The onset of the COVID-19 pandemic slashed valuations of companies around the world by $ 22 trillion in the first quarter of 2020, new data shows.
The study, by the International Advertising Association (IAA), found that brand value fell from S $ 116.6 billion to S $ 94.8 trillion between January and April.
However, since the COVID-19 outbreak, the total value of intangible assets of listed companies around the world reached an all-time high of US $ 65.7 trillion in September, up 69% from April, highlighting the importance of brands in fueling a post-COVID economic recovery.
While the global economy is expected to contract -4.4% this year (IMF), branded companies around the world have rebounded from the COVID-19 crisis to record growth of 3.8% (from 116, 6 to 121 trillion dollars between January and September).
Since the COVID-19 outbreak, the total value of intangible assets of publicly traded companies around the world reached an all-time high of $ 65.7 trillion in September, up 69% from April.
Around $ 22 trillion was wiped off the value of publicly traded companies in the first quarter of 2020 as the COVID-19 pandemic spooked markets, investors and consumers, but new research from Brand Finance, published in partnership with the International Advertising Association (IAA), shows that brands have the power to fuel an economic recovery.
Brand Finance’s analysis of 55,000 publicly traded branded companies around the world found that although their total business value rose from $ 116.6 billion to $ 94.8 trillion between January and April, it rebounded to $ 121 trillion in September, demonstrating how important brands are to businesses.
While the global economy as a whole is expected to contract -4.4% this year (IMF), branded companies that inspire consumer confidence, such as Apple, Amazon, Microsoft, Tesla and Visa, have already rebounded from the decline caused by COVID-19 crisis records growth of 3.8%.
Brands are among a company’s most valuable assets, accounting for about 20% of the total value of the business on average, according to Brand Finance.
Commenting, Dagmara Szulce, CEO of IAA, said: “This report shows us that the importance of brands increases in times of crisis, and that is why we are launching our global multi-channel campaign, Why Brands Matter. Brands communicate the origin, quality and authenticity of a product, but they also convey trust, identity, pride, passion, creativity, innovation and optimism. Strong brands restore consumer confidence, and competition between brands can restore economic strength. We call on governments and brand owners around the world to work together to create an environment that gives consumers the confidence to invest in the brands that matter to them; to foster an environment where brands are protected, nurtured and allowed to realize their full potential.
The report shows how and why brands are a powerful economic stimulus tool, allowing consumers to quickly identify the companies and products they love or differentiate themselves from them. Brands are there to protect consumers from the risks posed by unregulated, illegal and counterfeit products, giving consumers peace of mind in their purchasing decisions.
David Haigh, CEO of Brand Finance, said: “In times of crisis, brands – especially the most valuable and strongest in their categories and markets – become a safe haven for capital. Like gold or fine art in past economic downturns, well-managed, innovative and reputable brands are what the global economy is turning to today in times of need. There can be no better proof of the importance of brands than the role they have already played and will continue to play in the post-COVID recovery. “
For full results, access the Brand Finance: Why Brands Matter 2020 report here