For thirty years now, I’ve been consumed by the craft of building brands. Part art, part science, part gut decision making, the process of creating a brand has been a sought-after skill by many companies since around 1842, when the nation’s first two advertising agencies were founded, one by a Philadelphian named Volney B. Palmer, and the other by a New Yorker named Jon Hopper. Since that time, brand building has grown in importance because the world’s most valuable brands have become massive, stable assets for their corporate owners. According to a recent Forbes magazine article, the Apple brand is now worth $154 billion, up 6% from last year. The Coca Cola brand is worth $58 billion, up 4%. And the Amazon brand is worth $35 billion, up a whopping 25% since 2015. These are all incredibly valuable assets that often comprise a large percentage of the brand owner’s total market capitalization. Apple’s market cap is around $580 billion, so it’s brand, worth just over a quarter of its total market value, is the mighty asset that drive’s Apple’s business. Owning a valuable brand is probably even more important for a small local business, like a restaurant, because fluctuations in its business, caused by a knock to its brand, are more likely to have an immediate and meaningful impact on the lives of its owners than a few percentage point change in the value of Apple will have on its shareholders.
Lately, I have been considering the state of brands and their importance in today’s world, and how they will fit into the business landscape going forward. It’s true that they will remain a big asset opportunity for companies (because great brands offer the promise of future revenues and enhanced profit margins), but the way and speed at which they are created, and the volatility in the value of these brand assets is changing before our eyes. As a result, I have steered many of my clients away from investments in traditional “brand building” activities in favor of tactics that build transactions with consumers in hopes that a positive experience with the product or service will build brand advocacy. That way, they can let consumers tell their brand story and facilitate an increase brand value. This is a relatively new (and, ironically, very old — word of mouth used to be a key to building brands before the creation of electronic media) approach for most brand marketers and consultants to take, and in many cases it requires us to develop new competencies and continually update our knowledge of the new marketing and data tools that seem to emerge every month. But with consumers having so much control over the conversation, staying ahead of the game is imperative. In many cases now, we have become, at worst, interested spectators in the creation of our brands, and, at best, trusted moderators of the brand conversation, a scary reality for marketers used to being in control in either case.
Since the advent of the internet and e-commerce in the mid-1990’s, the job of building and maintaining the value of a brand has gotten a bit trickier — better in some ways, harder in others. With the proliferation of online media and distribution channels reaching epic proportions, and consumers now having the ability to instantaneously voice their opinions and feedback about brands, the speed at which a marketer can build a brand has never been faster and the margin for mistakes or failure never more thin. It’s probably why CMO tenures are so short. Consider this: if Zappos, a trusted shoe and fashion e-tailing brand changed their name overnight to Blazitt, and they still had the same service and selection of merchandise, would it materially change their business? Within minutes, the news of the name change would be all over the world, and customers would be notified of the change, but the great selection of merchandise, pricing and customer service would remain unchanged, and business would likely continue as usual. Okay maybe it would not be quite that simple and smooth, and some loyal customers might be skeptical until they have a few transaction experiences with the “new” brand, but it wouldn’t nearly be as risky to make that name transition as it would have been in a pre-digital marketing ecosystem world, a world where the ability to communicate one-on-one, to mine online behavioral and purchase data, and to instigate instant transactions takes precedence over the slowly methodical relationship and trust building process historically required to build a lasting brand. In fact, with effective SEO, data mining and media planning, companies can enter the market with a purely transactional/product offer model, make millions and disappear before most consumers have ever heard of them. And this happens every day online. I’m always amazed at all the people I meet that are making millions and millions of dollars selling something – a “no name” product – that I have never heard of before. And I track A LOT of business categories through my work.
So as brand and business builders, our landscape has changed dramatically and the questions we ask when approaching the business growth and development process need to change as well. Consider these questions before planning your next brand marketing effort:
- Do you control you own distribution? If you own your points of distribution, focus your energy and dollars on offering the best products, building traffic and exceeding customer expectations. Those actions yield consumer advocacy and “brand fans” who will increase the value of your brand by reputation over time.
- Do you have direct access to a significant audience of proven buyers? If so, talk to them about how your product meets their needs better than any other brand’s products. Differentiate. Offer trial incentives (and not just for one trial, but for three or four trials to gain preference and loyalty). Remember, you didn’t have to spend lots of money finding these consumers, so spend it on winning them over and keeping them. Brand loyalty will create brand value.
- Are you innovating or entering a mature category? Offering a new solution to an existing consumer need creates its own curiosity with prospective buyers. Consumers will seek you out to solve their problem. So spend on SEO solutions, building trial and delivering satisfaction and a great brand experience. Brand value will follow.
- Are you planning to be in business for the long term (and define long term) or short term? Some businesses aren’t looking to build a brand at all. They want to build a steady stream of repeated product or service transactions for a finite period of time (think HSN or QVC). If you have a product that is a fad or will have a suspected short lifecycle because its novelty or uniqueness will wear off, spend on traffic building and incentivizing immediate purchases. Forget the brand, because by the time you build one the product will have no demand. And capture consumer data with each transaction – it could be the most lasting asset you create in this scenario, and fuel your next venture’s revenue engine.
The world has changed and with it, the way marketers need to think and act. As someone once said, “if you’re not moving forward, you’re moving backward”. Let me know your thoughts and stories related to marketing in our brave new world…
Recent Comments