Brands & Branding: Will technology kill brands?
by Dr Thomas Oosthuizen (@drthomasbrand) Yes, many. But it will also enable many. I believe today we are all clear that a few key brands have become centre-stage far more so than any brands did before — and far faster.
Google, Apple, Tesla, Uber, Airbnb, Amazon.com, Expedia, Facebook, Instagram and many others became iconic names associated with unique value propositions. If you start or lead an industry, your name becomes synonymous with that value proposition. This is no different from the way in which brands like Ford, Ivory (soap), General Electric, McDonald’s, Bank of America, Sony Walkman and many others defined their categories in their day.
Will technology change all that?
- Of course, brand names like Google define new categories the way others have done before. They do so because they become the generics for the category; without them, the categories would not exist. Hence some even became verbs (“to Google”).
- In other industries, some defined it better than others — in video formats, VHS vs Beta; in software, MS vs Apple; in search, Google vs Yahoo (and a few others). In some, more than one brand is strong, such as Amazon.com and Alibaba. But dominance works, that is, if your desire is to dominate. It did before and it does now.
Yet, in many categories, brands are declining in stature.
So how do you survive as a brand?
If your value proposition is not unique, it will not survive in the long term. In this uniqueness, it needs to offer consumers more. Airlines are under severe threat, many banks, many hotel chains, many fast-moving-consumer goods, many telcos, many retailers, many white goods manufacturers, many media companies, fuel companies and the like — even car brands.
- They will be disintermediated, discounted and redefined by online retailers and others
- Strong focused brands will undermine the weak ones
For the large brands that survive, low costs will drive them. Even the very way technology algorithms work is in their favour.
- Unless their operating models enable them to be most effective in their industries, hence their still being able to make money despite low margins, they will not survive
- Many will be disintermediated and no longer form part of the consumer repertoire. Hence the gap between the large and small will widen. Those caught in the middle will be in the weakest spot, but then that always applied in marketing
Consumer needs first, technology second; now, it’s mostly the other way around
- At the moment, marketing is driven by technologists; either marketers have no idea what to do, believe little will change or are not interested. This is what occurred in the telco industry, which led to huge dissatisfaction with many brands and often very inflexible customer solutions. Brands adopted new technology without thinking, leaving consumers confused, unhappy and disloyal.
- Marketers will need to step-up to create a 60:40 balance. Technology per se is not a solution; what is done with it is. Creativity in value proposition, the entire user journey, insights rather than data only, multidisciplinary teams — all are vital marketing ingredients.
- Marketers will have to work at aligning the business model and all systems, people, and processes around the value proposition.
- Weak brands will die faster with attribution that is better. That is good, as fewer resources will be wasted by companies trying to manage huge brand portfolios, with many of these brands having no future.
Innovation will become far more important
- Consumers will only pay subscriptions to sites, applications, etc, for as long as they remain novel, fresh and add something new all the time.
- This is hard to do, but consumers will not pay licensing or other fees for no incremental value or renewed interest
- This means the brand obsession with meaningless and useless applications, will reduce
Vertical integration is key = consumer experiences must be seamless
- Experience fragmentation with technology is inexcusable; yet, in most companies, this is the norm
- What makes Uber, Trivago or Tesla different? The fact that these brands are conceived from the centre out around a given set of consumer needs. You access, engage, pay, evaluate, all at once. One integrated, seamless experience.
- In a Tesla, the brand does not have to integrate a variety of software systems from a range of suppliers; it starts from one built around a given owner or driver
- Retargeting for some brands has become equally sophisticated. Yet, retargeting for brands such as Amazon.com is so poor that it is the one thing that irritates me about them (they don’t have to be concerned about it because they are so large that, even if small percentages work, it is worth it). For most banks, retargeting is very poor. In a new era, this is inexcusable.
- Similarly, experience breakdowns are unforgivable.
The real, as against virtual, brand experience is vital
- In some instances, the retail experience is so unique, that at this point, technology can enhance — but not replicate it. In future it may, but not yet.
- How do you replicate the Liberty retail store experience? Or fashion store Anthropologie? Or a Lego store? Or Hamleys? Or the underlying excitement of an Apple store? This means retailers will have to also spend more time thinking about real-world experience design. Packaging design. Merchandising. Impact. Tactile factors. Sensory factors. Auditory factors.
Country legislation & trade restrictions will enable some brands to survive
- While this may not be sustainable in a totally open trade world, it will be for as long as trade barriers exist
- Most countries have very strong local brands. The loyalty to some of these is high. Some exploit this well.
Clarity of positioning will be key
- Be visually and in impact, unique
- Be designed well
- “Work” as described
Aim at a particular market only
Have a niche position that offers something the mainstream brands do not.
- Four Seasons and Aman Resorts are unique. Hence, they will attract unique, discerning customers neither driven by price nor discounts.
- Regular hotel chains? Will survive with great difficulty and may face a lot of brand rationalisation, unless culturally they offer consumers a familiar home-from-home experience (such as Americans traveling to China on business may prefer a hotel group they are familiar with to eliminate impracticalities).
- White goods? With great difficulty. There are many others like this.
Can data kill brands? Yes and no
- Yes: when brands are not unique, accurate targeting will be stronger than the weak brands in many categories. Hence, where price is more important than brand preference, brands will not survive unless they design their businesses to operate differently.
- Yes: to establish a much-stronger relationship between consumer and brands, the ones that do it best will survive.
- Yes: good attribution will cull weak brands fast.
- Yes: to offer more-seamless brand experiences and fewer experience breakdowns will require a lot of work most brand owners will not succeed at.
- Yes: where technology enables brand switching through geolocation, better available data, AI, etc.
- Yes: where category management enables manufacturers to shift brand preference away from unprofitable brands.
- Yes: when user journeys are purely generic as against unique. Once all are the same at the level of technology, differentiation will matter.
- Yes: when companies cannot use their data well or do not understand how to adapt their organisations. Sadly, this applies widely today.
- Yes: when companies acquire the wrong technology, become vendor-driven or remain fragmented.
- No: where technology is implemented in a way that makes a given brand unique, not just in the generic way all other brands does it.
- No: when brands are designed around consumers and the business model has adapted accordingly. When companies put the effort in to ‘live’ their differences.
- No: when company cultures align with the new reality.
- No: when marketing is still impactful and creative.
- No: where brands are unique. Data can enable greater experiences through better targeting and insight.
- No: where brand design (“look and feel”) supersedes everything else, as in watches, unique furniture, fashion, and accessories.
- No: where the technology IQ of a brand is high. Brands that ‘work’ better will prevail in some categories and smaller segments of the market. They may become even more profitable exactly because they are unique.
- No: where the brand relies upon tactile or other similar factors to express its uniqueness.
The bottom line for me is that brand owners will need to think much harder about a post-technology future. To simply assume you ‘own’ a brand is not enough. The odds against you are greater than the odds for you. Over time, many brands owners will discover they never really owned a brand because it was never unique in any way. Circumstances made it possible for them to survive (as with some airlines dominating certain routes or tourists to foreign countries preferring their local chains). It will also force more-informed brand decisions, from designing the products or services or to marketing them.
Dr Thomas Oosthuizen (@drthomasbrand) is head of strategy at Draper Gain Investment in London, a marketing technology company that consults to major multinationals across five continents. He has a track record of major brand achievements and has worked on projects in 25 countries during his career. He published ‘The Brand Book: How to build a profitable brand — fast, effectively and efficiently’ in 2013. Over the years, he established himself as a thought leader within the brand space and more recently, in the debate about the impact of marketing technology upon consumer centricity, customer engagement, new business operating models and brands.
The article first appeared in the 2017 edition of Brands & Branding in South Africa, an annual review from Affinity Publishing of all aspects of brand marketing — consisting of case-studies, profiles, articles and research — which may also be accessed at Brands.MarkLives.com. Order your copy now!
— One subscription form, three newsletters: sign up now for the MarkLives newsletter, including Ramify headlines; The Interlocker, our new monthly comms-focused mailer; and Brands & Branding, launching soon!