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Low friction brands

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?

 

 

 

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Brand marketing: From media to capability 

The facades of empires always look most impressive just before they fall.

The same goes for industrial giants and even whole industries.

The Roman Empire didn’t disappear. Neither did the British. But the centre of power in the world shifted, first chaotically, confusingly and then all of a sudden when the fog of revolution cleared.

Newspapers haven’t disappeared. Record labels haven’t disappeared. But there was a storm of change, a half-decade or so of intense uncertainty in each industry as it was ravaged by digital disruption. And then… new power structures and new masters emerged.

Media companies won’t disappear either, but their place at the centre of the brand marketing system is ending.

To Google and Facebook the advertising revenues, away from the media owners, at an expanding an inexorable rate. To automation and in-house teams and consultancies go the muscle and the influence once held by the media buying agencies.

Image result for scott galloway google and facebook advertising revenue chart

Image: Scott Galloway/L2Insights

The CMO’s closest advisor ten years ago, maybe even five, would have worked for a media agency. Now, it could be a chief digital officer, a management consultant, a creative technologist, even an author or similar species of seer.

The new order has yet to emerge, but the days of the media agency as the centre of the brand marketing system is ending.

Little by little. Then all at once.

The levers that improve the fortunes of a brand – its awareness among target consumers, their proclivity for it at the right moment – are more complex now because consumers are changing their media habits and the way they find and buy things they want. The big lever you used to pull was called media.

Now, as things move faster and more unpredictably, brands want the tech and the know-how to be closer to home, something they can call on in the moment, without a day rate or delays. In-house.

What makes the difference in a global brand marketing organisation isn’t the ability to pull the trigger on media – it’s the capabilities to think and act at the speed of the digital consumer. Capability – from technical and data know-how to a digital mindset – more than media muscle alone, is what will set leading brands apart in the coming decade.

Marketing, then, is moving from media to capability as its focus.

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advertising Public notebook

“Viral”

Nice idea from AXAPPP – Twitchoo – a map of how colds and other ailments are spreading across the UK.

A much more basic variation on the insight that Google had a few years ago – that the number of people searching for certain terms can predict where cold and flu outbreaks are about to occur. You can see that data at Google Flu Trends – although weirdly there is no UK data specifically available. Could this be because it has more commercial value there – advertisers willing to pay to know where they should be targeting their advertising and supply chains?

Although, given how many colleagues have been buffeted by colds over the past week, I’m surprised that East Sussex has “No Tweets” on their map today…

Ember

:: Also trying out embedding a Getty Images pic at the head of this post, since the firm launched this feature this week. Nice idea, although I do share the concerns of some about “link rot” that can happen when embedded content is changed or pulled.

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Poor old advertising

 

Nationwide

Image: Are brands are looking tatty?

The Economist asks us to “spare a thought for the poor admen”, whose industry is suffering “a difficult time”:

Not only are they confronting a proliferation of new “channels” through which to pump their messages; they are also having to puzzle out how to craft them in an age of mass scepticism. Consumers are bombarded with brands wherever they look—the average Westerner sees a logo (sometimes the same one repeatedly) perhaps 3,000 times each day—and thus are becoming jaded. They are also increasingly familiar with the tricks of the marketing trade and determined to cut through the clutter to get a bargain. Scepticism and sophistication are especially pronounced among those born since the early 1980s. A study by the Boston Consulting Group found that 46% of American “millennials” use their smartphones to check prices and online comments when they visit a shop.

None of this will be news to readers of this blog. The article is a collection of more or less accepted insights about the way that marketing is working.

A shift from promotion to product.

A focus on “what you do” as the best way to influence “what others say” (as opposed to the advertising-first way of “what you say you do”.

The opportunity lies somewhere between the agency and the management consultancy in all of this – both are moving into the other’s turf. More on that later…