Brands: A Shrinking Advantage or Shifting Advantage?
Umair Haque writes today about the Shrinking Advantage of Brands. Cheap interaction, he says, is "driving the strategy of branding into decay".
Huzzah! Haque echoes a number of the things that form the basis of our mission to remake the way marketers think about marketing. In doing so, however, he seems to throw the baby out with the bathwater. If the mechanisms for building a brand are changing, does the value and advantage of a strong brand necessarily implode as well? If consumers have more of a role in determining the relevance and meaning of the brands that they love (or hate), does the fundamental importance of these brands as repositories of perceived value go away?
With cheap interaction now available to all, isn't the need for a brand stronger than ever? With all of the market noise that accompanies cheap interaction, how else can a provider of goods and services identify the specific ways that they differentiate their value? How else can customers, partners, employees and other stakeholders identify and respond to the firms that they interact with? Brands today are more relevant than ever because they are more volatile. For the Googles out there that have built multi-billion dollar brands in breathtakingly short time periods, there are many others that have lost value due to a failure to live up to the promises made to their markets (think Kodak, GM, AOL, Motorola, Sears). This is less a failure of the brands than it is a failure to deliver on those brands.
Haque makes a fundamental error that most people (including many seasoned marketers) make; he conflates "branding" with "advertising". Yes, in the industrial era interaction was expensive, communications channels were limited and awareness of a product or company was the critical challenge facing marketers. However, in today's world of cheap interaction, mass media advertising is still the primary mode of brand-building. This has a lot to do with market inertia, the influence of major advertising conglomerates and fears about messing with the orthodoxy of the 30 second spot. No CMO wants to have to justify a reallocation of massive advertising budgets, even thought far more cost-effective brand-building channels now exist.
Marketers need to redefine their roles and the process of how they build brands. This will require moving away from the advertising-dominated paradigm that proven so difficult to shake. It will also mean breaking down the wall that currently exists between marketers and product developers, so that together they can hear the marketplace and respond to its calls for new kinds of value. The most innovative leaders out their will be able to pull it off, the others can look forward to clever advertising campaigns which do nothing to bolster their weakening brands.
HTC, Brand of the Year 2008
We live in an era of phenomenal brand volatility. No brand is beyond these accelerated brand value cycles. The upward swings can be tremendous as can the death spirals. Epic Cinderella stories like Apple's never fail to amaze and smaller, more nuanced dramas are being played out daily.
In this context there is always a brand that is ready for a breakout. A brand that because of a combination of factors seems uniquely positioned to redefine a market in its own image.
In 2008 this brand will be HTC.
HTC has quietly been making some of the best smartphones and PDAs in the market for the last 10 years. Most notably, they have been the leading manufacturer of Windows Mobile phones and Cingular/ATT's line of branded smartphones.
Recently HTC has been bringing its marketing into line with its standards of product excellence. They cleaned up their brand and are doing a good job of making sure it had a place on all of the devices they create. They even put a toe in the murky waters of advertising. Work is needed on the approach to product naming (which is a bit of a mess) but HTC will figure this out.
Of course, the brand drivers that will propel HTC to breakout in 2008 will not be found in its media plan. HTC understands that every great value proposition is built around real value. The company has led the handset industry in a number of arenas:
- Partners -Google, Microsoft, AT&T. Enough said. Look for HTC to extend its brand partnership competency to a range of product brands a la what LG and Samsung have done with Prada and Armani.
- Product Design - The company consistently puts out the broadest range of innovative handsets, hands down. And its not just about hardware; the interface work that they have done with TouchFLO is world class. HTC's ability to integrate the design of software and hardware puts them in a market-leading position.
- Goodwill - HTC's branding story is most impressive because it has not been built using traditional marketing techniques. Instead HTC has consistently provided value to partners, developers and customers and this consistency has created an enormous amount of goodwill with influential industry watchers such as Engadget and the Boy Genius.
Dead Brand Walking
Last weekend I was walking through Washington's Union Station when I saw the Palm Store and decided to pop in for a visit. It's hard today to remember just how innovative Palm was during its mid-90s heyday. Also difficult to reconcile the tepid offering on display at the Palm Store with the, revolutionary spirit of the original Palm Pilots. Just after Apple failed with its Newton handhelds, Palm brought a device to market that was simple to use, elegantly designed and, most import of all, unlike anything else.
These days, Palm can't get a break. Earlier this year it squashed its Foleo product before ever bringing it to market. The stock price has fallen by 2/3 since that announcement. On Friday, the company announced that it would miss earnings expectations because of certification delays with a new product (likely the "yawn-worthy" Treo 755p for Verizon Wireless). As is the way with these things, even the good news is bad news; Palm's budget-minded Centro has been selling well, but its slimmer margins have further hurt the financial picture.
Trying to think about what I would do with Palm is a challenging thought experiment. The company is surrounded by a mean gang of competitors, both for business customers and consumers. It's clear that in order to survive, Palm needs to make some quick decisions on what its going to be...the company no longer has the luxury or the scope to be a broad-ranging player.
Centro's positioning as an entry-level smartphone is not a bad one considering the space. However, it will need to do more than simply be a Junior Treo if it is to compete with the Sidekicks, Helio Oceans and next gen iPhones.
One difficult decision (that should have been made two years ago) is the OS. Consumers are not willing to make handset decisions and operating system decisions separately, nor should they be. Job one: figure out which operating system to go with (Win Mobile, Palm Garnet or Linux) and stick with that decision.
All hope is not lost. The Palm brand still has some gasps of life in it and in today's short-memory marketplace, product innovations trump all else. The company's record of waffling and making really stupid decisions doesn't give a lot of hope, but perhaps the smart folks at Elevation Partners can bring in some tough love. Palm needs it.
Pimp My Brand
What does MTV's "Pimp My Ride" (http://www.mtv.com/onair/pimp_my_ride/) know that many companies seem to have forgotten when they go about rejuventing themselves?
For one thing, tired brands, like tired cars, need make-overs that radiate excitement, engagement, surprise. Instead, we see an increasing number of brand stories that lack horsepower: "innovative solutions", "answers that matter", "smart solutions". These are not the products of insightful customizing.
Especially when they are used merely as glorified ad slogans, appearing on all corporate communications, they are little more than a new coat of paint on the old '89 Acura Integra. If you're starting a brand revitalization project, take the time to work with Operations and Sales to explore how your existing offering could be stripped down and re-built to drive a focused, energized brand and branding effort.
John Battelle Calls it Pride/Retribution
John Battelle blogs AOL today as well. I have a lot of respect for John, but I really do believe that this is about more than just the cultural incompatibility between TW and AOL. I think that the need some re-invention and a spin-off won't be enough. Customers aren't leaving in droves because of TW's mismanagement.
America Off Line
AOL has struggled for years with its strategy on dealing with how it would provide highspeed DSL and Cable connections to its users. The company has now abandoned the partnership model that it had put in place in favor of a “BYOA” or bring your own access model where users with highspeed accounts can keep AOL access and their email addresses for $14.95/month.
That might be an appealing offer for a neophyte user (do these creatures still exist?), a concerned parent, or a person who really doesn’t want to change email addresses, but I can’t imagine that this customer pool is sustainable in the long run, no matter how profitable the accounts are once you get them signed up.
AOL’s problem is a serious one, and frankly I don’t know what they can do to fix it. The product itself has been totally obviated by user sophistication, better search engine technology, the demand for higher access speeds and better user experience throughout the web. The “walled garden” might have been appealing in the wild early days, but today it is irrelevant. Actually, more than just irrelevant, confining. The centrally controlled user experience used to serve as a well-filtered sub-segment of the intimidating online totality. Today its an expensive imprisonment.
Another Brand Resurrection?
Last week the new Lycos launched. This is not Barry Diller’s Lycos. In fact, I have no idea whose Lycos it is. Seems like it’s part social network and part search and part media promotion vehicle. Even the design of the thing is distinctly second-rate.
If Terra Lycos is serious about being “the most visited online destination in the world”, they are going to have to do better than this.
Anyone out there watch Frontline's report last night on shady corporate tax shelters? Wachovia and KPMG bore the brunt of the onslaught, with KPMG really getting skewered. This with the follow-up in this morning's papers that Federal prosecutors are launching an investigation of KPMG's tax shelter offerings. (WSJ registration req.)
All this amounts to some very, very bad brand mojo for KPMG.
The Plus Side of Brand Volatility
Sometime you read about tech company consolidation that makes you realize why most of the consolidation that happens is so distasteful. Take for example EMC's acquistion of Legato Systems last year. Check out this piece on the topic in InformationWeek -- the PR folks must be blushing over this one.
From a marketing perspective a couple of things are striking:
1. The retention of the Legato brand rather than just stripping out relevant product brands.
2. The importance of customer confidence in financials as a critical brand support.
3. The elasticity of technology brands (this should be very good news for many companies out there).
EMC's situation and motivation is so similar to Oracle's -- the desire to diversify application offering and get a higher percentage of revenues from services. Yet one can't imagine that PeopleSoft's customers are hopeful that, should an acquisition go through, they will be in anywhere the shape that Legato's customers are in.
IF He Said THEN He Said
IF Steve Jobs and Michael Eisner hate each other. AND Disney and Pixar split up (at least in part) as a result. AND Disney and Microsoft get together to fight piracy with Microsoft’s digital rights management technology. AND Larry Ellison refuels his "testosterone-fuelled" mission to acquire PeopleSoft. AND Comcast is successful in its bid to buy Disney. THEN Apple iTunes’ promotion with Pepsi is the best marketing idea of its kind that we have seen in a long, long time.