intolerance of LGBT rights. AT&T also weighed in on the issue. Other corporate sponsors, including Coca-Cola and McDonald’s, chose an indirect approach, keeping the focus on their brand image and marketing in support of the athletes.

Back in the U.S., the new iPad “Your Verse” campaign captures the versatility and utility of the device, bringing its impact to life. But the big question remains: how will the brand innovate next?

Speaking of innovation, IBM’s Computational Creativity initiative changes the way we look at cooking with the IBM Food Truck. In this example of human-meets-machine, never-before-tasted recipes are created and shared around the country as edible examples of cognitive cooking. Brainpower is indeed a delicacy. (#sweetbreads?)

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Creative

A few of the DBC 25 brands shared their biggest creative visions this month at the Super Bowl and Winter Olympics. Perhaps most notably, Microsoft’s moving advertisement illustrated its shift to the more human side of computing, setting the stage and expectations for the brand’s future under new leadership. It was a widely applauded move, and deservedly so.

At the same time, Coca-Cola’s unexpectedly controversial Super Bowl ad showed the risk of total marketing. For a brand known for bringing countries and cultures together – and teaching the world to sing in perfect harmony – it goes to show that even the most well-defined brands must equip themselves for backlash when addressing global issues.

Walmart aired a beautifully shot spot during the Winter Olympics that focused on the company’s drive to create new manufacturing jobs in the U.S. While it illustrates their commitment to the U.S. economy, it might also call into question the issue of quality jobs closer to its own stores. And GE once again brings engineering to life through its latest campaign that shows the wonders of its inventions through the eyes of a child.