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Growth in ‘brand value’ of Canadian firms slowing

Lululemon Athletica placed ninth on the list of Interbrand's "Best Canadian Brands" report.

Fred Lum/The Globe and Mail

The value of Canadian brands may be slipping.

That is one cautionary note in a new report from Interbrand Canada, a consulting firm owned by advertising agency holding giant Omnicom Group Inc. The "Best Canadian Brands" report comes out every two years and is one attempt to attribute a monetary value to something that can seem intangible – branding and marketing.

But among the changes in its list of the 25 top brands in the country is a troubling trend: In 2010, overall growth in brand value of the top 25 was 53 per cent compared to the previous report. In 2012, growth had fallen to 27 per cent. This year, values were up just 4 per cent over all.

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Partly, that's attributable to some big struggles: BlackBerry, a former strong entrant in the ranking, has fallen off the list altogether, and the brands that have been added have not compensated for that. But there are bigger questions as well.

"It's an interesting discussion: Are we doing enough with brands and investing in the right things?" said Carolyn Ray, managing director of Interbrand Canada.

There is something else at play as well: In global lists of the best brands, growth is being driven by tech companies. But the Canadian tech companies big enough to make a dent among other household names – BlackBerry for example, and Nortel earlier – have fallen off the map.

"The growth in the best global brands list has been driven by technology," said Nicholas Lakas, Interbrand's director of strategy. "What we're seeing is that on the Canadian table, we don't have those brands that are coming out and establishing a consumer presence."

How it's calculated

Interbrand includes brands on the list that have Canadian origin (even if the brand itself has since been acquired by an outside company. Winners is a good example). They must be profitable, and have wide public profile. Financial information must be publicly available and attributable to a brand. Privately held brands are ineligible.

Interbrand calculates brand value by estimating after-tax operating profit and subtracting opportunity costs to create a five-year financial model for each brand. It then considers how much of a role the brand plays in consumers' decisions to buy as a percentage. That shows the earnings attributable to a brand. Finally, Interbrand measures brand strength, or the likelihood of consumers as well as people inside the company remaining loyal to the brand.

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The Top Ten

1. Toronto-Dominion Bank

Brand value: $10.8-billion

2. Royal Bank of Canada

Brand value: $10.5-billion

3. Thomson Reuters Corp.

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Brand value: $8.3-billion

4. Bank of Nova Scotia

Brand value: $7.7-billion

5. Tim Hortons Inc.

Brand value: $3.9-billion

6. Bell Canada

Brand value: $3.3-billion

7. Shoppers Drug Mart Corp.

Brand value: $3.2-billion

8. Rogers Communications Inc.

Brand value: $3.2-billion

9. Lululemon Athletica Inc.

Brand value: $2.9-billion

10. Telus Corp.

Brand value: $2.9-billion

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