MARKE STEINER

THE REAL ESTATE BRAND BLOG

Harald Steiner

CEO / European Real Estate Brand Institute

#18

Crisis for Winners

There are winners and losers in every crisis. And right now, the Covid-19 pandemic is providing an object lesson in separating the wheat from the chaff. If you want to see this process in action, you just need to take a glance at a major global brand ranking, such as Brand Finance Global 500, an annual ranking of the most valuable brands in the world. To pique your interest, here are a few headline figures to highlight some interesting changes in brand value between January 2020 and January 2021: 

  • The most prominent brands in the winners’ column include Tesla (+ 157%), Alibaba (+ 108%), Apple (+ 87%), Spotify (+ 39%), Microsoft (+ 20%) and Amazon (+ 15.1%).
  • There are also a number of high-profile brands among the biggest losers: Mercedes Benz (- 10%), McDonald’s (- 10%), Hilton (- 30%), American Airlines, Boeing & Airbus (each – 40%) and NBC (- 44%).

In simple terms, tech and eCommerce have outperformed all other sectors and have been given a massive boost by the crisis and the spotlight it has cast on digitalisation. The losers are airlines, hotel chains and restaurants, which by their very nature have been hit especially hard by the coronavirus pandemic. While this analysis provides the broad brushstrokes, it doesn’t really help to explain some of the positive and negative outliers who have bucked general sectoral trends. In order to understand these outliers, it is well worth taking a more detailed look.

Innovation beats tradition

Apple has certainly delivered the kind of incredible performance that makes everyone sit up and take notice. The more the company has succeeded in building its portfolio of solutions and services, a roster that now includes the App Store, iCloud and a host of media platforms such as Apple Podcasts, Apple Music, Apple TV and Apple Arcade, the less dependent it has become on the iPhone. Much of Apple’s recent success is due to the fact that the company has rediscovered its groove as a serial innovator. The Boston Consulting Group’s latest annual survey of global executives that ranks the world’s most innovative companies (The Most Innovative Companies 2020: The Serial Innovation Imperative) rated Apple as the most innovative company in year of the Covid-19 outbreak. Interestingly, Amazon and Microsoft, two other crisis winners, also occupy spots in the top 5. BCG’s analysis provides numerous insights, including the fact that the 50 most innovative companies in the world have outperformed their peers by delivering 5.6 percent higher returns to investors each year (share price gains and dividends) than the market as a whole. The lesson here is clear: Successful brands have innovation in their DNA.

Of course, it is also possible to misjudge the zeitgeist, as we can see from some of the most revered brands in the automotive sector. When people look back on 2020, what will they associate with Mercedes, VW and BMW? Plant closures, furloughed employees, losses running into the billions and CEOs lamenting their companies’ woes. Could it be that car companies were the only ones to experience massive supply chain disruptions last year? Or is it that their mentality is simply far too rigid and their equipment is not flexible enough to react to new market situations? A look at Tesla’s + 157% certainly suggests this is the likelier interpretation. While others were wasting their customers’ energy whining, Elon Musk was delving into the corporate communication’s “toolbox” and setting his own agenda on a range of topics, including electric mobility and automotive software, and taking control of precisely those media channels that were in greatest demand during the year of corona. His was visible, proactive behaviour – and it paid off.

Building trust through thought leadership

In 2020, an extremely notable example confirmed that large brands have no divine right to ongoing success. In June 2020, Facebook lost almost $60 billion of its market value in just two days. The dramatic decline was not just due to the general fact that advertising accounts for 98.5% of Facebook’s total revenue and that companies’ cut their advertising budgets in times of crisis. Far more, the slide followed sharp criticism from Black Lives Matter supporters that Facebook had not done anywhere enough to tackle hate speech on its social network. As civil rights groups banded together to launch the Stop Hate For Profit campaign, Coca-Cola, Honda, Unilever and Starbucks, were among the leading brands to call for a boycott of Facebook advertising. This was a major marketing and brand disaster for Facebook, which had underestimated the significance of the issue. The realisation may have come late, but it did come. Unlike with Trump.

Thankfully, there is another way, as demonstrated by Nike, one of the pandemic’s winners. Retooling its famous Just Do It slogan to great effect, the sporting goods manufacturer defined the spirit of summer 2020 with the words, “For Once, Don’t Do It”. Black background, white font, published in the wake of the racism debate surrounding the tragic death of George Floyd at the hands of the police operation in the United States. The social media video went viral, and Nike’s share price soared.

In Germany, REWE’s discount supermarket chain Penny provided an exemplary model of proactively addressing social issues with its #erstmalhelfen (#startbyhelping) and #erstmalzuhause (#juststayathome) social media campaigns in spring 2020. The response was overwhelming – and the brand received a boost. Not many brands did such a good job of capturing the public spirit and building trust so early in the coronavirus crisis. And trust is a fundamental driver of consumer spending on brands.

Brand value drivers in the real estate industry

Of course, the need to judge the public mood, take a lead on the right topics and build brand trust also applies to the real estate industry. Time after time, studies from our European Real Estate Brand Institute have delivered clear research results in precisely this regard. The most important drivers of brand value in the real estate industry are sustainability/ESG, resilience and employer branding. And the Covid-19 pandemic has dramatically accelerated these trends. If you want to carve out the best possible position for your brand, you need to take a clear stand on all of these issues.

And don’t worry, I haven’t forgotten digitalisation. The reason I left it out is that everyone already knows that digital transformation and optimisation has such a pivotal role to play in every facet of a company’s operations – from communication to the design of business processes. Digitalisation is a given and does not require any further emphasis. Over the next two years at most, digitalisation will become the norm. Brands that are not yet on the digitalisation track will disappear from the business radar.

At the REB Institute, we are taking the crisis as an opportunity to deep-dive into the major topics that will shape the future of our industry in order to deepen our market knowledge and understanding of dynamic processes. Under the motto “Disruption meets Resilience”, we are dedicating the Real Estate Brand Value Study 2021 to exploring the key issues and massive changes facing the European real estate sector and using empirical data to evaluate resilience in all its facets. What is it that gives a company the ability not only to survive crises without lasting damage, but also to exploit them as an opportunity for innovation and advancement? And what is it that makes a brand resilient? Well, we will soon be providing you with nothing short of the evidence-based answers to the fundamental question of our day and age: How do you become a brand winner in the ranking of the future?

With this in mind – continue to nurture your most important asset – your brand

With branded regards
Your Harald Steiner 

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