Microsoft and GE: not old & in the way

The annual Breakaway Brands survey of brand momentum has these two lumbering giants in the top ten.

By Matthew Boyle, Fortune writer

(Fortune Magazine) -- Big blue-chip companies like General Electric and Microsoft do many things well, but showing up on lists of the hottest brands is typically not one of them. Yet these two lumbering giants both made their way onto brand consultancy Landor Associates' annual Breakaway Brands ranking - a comprehensive survey that measures consumer sizzle over a three-year period.

The study, shared with FORTUNE for the third year in a row, is not a measure of brand awareness but rather brand momentum (think BlackBerry rather than Budweiser). From 2003 to 2006, according to the researchers, both GE (Charts, Fortune 500) and Microsoft (Charts, Fortune 500) shot up to a degree that outpaced almost all of the 1,500 other brands surveyed (the No. 1 spot went to discount retailer T.J. Maxx).


How did these dinosaurs earn this kind of buzz? Microsoft's rise in brand stature is due to several factors, experts say. Releasing more consumer-friendly products like its game console Xbox - despite repair glitches earlier this year with the Xbox 360 - give it cachet that office-related brands like PowerPoint and Word, however dominant, just don't deliver. (Landor does branding work for Xbox, the only brand on its list it currently advises.) The work by the Bill & Melinda Gates Foundation, too, has had a positive effect on the brand's image.

Also helping the company's case has been the perception of a kinder, gentler Microsoft. Steve Ballmer may be loath to admit it, but the company's image as a fierce, rapacious monopolist has faded, especially as new corporate bogeymen like Google (Charts, Fortune 500) and News Corp. (Charts, Fortune 500) are throwing their weight around. "[Microsoft] comes off as an underdog even though it is a behemoth," says Michelle Roehm, associate professor of marketing at Wake Forest University's Babcock Graduate School of Management.

General Electric's improvement is attributable almost entirely to its environmental efforts. The company's highly visible "ecomagination" campaign aims to more than double its annual research budget for cleaner technologies - like energy-efficient refrigerators and wind turbines from $700 million in 2005 to $1.5 billion in 2010.

Last year those research efforts generated $12 billion in revenues from 45 products and services. "They are trying to turn that entire ship into the ecovessel of the future," says Hayes Roth, chief marketing officer of Landor, a subsidiary of WPP Group's Young & Rubicam.

So how do you measure a brand, anyway? Landor, working with New York consultancy BrandEconomics (a unit of Stern Stewart), tapped Y&R's BrandAsset Valuator, a database of responses from 9,000 consumers evaluating 2,500 brands across 56 metrics, to ultimately come up with a "brand strength" value for each firm. Some brands were excluded, like nonprofits and media firms with their own distribution channel (sorry, Yahoo (Charts, Fortune 500)). The remaining brands were ranked by percentile growth of their brand strength; BrandEconomics then calculated the financial contribution brand heft added to the market value of each company.

As for the other names on the list, there are brands you would expect to see, like iPod, as well as a surprising trio of retailers. Shopping at Costco and T.J. Maxx is a treasure-hunt experience, which helps create an emotional bond with consumers, says Dan Stanek, EVP at consultancy TNS Retail Forward.

With consumer confidence headed south, those bonds will be tested in the months ahead. But Roehm, for one, has faith: "These brands are important to us no matter how fat our wallets are."  Top of page

Brands on the Run
Because it measures brand momentum over a short period, Landorís Breakaway Brands survey churns out an almost entirely fresh list of names each year; in its 2007 ranking, only iPod returns.* ìValue gainedî is the financial contribution each brand added to its companyís bottom line.

Value gained
(in millions)

How they did it
1. T.J. Maxx $697 Expanded clientele with higher-end jewelry offerings
2. iPod $7,842 Kept the hits coming with sleek new video models
3. BlackBerry $4,933 Transformed glitchy business tool into must-have device
4. Stonyfield Farm $61 Maintained organic street cred despite sale to Danone
5. Samsung $4,282 Created communities for fans of its TVs and cellphones
6. Costco $3,409 Took treasure-hunt shopping experience to the web
7. Propel $249 Fitness water brand added calcium-enhanced line
8. Barnes & Noble $283 Lured families with play areas and Starbucks coffee
9. General Electric $7,579 Eco-friendly product push started to pay dividends
10. Microsoft $5,462 Xbox gave the company valuable consumer buzz
* Landor Associatesí Breakaway Brands for 2006: 1. iPod, 2. Viking, 3. Converse, 4. Robitussin, 5. Best Buy, 6. Kohlís, 7. Frenchís, 8. Geico, 9. Dove, and 10. eBay