Brand Equity as a Gauge of the Economy

October 1, 2014

By James R. Gregory

The CoreBrand 500 average range of contribution to market cap is 5-7%. Over the past decade, there has been a steady decline in the CoreBrand 500 average, dropping from a high of 7.4% in 2004 down to 5.1% in 2011 and holding steady at that lower level. This is a fair reflection of a lethargic economy recovery.

The CoreBrand 100, which consists of corporations with the strongest corporate brands, fared better longer with the downward inflection point coming in 2009 and having less than a 1% negative impact on total enterprise value. The CoreBrand 100 average stayed within the 15-17% range over the past decade. Interestingly, this elite group continued to grow from 2004 to 2009, before declining. Even then, there was less than a 1% negative impact on enterprise value. The lesson is that big brands hold their value longer consistently maintaining a brand value 8-10% above the Top 500.

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