London // Big brands mean big business – and the trademark titans of the Middle East are growing faster than most.
Emirates, the Saudi Telecom Company, Etisalat and Qatar Airways have been ranked as the most valuable brands in the region – with the four names worth more than US$21 billion combined.
That is according to a list of the Middle East’s top brands published today by London’s international marketing consultant Brand Finance.
This region’s 50 biggest brands are now worth a total of more than $68bn – 11.25 per cent more than in 2015, a growth rate of almost double the global average, Brand Finance says.
Robert Haigh, the marketing and communications director at Brand Finance, says there has been “huge and successful investments in brand building” in the Middle East.
His company’s valuations – which factor in both marketing investment as well as the underlying financial performance of brands – mark a solid indicator of a company’s potential, he adds.
“Brand value provides a reliable indicator of future potential, and that is bright for most Middle Eastern brands,” says Mr Haigh.
“We’ve noticed that if you invest in heavily branded companies, you get a nearly doubling on your return versus investing on the S&P 500 as a whole.”
Despite the value of Middle East brands increasing faster than the global average, the pace of growth is slowing.
The region’s top 50 brands grew in value by 22 per cent from the consultancy’s 2014 ranking to 2015’s – almost double the current rate – and by 28 per cent in the 2013/14 year, according to Brand Finance.
Andrew Campbell, the managing director of Brand Finance Middle East, based in Abu Dhabi, says the slowdown in growth is a reflection of both global economic jitters over oil prices and the fact that some regional brands are maturing.
“The better you get, the harder it is to grow,” he says.
Despite that, Mr Campbell says there is “plenty of headroom” for some regional companies to further grow their brand valuations.
He points to the potential of Saudi Arabian companies, which currently dominate the ranking of regional brands.
“I am seeing a kind of groundswell of new energy and new engagement in the brands in Saudi Arabia. And, looking forward, I think there is a lot of potential for growth,” Mr Campbell says. “Inevitably the squeeze on oil price will require the larger public companies in the region to perform better across the board. And marketing and brand is integral in that equation.”
Mr Campbell points to companies such as STC – the Middle East’s second-biggest brand, with a valuation of $5.61bn – and the Saudi banking sector as being particularly strong in the branding stakes.
Four Saudi banks rank among the top 10 fastest-growing brands in the Middle East, according to the Brand Finance data. Saudi Hollandi Bank’s brand valuation grew by 30 per cent over the past year, with Banque Saudi Fransi, the Saudi Investment Bank and Arab National Bank all posting gains of more than 20 per cent.
Overall, 34 of the top 50 Middle East brands rose in value, while just 12 saw their valuation drop, with four new entries to the list, according to the Brand Finance figures.
John Brash, the founder and chief executive of Brash Brands, which has an office in Dubai, says that the figures are credible.
“As the best and biggest Middle East brands continue to grow, so does their understanding of the path to international success.
“They innovate, they’re ambitious and they show steadfast determination – we shouldn’t be surprised by their growth at all,” he says.
Ramzi Raad, the group chairman of the TBWARAAD advertising agency, which is headquartered in Dubai, agrees that Middle Eastern brands are growing in value.
“Middle East brands have been forging their way fast to international markets and certain brand categories have achieved global dominance,” he says. “Hence it is not surprising that their valuation growth has been growing at double the global average.”
Not everyone is convinced the Brand Finance valuations are an accurate representation of what is happening on the ground.
Charles Wright, a principle at the global branding agency Wolff Olins, who previously ran the company’s office in Dubai, says the results are “odd”.
“Courtesy of the collapse in oil prices and the [widespread] political uncertainty, the economy of the region is weak and a lot of the smart money has moved abroad,” he says.
“I am puzzled that the value of the top 50 has risen by 11 per cent. Something does not stack up. But brand valuation has always been as much about art as science.”
But no one denies the dominance of the Middle East’s top brand, Emirates. The Dubai airline has been buoyed by its capacity expansion, high-profile sponsorships of sports teams such as the football clubs Arsenal and Real Madrid, and associations with global TV stars such as Jennifer Aniston.
The airline’s brand valuation grew by 17 per cent over the past year, and is now worth $7.74bn, according to Brand Finance.
“The rate of increase – 17 per cent – is pretty impressive given how mature they are, how expanded their route network already is. But then on the other hand they are increasing their capacity significantly, continuing to invest, and they’ve got a vast array of sponsorships,” says Mr Haigh.
But the flip side of this is that Emirates stands as the only true “superbrand” that has emerged from the Arab world so far, Mr Haigh adds.
“It’s so far ahead of any of the others that it’s really in a league of its own. [Emirates] is unquestionably an international superstar brand.
“But I don’t think any of the other brands have developed an international reputation that separates them from their region in quite the same way.”
Yet given the pace of growth of Middle East names on the global stage, Mr Haigh says he expects more Arab superbrands to emerge.
“I would be surprised if there weren’t any in the next 10 or 20 years that really took off in the same way that Emirates has.”
So it might be wise for the region’s other big players to fasten their seat belts and prepare for take-off.