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Brands WTF?! Why you need to rethink your approach to brand building

Where do brands fit into a digital world running on algorithms, data and fast sales? Do consumers even care about brands anymore? Matt Mee muses how brands need to rethink their messaging tactics to keep connecting with consumers.

Marketers have always had a hard life. Their teams are under constant pressure to deliver immediate sales while simultaneously building their brands to create value for the future. They’re taught to chase sales now, margin for the long term. But while that ask has been the same since the dawn of time, it’s becoming harder to find the right balance.

Traditionally, the right balance between brand and response was thought to be around 60:40. In their 2011 report, The Long and the Short of It, advertising gurus Les Binet and Peter Field argued that the bulk should be assigned to boosting the brand in order to drive conversion in the last stages of the purchase journey.

But this thesis might have run its course in the digital world as marketers battle with new technologies and behaviours that threaten to nullify their brand’s voice. From voice to e-commerce, and AI to passive selection, many consumer decisions are now being automated – and that’s bad news for advertisers.

Consumers are increasingly giving brand choice over to algorithms

To survive, marketers will certainly have to optimise their messages for these new channels, but that doesn’t mean the future will just be about price and function. Not least because most companies have a huge intangible for brand value on their balance sheet.

Instead, brand thinking, econometric research and, quite frankly, human desire (and irrational behaviour) all indicate there will still be a huge space for brands to thrive in – but only if marketers can find the right balance between brand and response, and the right triggers that encourage consumers to ask for them by name. To begin understanding what that balance looks like, marketers first need to assess the challenges happening around them right now.

Below: Digital gurus
While many traditional brands are facing new challenges, not everyone is struggling. As WPP’s brand ranking study BrandZ tells us, the combined value of the world’s top 100 global brands actually increased by 152% between 2005 and 2017. But there’s a sharp trend here: Seven of the 10 most valuable brands in the world are now technology and digital companies. Many of the top 100
weren’t even on the list 10 years ago.

Challenges of the present

In recent years, many brands (at least those born in the non-digital world) have experienced slow growth due to macroeconomic factors in the biggest CPG markets (from the US to Europe). Meanwhile, the short tenure of brand marketing roles (currently just 42 months in the US), coupled with constant pressure on costs and a focus on short-term tactics, have also reduced marketers’ focus on longer-term brand building.

But there’s an even more worrying problem at play: changing technologies, which are impacting how brands communicate. As J Walker Smith, Executive Chairman of Kantar Futures writes in The Pivot to Passive, new technologies, such as AI-driven assistants, beacons and (smart) buttons, are taking decision-making away from consumers and prompting more passive purchases.

We need only look at Amazon’s voice-activated Alexa device to see how new tech is pushing brands to the periphery. The prospect of people saying “Alexa, add AA batteries to my Prime order”, rather than calling out a specific brand name, is enough to make any brand owner fearful (especially if they are in a low attention/high frequency or functional category).

We need only look at Amazon’s voice-activated Alexa device to see how new tech is pushing brands to the periphery.

And it’s not just new interfaces driving this new behaviour. Traditional desktop e-commerce is also contributing. If you look at the UK, where 7.3% of grocery sales now happen online, many consumers are already transitioning to ‘passive selection’. Without the serendipity and promotional power of the physical store experience to influence their choices, many shoppers are sticking with what they know. The majority of brands in their online basket remain unchanged from week to week.

Such passive selection is the first step to oblivion for many brands, and what makes matters worse is that for some consumers – and, in some moments – it’s welcome. Lots of us are happy handing decision-making responsibilities to algorithms in many areas of our lives; from playlists to news filters. So, how should brands respond?

Visions of the future

Ultimately, these challenges leave brand-building at a juncture and create two possible visions for the future. One, where brands – especially those in low-interest categories – just give up and let the robot overlords take over. This is a world where brands forget about building long-tail brand value and focus squarely on optimising their keywords, visuals and search terms for algorithms.

The alternative is a world where brands look for new ways to build on the subjective value consumers project onto their products and services – and even prompt it. But in a data-driven world, is such an emotionally-driven approach even possible? Rory Sutherland, Founder of Ogilvy Change, and Vice Chairman of Ogilvy & Mather, certainly thinks so.

His exploration of behavioural economics in marketing argues that consumers aren’t just rational economic beings but are constantly using simple rules of thumb and emotions to navigate thousands of complex decisions.

In Sutherland’s vision, brands will continue to have a role as essential parts of the decision-making process for satisfied consumers. That’s because he argues, it is often the intangible, subjective aspects of a brand that give people pleasure. These are the things that drive the answers to questions like, does Coke taste better than Pepsi? Well, it will do if that’s what you believe. Or is a Mars bar tastier than a Snickers? In the eyes of some consumers, you can count on it.

Algorithms or not, Sutherland suggests, people will always have preferences; the challenge will be working out how to trigger them.

Why you need to rethink your approach to brand building

Building brand icons (in the digital age)

Marketing theorist Douglas B Holt believes he knows how brands can get consumers to demand them. It’s not price; it’s not algorithmic; it’s cultural. In his 2004 book, How Brands Become Icons, Douglas B Holt argues that the most valuable brands are those which aim higher than just promoting their products. Brands, he infers, transform themselves into “cultural leaders” by “successfully responding to historical changes that matter to category consumers.”

Holt cites Coca-Cola, Starbucks and Ben & Jerry’s as brands that, at their peak, were operating at a level far beyond the intrinsic power of their products/services, and more in terms of cultural leverage. Coke, for instance, has long associated itself with sharing and happiness. Its key product isn’t just a sweet, cola-flavoured beverage, it’s a way of bringing people together, exemplified by its tagline “Share a Coke”. That’s a powerful message in any culture.

Of course, promoting such messages at scale and speed is more difficult than it once was. In the digital world, a number of factors have made it harder for brands to reach mass audiences. Media is now fragmented and personalised; it’s dominated by subcultural celebrities, not brands (gamer Dan TDM, for example, has twice as many followers to his YouTube channel as Red Bull); and consumers are generally savvier and more sceptical than they used to be.

Brand purpose is the glue that makes a brand both worthy of cognitive effort and sticky for algorithms

Many brands have sought to address this challenge by standing for something and initiating change: by having a purpose. This is the new glue that makes a brand both worthy of cognitive effort and sticky for algorithms. If a brand or service is not just providing functional benefits but also doing something we support (for example, Pedigree dog food supporting a dog adoption campaign), it adds an important counterbalance to the passive command: “Alexa, add 15 kilos of dog food to my order”.

Consumers will also reach for brands they feel are culturally relevant. Dove’s global ‘Real Beauty’ work, for example, encouraged people to rethink their definitions of beauty; while Ariel’s ‘Share the Load’ initiative in India encouraged men to challenge traditional gender roles in the home. Both campaigns successfully drove sales while building long-term differentiation in (in Ariel’s case, at least) low attention categories.

Both purpose and cultural relevance point to a new role for brands, one that combines both empathy and data (to provide insights and target the message). Tomorrow’s marketing decision makers will look to combine the two to create more modern brands that can cut through the media clutter.

So, what’s the split?

Understanding the new marketing landscape is one thing. Working out its practical implications is another. All marketers need to seriously rethink how they allocate their budgets between driving short-term sales and long-term loyalty.

So we come back to Binet and Field’s simple 60:40 split, with the bulk assigned to boosting the brand in order to make sure it comes to mind in the last mile. It’s a refreshingly simple formula but the truth is more nuanced.

In reality, the split will depend on which sector a marketer’s brands are in, how much they’ve previously invested in both brand and response, their rivals’ positions, and the way their category is evolving the digitisation of the purchase experience.

Our research, in conjunction with human behaviour analysts Sandtable, for example, found that for FMCG at least the amount of response-driven activity should be lower than many currently model (although it depends on the category).

Using amalgamated data from GroupM, we found that only 13% of adults will respond to seeing weekly adverts from razor Brand X; the other 87% are either already customers or don’t use razors. That leaves the segment that can be effectively targeted as 13% (although, as perfect targeting is not possible, the optimal budget split might be closer to 80:20 than 87:13).

Other sectors, even within FMCG, will be different, but the analysis demonstrates that ultimately, there is no ‘one size fits all’ model of brand value and brand building. The simple fact is brands must stop see-sawing between short-term fixes and long-term gains and focus on balancing the equation again. The brands of the future will be able to manage both – and at the same time. It’s marketing multi-tasking for better effect.

This article is taken from BLINK, MediaCom’s media industry magazine. Click to read more content from ‘BLINK #12 – Building the brands of the future‘.

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