#BrandZ100: The rise of ecosystem brands

by Louise Burgers. COVID-19 has accelerated the rise of ‘ecosystem brands’ and what we are seeing the world over is the complete transformation of the digital business model. A decade ago, brands either sold a service or a made a product for sale. Brands are now creating more occasion-based brands that play a role in the customer’s life wherever they are, being part of every experience. This was a key finding from the annual BrandZ Top 100 Most Valuable Global Brands 2020 rankings and insights released this week by Kantar.

The BrandZ Global Launch Diginar on 30 June 2020, celebrated the strongest global brands; and discussed the key findings and implications for brands from the BrandZ global study with key insights from the impact of the current COVID-19 pandemic. Due to the global lockdown and ongoing travel restrictions, this was the first time the awards and study was launched digitally, live, across the globe, interspersed with recorded interviews with brand leaders. David Roth, CEO The Store WPP, EMEA and Asia, hosted the live webinar and conducted the interviews exploring how high-performing brands are proving their resilience, the pandemic impact across 14 categories and implications for future growth; before announcing the various awards and those brands at the top of the rankings for this challenging year.

The event, which was themed, New Days + New Ways, included economists, strategists, brand leaders, CMOs and the research heads who put the study together; to delve into the brand and consumer insights. This was probably the most important BrandZ 100 event ever, due to the economic chaos and uncertainty generated the world over by the current pandemic. “Right now, the whole world is at a pivotal moment of renewal and rebirth: economically, socially and emotionally. We are looking at how Governments, business, consumers, brands and retailers are breaking out of the COVID-19 hiatus. Over the last few months, COVID-19 has been top of mind for us; but this past year has had many other key moments,” commented Roth, on opening the live event.

KEY TAKEOUT: The BrandZ Top 100 Most Valuable Global Brands have increased their total brand value by 6%, adding $277 billion over the past year to reach $5 trillion in total value. Amazon is the world’s most valuable brand, growing 32% to US$415.9bn and accounting for a third of the BrandZ Top 100’s total growth. The retail sector has grown the fastest by 21% in brand value, driven by major e-commerce players. Technology brands continue to dominate the top of the ranking, representing 37% of brand value in the Top 100 and growing overall by 10%. Over half of media and entertainment brands appeared in the top 20 risers. TikTok (no. 79, $16.9bn) was the highest new entry.

Evolution of ‘occasion’ brands

Ecosystem brands are going to be very important going forward and more will appear on the BrandZ Top 100 rankings in the future, said Doreen Wang, Kantar China CEO and global head of BrandZ. “Nowadays we see this very important trend of technology companies upgrading themselves into the next level, which is ecosystem brands… interacting with customers and consumers; with the core value at the centre, but with a gradually expanding ecosystem. Because in all these different interactions they have with consumers, they want to keep building their brands and strengthening that relationship [with the consumer].”

Wang said there were key mindset differences between an ecosystem brand and another: “The ecosystem brand keeps adding value to the customer. It is not a transactional relationship, but lifelong relationship building with the consumer,” she explained. Within this ecosystem, are  entrepreneurs and partners which are providing additional value, so consumers will want to pay more. “We believe the value of the ecosystem will be released little by little and in the future, we will see tremendous benefits to human beings,” Wang added.

The ‘New Retail’ model

Alibaba, which features in the top 10 of the most valuable BrandZ 100, and is China’s most valuable brand, has seen huge change across the retail sector. In an interview broadcast during the live launch, Michael Evans, Alibaba president, spoke about the impact of Covid on their business: “We are doing things today that we had not anticipated before COVID-19. And all the things we are doing are designed to help our brands and our consumers. Starting with the brands, it is clear that this concept we call ‘new retail’, which is the digitisation of the offline store, allows us to be open even when we are closed as it acts as a fulfilment centre. That has completely changed the way brands are thinking about the digitisation of their offline resources and infrastructure.” He said many of their brands in China had already begun doing that, but now this change was evident across all categories of retail.

Alibaba is a “giant ecosystem of businesses”, viewed by consumers as a “lifestyle app”, not a traditional ecommerce business, Evans explained. There is also an entertainment component, as well as traditional grocery services. “We want to make it easy for the consumer to find everything important to their lifestyle, in addition to shopping. We want consumers to come to one place and live there.” The average Alibaba consumer visits the app up to eight times a day and spends on average 25 minutes there. The full digitisation of the entire retail chain is very important, Evans said, remarking that the technology challenges in different parts of the world needed to be integrated into every brand’s eco-system, so that multiple platforms weren’t needed in different parts of the world. Harmonisation was important.

Brand “pandemic heroes”

Elspeth Cheung, global valuations director for Kantar, which conducts the BrandZ Top 100 Most Valuable Global Brands study, spoke on the pandemic’s impact and the resilience of the top brands. Brands that were doing well during this pandemic correlated with the practices of the top brands studied. “It’s a rollercoaster. We still see a net increase of 6% of the Top 100 brand values; even though overall, more than half of the top brands in the rankings this year had declined in brand value. This is the important message we want to deliver today: the strongest brands are becoming stronger. This is very interesting,” Cheung reiterated.

She termed these brands “pandemic heroes”. Brands like Lululemon, Amazon, Costco, Netflix, Instagram and Microsoft, were the strong brands helping consumers live a digital life before lockdown; and the pandemic had helped accelerate that digital trend. Retail was the top performing category this year and included the ecommerce players; as well as suppliers of essential items, like Walmart and Costco. Of course, not all the retailers were doing well, and apparel retailers and department stores were struggling, with some filing for bankruptcy. Those retailers and brands which were doing well, the study found, were the ones helping consumers live their best digital life by helping them stay fit and stay well, both physically and mentally; and get through this pandemic.

Practice ‘practical creativity’

In turn, Martin Guerrieria, global research director for BrandZ at Kantar, said it was the brands with better consumer relationships which have been better protected during this crisis, than in the 2008 global financial crisis; although he acknowledged that the full impact of the current crisis had not yet impacted. “We are very close to dipping into a global recession, so the full effects could yet be amplified, but certainly, the key factor we are seeing in those brands growing in the past 12 months and recently, versus those declining, is difference: really standing apart from the crowd. Difference is the key to success, but it is more about innovation in the world we are in now – it is more about what we are calling ‘practical creativity’. Creativity is still very important in a crisis, but it needs to have a practical edge to it.”

Guerrieria referenced brands like eBay, which have waived fees for businesses to operate on their platform; and even Budweiser which repurposed previous creative for the world of COVID-19. “We are seeing that overall, the goal is trust and reassurance. There is no doubt that brands can provide that and those brands with those trusted consumer relationships are the ones that are better able to ride out this crisis.”

*For the full diginar recording and to download the digital assets of the BrandZ 100 Most Valuable Global Brands, go to: https://global.diginar.io. There are longer versions of the interviews, a copy of the full report for download, and a Diginar app to watch the brand documentaries and more.

Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

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