Businessweek and Interbrand have ranked the 100 top brands of 2006. Google moved up to position 24 from last year’s 38, and Yahoo! moved up 3 positions to 55. Microsoft remains at position 2 in two consecutive years. Businessweek explains how the brand rankings were determined.
Interbrand takes lots of ingredients into account when ranking the world’s most valuable brands. To even qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizable outside of its base of customers, and have publicly available marketing and financial data.
Based on reports from analysts at J.P. Morgan Chase, Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes, and a charge for the capital employed to arrive at the intangible earnings. The company strips out intangibles such as patents and management strength to assess what portion of those earnings can be attributed to the brand.
Finally, the brand’s strength is assessed to determine the risk profile of those earnings forecasts. Considerations include market leadership, stability, and global reachâ€”or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value.