We used to wonder about the future of advertising in brand marketing – now we are wondering about the future of brands themselves.
In his book about the tech giants of the 20-teens, The Four, Scott Galloway casts Google and Amazon as threatening the very existence of traditional consumer brands:
The insights into consumer behavior Google gleans from 3.5 billion queries each day make this horseman the executioner of traditional brands and media. Your new favorite brand is what Google returns to you in .0000005 second.
Galloway is nothing if not a master of the pithy line – but he backs up his argument with data:
the cost of customer acquisition continues to rise as consumers’ loyalty to brands erodes. You have to keep reacquiring them. In 2004, 47 percent of affluent consumers could name a favorite retail brand; six years later that number dropped to 28 percent. That makes pure e-commerce play increasingly dangerous. Nobody wants to be at the mercy of Google and disloyal consumers.
Of the thirteen firms that have outperformed the S&P five years in a row (yes, there’s just thirteen), only one of them is a consumer brand—Under Armour. Note: it will be off next year’s list. […] Amazon, armed with infinite capital provided by eager investors, is leading a war on brands to starch the margin from brands and deliver it back to the consumer. Death, for brands, has a name … Alexa.
There is supporting evidence for this view in the synchronised slump of Publicis and Unilever shares. The brand-media-advertising complex is looking shakier by the passing week.
At the consumer end of things, take a look at the rise of new consumer tech firms, described in a New York Times article this week – The Hidden Player Spurring a Wave of Cheap Consumer Devices: Amazon.
When you sit in an Uber in Brighton or a Didi in Beijing you will see evidence of this – $20 dash-cameras, car gadgets, at least two smartphones – all costing in total less than the ridiculously high-end luxury UX and glass luxury that might be your iPhone X.
Because of its scale and relative lack of interest in profit – the manufacturers and the consumer are connected by Amazon without it feeling or acting like a middleman in the transaction.
Allen Fung, a general manager at Sunvalley, which owns several upstart consumer tech brands explains that this isn’t about cheap, low quality tech:
It’s not a race to the bottom,” Mr. Fung said. “Sellers are forced to create better products at lower pricing, and sellers who aren’t able to do that just get weeded out.”
Competing and winning on Amazon means more than just cheap though – good customer service is essential part of the equation.
Mr. Fung recently spent a couple of hours providing an in-depth look at how he manages his company’s brands on Amazon. To win a certain product category — portable chargers, say, or children’s night lights — the company is obsessive about monitoring customer feedback, including the rate at which its products are returned. Sunvalley recently hired a team of customer service agents to respond to complaints. It has also hired industrial designers to improve the look of its devices — which also helps it stand out from other commodity devices on Amazon’s results page.
I find these brands, such as Anker to be ones that only really come into my consciousness when I’m looking for something on Amazon. They carry little cachet or style but with their reviews to back them up they are like cousins of the Amazons Basics range – as cheap as it gets but definitely reliable.
Perhaps we can call these low-friction brands, or the children of Amazon. The brand is built in the substance not the surface of their offer. the friction is low, because the investment in “brand” is limited to a logo, a name and a focused customer experience from purchase to product to support.
They are cutting out advertising and branding costs to lower cost and increase value to the consumer. Low-cost used to mean poor quality and zero customer service – because of the power of transparent reviews on Amazon, low-cost means a complete focus on what customers actually want.
Is this a new mode of branding, a utilitarian subset, or a glimpse of a future where brands are what Google Home or Amazon’s Alexa tell you are the best for whatever you need in that moment?