P1 Does Marketing Matter? January 2009

Brand Valuation: 2014 Results

Comparison of the 2014 League Tables from Interbrand, Eurobrand, Millward Brown & Brand Finance

Analysis by Type 2 Consulting October 2014

P2

Brand Valuation

Four brand consultancies have published annual league tables of the top 100 brands since 2011: Interbrand “100 Best Global Brands” Published in October Eurobrand “Global Top 100 Brand Corporations” Published in September Millward Brown “Top 100 List” Published in May Brand Finance “The World’s 500 Most Valuable Brands” Published in February This presentation compares the results of the 2014 league tables published by these four consultancies

P3

Methodology

•  All four consultancies employ “economic use” methodologies for estimating the financial value of brands: –  The “earnings split” approach (which calculates the net present

value of the brand-specific earnings of the business) –  The “relief from royalty” approach (which calculates the net

present value of the notional licensing fee that a company would have to pay for the use of its brand)

•  These methodologies are conceptually robust, but leave room for considerable subjectivity in choosing: –  The proportion of profitability solely attributable to the brand –  The selection of the appropriate royalty rate

•  This subjectivity – not the methodologies – is the reason for the massive inconsistency between the agencies

P4

The four top 100 lists contain 209 different brands

Only 29 brands are common to all four lists

P5

There is an average difference of 2.2x between the high/low values of these 29 brands

38% of the time, the consultancies disagree about whether these brand increased or decreased

in value relative to 2013

P6

Top 30 brands according to each provider

Eurobrand data originally published in Euros and converted at €1 = $1.27

INTERBRAND - 10/14 EUROBRAND - 9/14 MILLWARD BROWN - 5/14 BRAND FINANCE - 2/14Apple 118,863 Apple 143,720 Google 158,843 Apple 104,680 Google 107,439 Google 85,688 Apple 147,880 Samsung 78,752 Coca-Cola 81,563 Coca-Cola 82,264 IBM 107,541 Google 68,620 IBM 72,244 Microsoft 79,132 Microsoft 90,185 Microsoft 62,783 Microsoft 61,154 IBM 69,134 McDonald's 85,706 Verizon Wireless 53,466 GE 45,480 McDonald's 61,034 Coca-Cola 80,683 GE 52,533 Samsung 45,462 P&G (corp) 60,665 VISA 79,197 AT&T 45,410 Toyota 42,392 Johnson & Johnson (corp) 59,967 AT&T 77,883 Amazon 45,147 McDonald's 42,254 AT&T 57,109 Marlboro 67,341 Wal-Mart 44,779 Mercedes 34,338 Philip Morris 56,690 Amazon 64,255 IBM 41,514 BMW 34,214 China Mobile 55,790 Verizon Wireless 63,460 Toyota 34,903 Intel 34,153 Louis Vuitton 49,976 GE 56,685 Coca-Cola 33,722 Disney 32,223 Pepsico (corp) 48,485 Wells Fargo 54,262 China Mobile 31,845 Cisco 30,936 Wal-Mart 46,434 Tencent 53,615 Deutsche Telecom 30,607 Amazon 29,478 GE 44,536 China Mobile 49,899 Wells Fargo 30,242 Oracle 25,980 Verizon Wireless 43,445 UPS 47,738 Vodafone 29,612 HP 23,758 Amazon 42,655 ICBC 42,101 BMW 28,962 Gillette 22,845 Nestle (corp) 41,972 MasterCard 39,497 Shell 28,575 Louis Vuitton 22,552 AB InBev 37,920 SAP 36,390 VW 27,062 Honda 21,673 Disney 35,378 Vodafone 36,277 HSBC 26,870 H&M 21,083 VW 32,526 Facebook 35,740 Bank of America 26,683 Nike 19,875 Toyota 32,518 Wal-Mart 35,325 Mitsubishi 26,145 American Express 19,510 Vodafone 32,141 Disney 34,538 McDonald's 26,047 Pepsi 19,119 Samsung 32,027 American Express 34,430 Citi 24,518 SAP 17,340 Unilever (corp) 31,622 Baidu 29,768 The Home Depot 24,322 IKEA 15,885 Intel 28,250 Toyota 29,598 Mercedes 24,172 UPS 14,470 McKesson 27,893 Deutsche Telecom 28,756 Disney 23,580 eBay 14,358 SAB Miller 26,814 HSBC 27,051 Chase 23,157 Facebook 14,349 Wells Fargo 26,811 Samsung 25,892 Intel 22,940 Pampers 14,078 NTT 26,351 Louis Vuitton 25,873 ICBC 22,803

Bold : 11 brands common to all four listsItalics : Unique to one list

Common 11 11 11 11Unique 11 9 5 6

P7

BRAND INTERBRAND EUROBRAND M BROWN B FINANCE MAX:MINApple 118,863 143,720 147,880 104,680 1.4Google 107,439 85,688 158,843 68,620 2.3Microsoft 61,154 79,132 90,185 62,783 1.5IBM 72,244 69,134 107,541 41,514 2.6Coca-Cola 81,563 82,264 80,683 33,722 2.4McDonald's 42,254 61,034 85,706 26,047 3.3 GE 45,480 44,536 56,685 52,533 1.3Samsung 45,462 32,027 25,892 78,752 3.0 Amazon 29,478 42,655 64,255 45,147 2.2Toyota 42,392 32,518 29,598 34,903 1.4Disney 32,223 35,378 34,538 23,580 1.5BMW 34,214 23,183 25,730 28,962 1.5UPS 14,470 19,980 47,738 19,431 3.3 Intel 34,153 28,250 11,667 22,940 2.9American Express 19,510 16,300 34,430 21,116 2.1Cisco 30,936 25,532 13,710 20,784 2.3Oracle 25,980 22,108 20,913 20,635 1.3HSBC 13,142 20,982 27,051 26,870 2.1Nike 19,875 18,395 24,579 20,821 1.3SAP 17,340 16,444 36,390 13,360 2.7HP 23,758 16,604 19,469 19,824 1.4Shell 6,288 17,930 19,005 28,575 4.5 Citi 8,737 20,851 17,341 24,518 2.8Honda 21,673 13,236 14,085 22,152 1.7IKEA 15,885 14,842 19,367 18,471 1.3H&M 21,083 14,864 15,557 11,678 1.8Ford 10,876 18,030 11,812 20,236 1.9JPMorgan 12,456 13,840 12,356 14,039 1.1FedEx 4,414 14,858 17,002 13,467 3.9

TOTAL 1,013,342 1,044,316 1,270,008 940,160 2.2 # highest value 7 2 14 6

Valuation of the 29 brands common to the four lists

Eurobrand data originally published in Euros and converted at €1 = $1.27

P8

Divergence of Opinion on YoY Change

H&M, FedEx and Ford excluded from list as were not in the top 100 brands list for all four providers in 2013

BRAND INTERBRAND EUROBRAND M BROWN B FINANCE CONSISTENT?Apple UP UP DOWN UP NOGoogle UP UP UP UP YESMicrosoft UP UP UP UP YESIBM DOWN UP DOWN UP NOCoca-Cola UP DOWN UP DOWN NOMcDonald's UP DOWN DOWN UP NOGE DOWN UP UP UP NOSamsung UP DOWN UP UP NOAmazon UP UP UP UP YESToyota UP UP UP UP YESDisney UP UP UP UP YESBMW UP DOWN UP UP NOUPS UP UP UP UP YESIntel DOWN DOWN DOWN UP YESAmerican Express UP UP UP UP YESCisco UP UP UP UP YESOracle UP UP UP UP YESHSBC UP UP UP UP YESNike UP UP UP UP YESSAP UP UP UP UP YESHP DOWN DOWN UP UP NOShell UP DOWN UP DOWN NOCiti UP DOWN UP UP NOHonda UP UP UP UP YESIKEA UP UP UP UP YESJPMorgan UP UP UP UP YES

INCREASE 22 18 22 24 YES = 16DECLINE 4 8 4 2 NO = 10

P9

#1 & #2 Ranked Brand in Each Year #1 INTERBRAND EUROBRAND MILLWARD BROWN BRAND FINANCE2014 Apple Apple Google Apple2013 Apple Apple Apple Apple2012 Coca-Cola Apple Apple Apple2011 Coca-Cola Apple Apple Google2010 Coca-Cola Google Wal-Mart2009 Coca-Cola Google Wal-Mart2008 Coca-Cola Google Wal-Mart2007 Coca-Cola Google Coca-Cola2006 Coca-Cola Microsoft2005 Coca-Cola2004 Coca-Cola2003 Coca-Cola2002 Coca-Cola2001 Coca-Cola2000 Coca-Cola1999 Coca-Cola

#2 INTERBRAND EUROBRAND MILLWARD BROWN BRAND FINANCE2013 Google Google Apple Samsung2013 Google Coca-Cola Google Samsung2012 Apple Coca-Cola IBM Google2011 IBM Coca-Cola Google Microsoft2010 IBM IBM Google2009 IBM Microsoft Coca-Cola2008 IBM GE Coca-Cola2007 Microsoft GE Microsoft2006 Microsoft GE2005 Microsoft2004 Microsoft2003 Microsoft2002 Microsoft2001 Microsoft2000 Microsoft1999 Microsoft

P10

Are the Results Converging?

•  The answer is “maybe a little”: –  The number of brands appearing in the four top 100 lists was 209

in 2014 compared to 213 in 2013, 215 in 2012 and 213 in 2011 –  The number of brands common to the four top 100 lists was 29 in

2014 compared to 28 in 2013, 27 in 2012 and 28 in 2011 –  The number of brands common to the four top 30 lists was 11 in

2014 compared to 11 in 2013, 9 in 2012 and 9 in 2011 –  There was disagreement on the year-on-year sign change for 38%

of the common brands in 2014 compared to 46% in 2013 –  The high/low valuations of the same brand each year still differs by

an average multiple of 2.2

•  2013 was the only year that the same brand – Apple – was ranked as #1 by all four consultancies

P11

What Should We Conclude from this Inconsistency?

•  Brand valuation is in its infancy as a discipline: –  There is no GAAP-equivalent standard for how to measure the strength of

a brand, leaving room for considerable subjectivity in the assumptions put into the various valuation models

–  There is no consensus on the definition of a brand, and therefore no consensus on how much of the impact of NPD, distribution weight, customer service or other important factors in the customer experience should be included in the brand valuation

•  It is a mistake for marketers to view brand valuation as a “silver bullet” for proving the business value of marketing: –  The large variation in the published valuations undermines the credibility of

brand valuation among business audiences –  Brand valuation involves treating the brand as if it were a standalone asset

that is the sole responsibility of marketing, and this creates a “zero sum” dynamic between marketing and other functions about the relative contribution of each discipline to the strength of the brand

P12

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