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Brand Power in the Digital Age10 Years of BrandZ - The Rise of Digital Brands

Istanbul – 26th November 2015

Unleashing brand-led business growth

Agenda

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BrandZThe rise of digital brands in the Top 100The rise of digital brands in TurkeyAdopting digitalAdopting digital in TurkeyThe digital challenge – a case study in bankingThe future

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BrandZ

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BRANDZ is the largest brand database worldwide

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BRANDZ is underpinned by the an extensive consumer & customer research programme

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IS BIG DATA

100K BRANDS

400 CATEGORIES

3mCONSUMERS

50 MARKETS

4.5bnDATA POINTS

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BRANDZ is the most robust ranking

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GLOBAL STANDARDPUBLIC DATA

VALIDATED

Globally 3million+ consumers, 100,000+ brands, 50+ markets.

Category specific, with cross category findings

Entirely objective, direct-from-consumer

COMPREHENSIVE & OBJECTIVE

BRANDZ™ TOP 100 GLOBAL BRANDS

BRANDZ™ TOP 100 CHINESE BRANDS

BRANDZ™ TOP 50 LATAM BRANDS

BRANDZ™ TOP 50 INDIAN BRANDS

BRANDZ™ TOP 50 INDONESIAN BRANDS

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We believe that strong brands create optimal business success

7 Source: Proprietary BrandZ™ brand strength data; Bloomberg; Millward Brown analysis

Millward Brown's analysis shows that companies with strong brands are able to grow their share prices more than companies with weak brands:

BrandZ™ Strong Brands Portfolio Performance vs. S&P 500 vs. MSCI World Index

Apr 06 Sep 06 Feb 07 Jul 07 Dec 07 May 08 Oct 08 Mar 09 Aug 09 Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Jul 12 Dec 12 May 13 Oct 13 Mar 14 Aug 14 Jan 15

-50%

-30%

-10%

10%

30%

50%

70%

90%

110%

BrandZ™ Strong Brands PortfolioS&P 500MSCI World Index

63.0%

102.6%

30.3%

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The rise of Digital Brands in the Top

100

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Digital Brands in the BRANDZ Top 100

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2015201320112006

Source: BrandZ, 2105, MBV Analysis

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Drivers of digital brand success

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• Diversified portfolio of projects and areas of interest• Focused on driving penetration• Premiumisation of users is a relatively recent

phenomenon• Two types of players:

– Brands that moved real life operations into the digital world

– Brands that invented services that did not exist before and created new markets

2006 2015

TWITTER INC LINKEDIN CORP - A FACEBOOK INC-A-2000

0

2000

4000

6000

8000

10000

12000

14000

Net Income RevenueSource: BrandZ, 2105, MBV Analysis

Financial performance 2014

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Value of Digital brands in the BRANDZ Top 100

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $-

$50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000

0%2%4%6%8%10%12%14%16%18%20%

Value and Proportion of Digital Brands in BrandZ T100

Digital brands values % of total Top 100 brnads value

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

2

4

6

8

10

Digital Brands in BrandZ T100

Brand Contibution % Intangible Ratio

Brand Contribution & In-tangible Ratio

Digital Brands in Top 100 (Average)Other Brands in Top 100 (Average)

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The rise of Digital Brands in Turkey

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Digital Brands in Turkey

Turkey is among the world leaders in B2C E-Commerce growth

Online audience is one of the most engaged in Europe – behind only the UK

Turkey's Internet users are the youngest in Europe

A quarter of all Internet users shop online

The B2C E-Commerce market share of pure Internet players in Turkey is the highest in Europe

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Online mass merchants

Amazon-style marketplaceAttracted overseas investmentValued at over $400M

Turkish subsidiary of eBay“Going, going, gone”

Established in 2001

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Online fashionLeading online fashion retailer in Turkey with 2,000+ brands and 10million + users

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Private shopping club & celebrity

From private shopping club to e-commerce vehicle

Largest online fashion retailer in MENA

Operates across Turkey, Australia, Ukraine, Korea, Greece, Poland

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Online food delivery & grocery“Food Cart”3 million customers and 9,000 member restaurants in Turkey and CyprusCEO shared his windfall with 114 employees –gave them $237k eachBought by Delivery Hero of Germany for $589M

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Adopting Digital

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Burberry brought the brand vision to life through a connected on- & offline experience

• Cohesive customer experience• Upgraded all stores to become live

versions of the website• Digitalized to engage with Millennials• Allocated 60% of the marketing budget to

Digital media• Created 3 new departments: Insights &

Analytics, Social Media and Mobile• Brought the creation of social media

content in-house• New products would be first launched

online and only after that via traditional media, such as billboards

• Retained its heritage2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

716 743 850 995 1,202 1,185

1,501 1,857 1,999

2,330 2,523

Global Revenue, (in GBP million)

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HSBC has moved into the digital space more aggressively than almost any other bank

“How do our consumers want to engage with their

bank?”

“We’ll judge that in the advocacy of the brand and

recommendation.”

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Tesco is the largest online grocer in the world

Revenue % of online UK market

≈£1Bn 10%

Revenue % of online UK market

≈£5Bn 50%

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Adoption of digital in fmcg is more difficultProduct rangeCocktails & recipes“Good times”

Product rangeGrooming tips & Online videos

New products

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Adopting digital in Turkey

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Adoption of digital to win nationally

Leader in Turkish market

Diversified and international portfolio

Embraced implications of digital across its businesses

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Adoption of digital to win internationally

Voted Europe’s best airline 4 years in a rowMore destinations than any other airline with 270+ destinations

Reservations Bookings

Baggage Tracking

Check-In Timetable

Car Rental Hotel Reservations Pay & FlyRewards

Flight Status E_Tickets

Customer Relations

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The digital challenge

A C A S E S T U D Y I N B A N K I N G

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Digital is just another cycle in the innovation of banking

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• Digital innovations in banking industry created new markets that carry opportunities as well as threats for well established players…

• … but this is nothing new

• However, banks are pressing ahead with digital plans not only to win customers from their immediate rivals…

• … but also with an eye to the potential threat from Apple, Google and other tech giants.

Source: FT, BBA report

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But the size and speed of change is striking

28Source: FT, BBA report

-10 0 10 20 30 40 50 60 70 80

-4

-3

-2

47

63

70

Negative Positive

Recent dealings with your bank:

..how enjoyable were the interactions you had

..how effective were they at meting your needs

..how easy was it it get your banking tasks done

18-24 25-34 35+

20%

30%

21%

Share of UK customers who would consider using a pure digital bank

Visits to bank branches

DOWN -30%

Telephone banking

DOWN -5%

Online Loans

50% SHARE

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Banks have to keep adapting the way in which they adopt digital

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LIFE STAGES OF DIGITAL CHALLENGE

1. Technology-led cost reduction plays

2. Digital as a tool for service and sales

3. Digital as a way of offering tailored, relevant experiences

4. Findings the right balance

Source: BBA report, Bain & Co report

Customers who interact with their banks through both digital and physical channels are:• more engaged• more loyal• more likely to hold more products

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Digital is an opportunity as well as a challenge

30Source: ThisisMoney, 2014

Consumer trust is driven by category norms

And is still far more likely to reside in established businesses

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The future

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Disruption of digitalAn imminent launch in the UK b2c market:• Fair and transparent, that acts in the best interest of its customers• Technology that makes life easier and puts you in control• A bank that is run for the benefit of its customers rather than for itself

SME-focused challenger bank :• Traditional banks failing to increase lending to SMEs• There is growth - but it’s all going to internet banks

• Similar mindset

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The Future?

Most categories are not fundamentally disrupted

Most categories that are disrupted continue to deliver the same products and services

Digital companies are there for the benefit of the consumer

Digital results in a far more customer-centric business model

But they may be disintermediated

But they are accessed in a new way

Not the benefit of the provider

This is an existential challenge for businesses that do not want to change

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THANK YOU