Brands Aren’t Dead, But Traditional Branding Tools Are Dying
February 15, 2014 Editor 0
Back in the days when the internet was young, many believed that as it grew brands would become a thing of the past. Leading information economy thinkers propagated this view, including Carl Shapiro and Hal R. Varian, who published the highly influential book, Information Rules, in 1999 (Varian is now chief economist at Google). The book predicted that the power of brands would shrink as people had access to more and more free information. This has clearly turned out to be wrong. In fact, the web has become dominated by, yes, a few big brands.
Still, the notion that a bigger world wide web means smaller brands is surprisingly resilient. Most recently Stanford professor Itamar Simonsen and author Emanual Rosen have argued in their new book Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information and in their recent blog post here that marketers need to reevaluate the idea that brands are critically important in consumer’s purchasing decisions. They claim: “…brands are less needed when consumers can assess product quality using better sources of information such as reviews from other users, expert opinion, or information from people they know on social media.”
The case for the decline of big brands follows a strikingly clear logic: The primary role of a brand is to make it easier for consumers to choose which products to buy. If consumers have immediate access to information that helps them make those decisions such as user reviews and expert opinion, the value of a brand will fall. Proponents of this theory point to the explosive growth of the mobile web as compelling evidence. It’s undeniable that we are not far from a future where most Western consumers have instant access to the accumulated mass reviews of every product that Simonsen and Rosen describe.
But this doesn’t make the “death of the brand” theory any truer than it was 15 years ago when Varian and Shapiro put it forward. In fact, the exact opposite is true. As digital disrupts more marketplaces, brands become more important and more valuable. Take a look at the various brand rankings: Digital brands such as Apple, Google, Microsoft, IBM, Intel, and Samsung are in the top 10 of most rankings. This is not because the likes of Coca Cola, McDonalds, and Mercedes have become less valuable. The digital brands have just turbocharged past them. If brands are truly unimportant in a digital world, why is it so brand dominated? Why do so many people choose Google search over Bing when only experts can tell which has the most accurate results? Why has Apple become the most valuable company in the world with over-priced products and inferior functionality?
Because brands still matter immensely. The mistake Simonsen and Rosen make is to confuse the value, role, and meaning of a brand in today’s digital economy with the methods used to build the brand. What sets the Googles and Apples of the world apart from older brands is how they’ve built their brands. Google has hardly spent anything on traditional advertising (although the company wisely, as all its profitable revenue comes from advertising, doesn’t brag about it). Instead, the company has kept the brand meaningful and relevant to people’s lives through free services and cool ideas. Apple relaunched the brand with the ad campaign “Think Different”, but has since withdrawn from image-building ads and kept a much smaller marketing budget than peers, focusing it brand efforts on creating an insanely well-designed, holistic product experience. The company’s advertising is limited to boring product shots.
The role of a brand is—and never was—just about solving an information problem. It’s about providing meaning and satisfying emotional needs. These fundamental human needs have not changed. To the contrary as consumers experience information overload, there might be a tendency to gravitate toward what’s known and comforting. Sure, disruptive digital services explode and take over the world in an instant, but to go from being a popular service like Pinterest and Whatsapp to a brand that commands a proper price premium is still a long road.
So instead of discussing “brand versus not brand” marketers and executives should ask themselves: How can we strengthen our brand when the traditional tools such as advertising, corporate identity programs, and PR are becoming impotent?
Part of the answer is in making the brand more—not less—central. In a hyper-transparent digital world, consumers instantly know the difference between what a company says and what it does. Organizations can no longer draw clear lines between marketing and product development, between communications and services. Brand builders must embed themselves across the customer value chain. Products and services must be able to tell a story and communicate value without an extra advertising layer on top. As information is more and more available and the importance of brands increases, the ability to tell a meaningful story through actions and products, not words, is the only way to win.
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