What's in a name?

Brand values: Measuring a brand’s worth is an imprecise art. Apple’s has nevertheless been deemed the world’s most valuable. At $153 billion, according to a new survey, it accounts for about half the company’s market capitalisation and nearly 10 times its estimated value five years ago. Tech companies also populate the top ranks. There are good reasons they dominate the list — and why they’re prone to big swings in value.

The survey, by a subsidiary of WPP, estimated the earnings resulting from big brands and attempted to put a multiple on them to account for future growth. The result is a tech-heavy list. Google’s, at $111 billion, ranks second, IBM is third and Microsoft fifth. This not only reflects the growing importance of hardware and software on the economy, but also how consumers spend more time online socialising and shopping. Facebook scored the biggest increase — its value nearly tripled to $19 billion. And Amazon’s brand overtook Wal-Mart’s.

There are also economic reasons tech firms rate so highly. A large chunk of what they make is intangible, and therefore hard to capture on a balance sheet. Coding skills and patents are valuable, but not easily measured.

Further, technology is often a winner-take-all game. Network effects mean people want to use the same software or systems as their friends or employer. That helps explain why Apple’s distinct label accounts for so much of its worth compared to, say, Exxon Mobil, whose name is estimated to represent just 4 per cent of its $414 billion market value.

Brand calculus nevertheless remains a squishy concept. Is Microsoft’s really worth $78 billion, or does its extraordinary market power account for the brand’s value? Yet there’s obviously something in a name. Just look at the premium prices Apple can tack onto its computers or gadgets — or how carefully it guards the use of its name.

Apple isn’t alone. Google’s most valuable real estate is its front page. It only puts its own logo there, instead of ads, to avoid diluting or sullying its own brand.

Times still change, however. And evolution happens faster in tech, with new invasive species popping up regularly. Nokia lost more than a quarter of its brand value in a year, according to the survey, as users switched to Android-based and Apple handsets. Yes, a name has value, but it is far from timeless.