The Great Technology Divide
Technology services brands are thriving while the companies that actually make devices have performed much more poorly in the latest BrandZ study. Peter Walshe, global brand director at Millward Brown’s BrandZ explains what they can do about it.
It’s not often that you see a dramatic split in performance between different types of companies in BrandZ's Top 100 Global Brands. Yes, we see companies that have done well and those that have done badly, but usually in every sector and sub-sector there are brands that have done well and brands that have done poorly.
This year’s Top 100 Global Brands, however, shows a clear divide in the technology sector. In 2014, fortunes have been split between those providing services to consumers and those making products. The former have thrived while the latter are just growing well.
Our analysis of the top 20 tech companies shows that brands providing services have seen their value increase by an average of 43% while those making products are up by just 10%.
The epitome of this duality can be seen from the fate of Apple and Google. While Google has grown 40% and is now the world’s No 1 brand, Apple has fallen back by 20%, losing the top spot that it’s held for the last three years.
The same pattern can be seen with Samsung, HP and Sony, all product-dominated companies that show a less impressive performance than the likes of Tencent, Facebook and Baidu. The latter are up 97%, 68% and 46% respectively, while the former have moved +21%, +19% and -1%.
New entrants to the BrandZ Top 100 as well as the Technology Top 20 include two more technology service platforms, Twitter and LinkedIn.
The big picture is that digital service platforms are increasingly managing to monetise the time that consumers spend with them, be it on laptop, desktop, tablet or smartphone and have also built or are starting to build strong brands that consumers trust.
Delving into the detail behind the headline valuation tells us that service oriented brands are boosting their brand power substantially. While the tech product brands also perform substantially better than the average brand, their service rivals are leaping ahead.
Brand power – a measure of the ability of brand to drive sales – for service based companies in the top 20 now indexes 293 while product companies score just 185.
What’s happened is that tech service brands have built their brand power substantially during the recession. While product companies were indexing 162 in 2008 at the start of the recession, service companies were scoring 183 and have since nearly doubled this score.
Breaking brand power down into its components of meaningful, different and salient, service brands are significantly ahead on meaningful (indexing 147 to 125) and salient (165 vs 126). Product brands score slightly better on different where they lead by 133 to 121.
But perhaps the real key to the service brand’s success lies in the brand personality question. Service brands score much higher on metrics such as fun, kind and rebellious, qualities that are perhaps a little easier to project when you don’t have a vast, global supply chain to manage and maintain.
Technology service companies score 31% on fun compared to 17% for product companies, they lead 20:16 on kind and 16:9 on rebellious. Product-focused companies score much higher on arrogant (14 vs 9). So where does the opportunity for technology product producers to revamp their brands and gain ground on the service sector lie?
There is potential in the brand character analysis, which puts them ahead on positive attributes such as straightforward (30 vs 25) and wise (26 vs 20). If technology product companies are to improve their performance they need to find ways to add and fit into peoples’ lives in a meaningful way that makes their decisions easier.
Regardless of whether the brand makes something or is service based, there are six key aspects that will add positively to their brand equity (and thus drive both sales and brand value).
1. Be relevant for today;
2. Ensure you are delivering great value;
3. Provide a great brand experience;
4. Act so that you live up to a trusted reputation;
5. Create and maintain a strong definitive brand personality; and crucially
6. Harness technology to create a seamless experience for the consumer
Product or service, the rules are the same but in 2014, it’s been the service companies that have ticked more of these boxes than their product-producing rivals. Apple, Samsung and Sony need to take these rules to heart once more if they are to take back the ground they have lost to the likes of Facebook, Tencent and Google.
Peter Walshe is Global Brand Director, BrandZ at Millward Brown