Magazine

Turmoil in the Rankings


As consumers rethink their priorities, companies struggle to revamp their marketing. Here's who's coming out ahead

Last fall, as the recession deepened, Microsoft's (MSFT) chief marketer, Mich Mathews, got an e-mail from her team in Australia. Believing that the upbeat advertising copy supplied by headquarters was unsuited to the times, the Australians informed her they had junked it and made their own ads. Mathews recalls the Australian campaign as slapdash and off-brand; it used the glass half-empty vs. half-full metaphor to describe how business customers could save money by using Microsoft products. But Mathews had to acknowledge that the campaign made more sense in the current environment. "It was 'Hello, Mich! We need to regroup dramatically,'" she says. The wake-up call from Down Under sent the Microsoft team back to the whiteboard. Within 21 days, headquarters had cooked up a new campaign focused on value.

The recession has presented brand stewards with the most severe test of their careers. "This is a Darwinian recession. Only the strongest will survive," says Jez Frampton, CEO of consultancy Interbrand, which computed the value of each brand in our ninth annual ranking of the Best Global Brands. Companies have had to adjust rapidly as consumers reexamine their purchases and rethink brand loyalties. Marketing executives are balancing the temptation to chase short-term gains with discounts and promotions against the risk of cheapening their brands over the long haul. Meanwhile, most have considerably smaller budgets with which to reach their customers.

Some brands have prospered amid the hard times—or at least held their own. You can read about five of them—Amazon (AMZN), Pepsi, Audi (VLKAY), Panasonic (PC), and Campbell's (CPB)—starting on page 51.

If the ranking has one theme, it is how the mighty have fallen. While Coca-Cola (KO) kept the No. 1 spot, and Google (GOOG), Amazon, and Zara continued their strong growth, UBS (UBS) fell an astounding 31 places, to No. 72, losing 50% of its brand value. Seven brands fell right off the list. Among the biggest: Merrill Lynch, which ranked No. 34 last year, and AIG (AIG), previously No. 54, after both required emergency assistance from the U.S. government. ING (ING), ranked No. 86 last year, also fell off the list after huge subprime losses. The other casualties placed near the bottom of last year's ranking and watched their prospects dim amid the recession: Hennessy (LVMUY), Marriott (MAR), Motorola (MOT), and FedEx (FDX).

Not surprisingly, big banks fared the worst. Several tried to win back consumers' goodwill—running ads in national newspapers defending their solvency and fiscal responsibility. But brand experts found their outreach unpersuasive. "Public-relations efforts like this are a Band-Aid," says Nancy F. Koehn, who teaches business administration at Harvard Business School. "Banks need a whole team of plastic surgeons."

EATING AT HOME

Another nonsurprise: Auto brands tanked. Two exceptions were high-end Ferrari (FIATY) and low-end Hyundai. Ferrari, thanks to cachet and inventory control, continued to sell its models briskly. Hyundai boosted ad spending and aggressively promoted its Assurance program, which allows buyers who lose their jobs to return cars. Hyundai's brand value slipped 5%, but it moved up three places to No. 69.

This year seven brands made the list for the first time. The seven are the apparel brands Burberry, Polo (RL), and Puma, low-cost food companies Campbell Soup and Burger King (BKC), cosmetics maker Lancôme, and the tech firm Adobe Systems (ADBE), whose Flash player is the de facto video standard on the Web.

Food brands, including Nestlé, Heinz (HWZ), Pepsi (PEP), Kellogg's (K), Campbell's, and Danone, benefited because consumers began eating at home more. The food companies also got an unexpected windfall: Having raised prices to offset soaring commodity prices last fall, they have enjoyed higher profits since raw material prices fell back to earth.

Big Food is fighting the growing private-label threat by appearing to be anything but generic. Kellogg is boosting its advertising spending to draw attention to such new products as Special K Protein Shakes, Jumbo Multi-Grain Krispies, and Froot Loops with added fiber. Nestlé, meanwhile, has responded to consumers' newfound craving for simplicity by launching a new Häagen-Dazs ice cream line with just five all-natural ingredients.

Fashion brands also did surprisingly well this year. Several, such as Louis Vuitton (LVMUY) and Gucci, benefited by expanding into China and the Middle East, where economies held up relatively well compared with the West. Luxury companies specializing in handbags and other accessories—including Vuitton, Gucci, and Hermès—generally performed better than those best known for apparel, such as Chanel. Accessories are simply seen as a smarter buy nowadays: Someone who splurges $1,000 on a new handbag can make use of it every day—not so for a similarly priced dress. Meanwhile, the affordable "fast-fashion" chains H&M and Zara rocketed up our list.

The recession may be abating, but life isn't going to get much easier for corporate marketing chiefs. They are already under enormous pressure to justify their budgets. And consumers are widely expected to remain frugal long after the global economy revives. "In saturated, shrinking markets," says Interbrand's Frampton, "competition becomes even tighter."

With Matthew Boyle in New York and Carol Matlack in Paris

Return to 100 Best Brands Table of Contents


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