Economic factors slow B2B brand value rise
But B2B brands demonstrate long-term stable growth
Slower growth in China, Brazil and Russia, along with the precipitous drop in oil prices, especially challenged business-to-business (B2B) brands. They populate the two categories most affected by those factors: oil and gas, which declined 20 percent in brand value; and banking, with global and regional bank brands down 11 percent and 12 percent, respectively.
A third factor – the technology category shift to cloud computing – continued to affect the value growth of B2B technology brands. Even the most iconic B2B technology brands felt the perfect storm of global economic weakness, rock-bottom oil prices and category disruption that required major investments of time and money to develop and implement new strategies and business models.
Consequently, the 2016 BrandZ™ B2B Top 20 declined 5 percent in brand value, and only five of the 2016 BrandZ™ B2B Top 20 increased in value. The Business-to-Consumer (B2C) Top 20 performed somewhat better, increasing 10 percent in brand value, with all but five of the B2C Top 20 increasing in brand value. This contrast resulted in part from the year’s unusual confluence of market forces; viewed over time, however, B2B brands show greater stability than B2C brands.
All 20 B2B brands in the 2016 ranking also appeared in the 2015 B2B Top 20. But only 16 of the 2016 B2C Top 20 brands also appeared in last year’s B2C Top 20 ranking. Reviewing performance over time, 14 of the B2B brands that appeared in the 2006 B2B Top 20 also appeared in 2016, while only eight of the 2006 B2C Top 20 brands remain in the 2016 B2C Top 20. The results testify to the consistency of the B2B brands and their ability to adjust and endure even during difficult periods like the past 11 years, which included the global financial crisis and its aftermath.
Over the 11-year period from 2006 to 2016, the BrandZ™ B2B Top 20 brands grew 68 percent in value, much less than the 215 percent increase for the B2C Top 20. The difference in growth rates reflects the predictable performance of large and well-established B2B brands, and also the rapid rise of recent start-ups and younger B2C Top 20 brands such as Facebook and Apple.
Because of the rapid rise of B2C brands, especially in the technology category, and the steady but slower growth of B2B brands, the proportion of brand value in the BrandZ™ Global Top 20 has shifted over time from B2B to B2C. In 2006, B2B brands totaled 59 percent of the BrandZ™ Global Top 20 value. In 2016, the B2B Top 20 value totaled only 35 percent of the Global Top 20 value.
Business and consumer brands collaborate
Only these five B2B brands, all in technology, increased in value in the BrandZ™ 2016 Global Top 100: Microsoft, SAP, Accenture, Huawei and Intel. And in two instances, the increases occurred as B2B brands shifted toward B2C in corporate culture or product offering. These instances reflect a larger trend of B2B and B2C blending in the technology category.
Under new leadership, Microsoft began to transform from a traditional B2B central-control structure to a collaborative culture, more typical of the B2C technology brand leaders. Huawei, the Chinese telecommunications equipment maker, led the B2B Top 20 in brand value growth, based on a 44 percent increase in sales of its smartphones, which are essentially consumer products.
The technology category is experiencing some “consumerization” as B2B brands introduce more consumer devices into the workplace and more collaboration takes place. IBM, Cisco and SAP have partnered with Apple, for example. These partnerships push more consumer devices into the workplace and enhance consumer devices with more enterprise apps.
Over the past 11 years, B2C technology brands have grown 358 percent in value compared with a 84 percent rise for B2B technology brands. The B2C brands now account for 65 percent of the technology category value, compared to just 43 percent 11 years ago.
Not surprisingly, because of depressed crude oil prices, the oil and gas brands in the B2B Top 20 – Exxon Mobil, Sinopec and Shell – declined most in brand value. But even these B2B brands looked for possibilities in their B2C businesses. Shell, for example, operates over 45,000 service stations worldwide. Many multinational oil and gas brands warmed their messaging in order to target consumers.
Pressures cross categories
Several of the B2B technology leaders continued the difficult transition to cloud-based businesses. HP split into two publicly traded entities: Hewlett Packard Enterprise, which focuses on software, cloud storage, and networking; and HP Inc., which continues the core printer and PC businesses. HP also planned a further spinoff from Hewlett Packard Enterprise, and SAP grew its cloud subscriptions.
A combination of economic slowdown and category disruption also impacted the B2B logistics brands: UPS, FedEx and DHL. While the rise of e-commerce drove additional revenue for these brands, it also stressed operations. In addition, Amazon, the largest e-commerce brand, and a major customer of the logistics companies, increased capacity to deliver its own orders. Operating both e-commerce and cloud storage businesses, Amazon best exemplifies how brands are blurring the borders of B2C and B2B.
Among the bank brands in the BrandZ™ B2B Top20, HSBC and Citi meet the BrandZ™ definition for “global” banks, because they derive at least 40 percent of their revenue from outside their home market. Wells Fargo, in contrast, is a “regional” bank with most of its business centered in North America. The decline in value of both global and regional brands reflects in part the widespread impact of global economic pressures on B2B brands.
Global pressures impact B2B Top 20 brands
Global economic pressures that slowed the brand value growth of the 2016 BrandZ™ Global Top 100 especially affected B2B brands.
Market forces slow B2B value growth short term...
The B2B Top 20 declined 5 percent in brand value, as the B2C Top 20 increased 10 percent.
… But the B2B brand ranking is more stable over time than the B2C…
All the B2B brands that appeared in the BrandZ™ B2B Top 20 in 2016 also appeared in 2015. Only 16 B2C brands from the 2015 ranking appeared again in 2016. Over the past 11 years, B2C churned more than B2B; 14 B2B brands from 2006 remain in the B2B Top 20, but only eight B2C brands remain in the B2C Top 20.
… Although B2B brand value grows more slowly...
Driven by the entrance of fast-growing technology brands such as Google, Facebook and Apple, and the rise of Amazon and Alibaba, the BrandZ™ B2C Top 20 increased 215 percent in brand value over the past 11 years, compared with a 68 percent increase for the BrandZ™ B2B Top 20.
… And the B2B Top 20 becomes more dominant
In 2006, the B2B Top 20 value totaled 59 percent of the Global Top 20 value. In 2016, the B2B Top 20 value totaled only 35 percent of the Global Top 20 value. In 2006, seven B2B brands ranked in the Global Top 20, but by 2016 that number had declined slightly to five.