Will Snapchat’s Am­bi­tious Val­u­a­tion Last Longer than its Posts?

ArabAd - - BRANDS -

Ev­ery year, lead­ing val­u­a­tion and strat­egy con­sul­tancy Brand Fi­nance val­ues the brands of thou­sands of the world’s big­gest com­pa­nies. Snapchat’s brand has been found to be worth only US$1.7 bil­lion. This is 8-9% of the sug­gested US$19.5-22 bil­lion com­pany value range, an unusu­ally low per­cent­age, which sug­gests that the tar­get may be over-am­bi­tious. Brand Fi­nance’s CEO David Haigh com­ments, “'Brand Fi­nance has val­ued the Snapchat brand from first prin­ci­ples. The brand value is rel­a­tively low be­cause of low rev­enues and mar­gins and an un­proven abil­ity to mon­e­tise the plat­form sub­stan­tively. Snapchat has made its name by de­liv­er­ing posts which are here one minute and gone the next. Its users ap­pre­ci­ate its abil­ity to make their pho­tos dis­ap­pear, but over-ex­cited in­vestors cer­tainly won’t feel the same about their cash.” Snapchat’s brand value is in fact so low that it fails to make the list of the 100 most valu­able tech brands, de­spite the fact that its IPO is ex­pected to be the 4th big­gest in the in­dus­try’s his­tory. Brand Fi­nance's rank­ing re­veals Twit­ter’s pre­cip­i­tous fall as its in­abil­ity to prove it­self fi­nan­cially and slow­ing user growth have caught up with it. Brand value is down 39% year on year to US$2.5 bil­lion which sees it fall out of the top 50 to 83rd. Ap­ple is an­other brand to suf­fer this year. US$38.7 bil­lion has been wiped off its brand value as op­ti­mism around its abil­ity to in­no­vate and sus­tain rev­enue growth wane. David Haigh con­tin­ues, “Ap­ple has strug­gled to main­tain its tech­no­log­i­cal ad­van­tage, with new it­er­a­tions of the iphone de­liv­er­ing di­min­ish­ing re­turns, while the Chi­nese mar­ket is now crowded with lo­cal com­peti­tors such as Huawei. Ap­ple has been liv­ing on bor­rowed time for sev­eral years by ex­ploit­ing its ac­cu­mu­lated brand eq­uity. This un­der­lines one of the many ben­e­fits of a strong brand, but Ap­ple has fi­nally taken it too far.” De­spite these no­table ca­su­al­ties, on the whole this was an­other stel­lar year for tech brands, which achieved an aver­age brand value growth rate of 26%, against a fig­ure of 20% across all sec­tors. Google’s brand value rose 24% (from $88.2bn to Us$109.4bn) over­tak­ing Ap­ple to be­come the most valu­able brand not just in tech but across all sec­tors. Chi­nese tech brands are per­form­ing par­tic­u­larly well. Alibaba’s brand value has nearly dou­bled to US$34.8 bil­lion. Its suc­cess stems from the op­por­tu­ni­ties to both open up and sim­plify com­merce for Chi­nese com­mu­ni­ties, par­tic­u­larly ru­ral ones. It is now aim­ing to ac­cel­er­ate brand recog­ni­tion and growth abroad by join­ing Mcdonald’s, Coca-cola and Visa as a ma­jor spon­sor of the Olympics Games. Wechat has over 850 mil­lion users and de­spite be­ing largely con­fined to its do­mes­tic mar­ket. It of­fers a more ex­ten­sive range of ser­vices, than any com­pa­ra­ble brand, from mo­bile pay­ments to video games and text mes­sag­ing to video shar­ing. As a re­sult, it is far more em­bed­ded in the daily life of its aver­age user, even re­plac­ing work emails for many Chi­nese. This cen­tral po­si­tion in daily life builds an in­tense brand affin­ity, help­ing to build brand value to US$13.2 bil­lion.

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