Branding 3.0: Why Social Media Has Made Branding More Important Than Ever

Forthcoming In November:

In the beginning there were products, made and consumed locally. As the nation grew, products slowly become national in scope. The Sears Catalog is an example of this pre-branding world. After World War II, a relatively homogenous nation saw, and contributed to the growth of, mass media and its newborn, brands. In this "Branding 1.0" world consumers equated the brand with the ad or the logo. P&G and its consumer package goods compatriots exemplified this model. It took two generations for best practice marketers to begin embracing Branding 2.0, where brands staked their claims to relevant differentiation by consistently communicating across touchpoints and by ensuring that operations supported the promise. Southwest is a great example of a brand that "got it". But before the majority of U.S. companies had a chance to join elite brands in adopting 2.0 branding practices, the social media revolution made 2.0 irrelevant. In this radically changed marketplace influenced by social media, branding has to include touchpoints, operations, and products. The definition of how to build a strong brand has widened. Brands, in other words, are more important than ever.

Wow

This isn't a blog posting per se but a shout out to all potential clients of Razorfish to check out this job description before negotiating a contract:

https://jobs-razorfish.icims.com/jobs/5774/job?sn=Indeed

Didn't know that agencies could make 56% margins. Wow.

Saturn's Rings

It will be interesting to see whether Ally can successfully position itself as a different kind of bank given that it is actually a unit of financial giant GMAC. The decline of the Saturn, a brand that positioned itself as a different kind of car company but is actually a unit of auto giant General Motors, offers an interesting object lesson.

The only shock regarding General Motor’s bankruptcy was that it didn’t happen sooner. With the exception of recent Cadillac models, it would be hard to remember the last time “GM” and “top rated” could be found in the same sentence. From a branding perspective, GM’s brand architecture – the relationship of brands within a portfolio to each other and the relationship of brands within a portfolio to the master or corporate brand – has long been a disaster of pieces that just didn’t work together. Caddy was a success story because they made the cars less clunky and supported the new models with relatively breakthrough marketing.

Within General Motors’ battered portfolio, it’s Saturn that offers the object lesson for Ally. Saturn deserves a spot in the branding hall of fame because it pulled off the seemingly impossible: it created relevant differentiation despite the fact that it was owned by a corporate giant with an abysmal quality reputation. Saturn accomplished this by recognizing that the best brands are supported across touchpoints and operations. Its cars were the product of a unique management-labor partnership and its in-store experience broke through category norms with a no haggle policy. Its marketing - including the now legendary BBQ for customers at its Spring Hill, Tennessee plant - struck an emotional cord of made-in-America without being jingoistic.

Saturn started off with a bang but soon began a slow, steady decline that eerily mirrored General Motors’ slow, steady decline. The President of North American operations, quoted in the New York Times, said that “the only way we can make Saturn work economically is to leverage the rest of General Motors.” Saturn, was brought more closely into GM’s orbit. From an operations standpoint, industry observers noted that while the Detroit-managed Saturn was relatively quick to bring a SUV to market, it was slow to keep its core sedan fresh and unique, a problem that plagued other GM nameplates. From a branding standpoint, the shadow that GM cast made it difficult to maintain the proposition that Saturn was a different kind of car from a different kind of car company. The most recent branding campaign, which can be seen on You Tube, is well-executed effort but it could just have as easily come from Chevy.

http://www.youtube.com/watch?v=xX_frSinZ2s

Which leads to Ally, the consumer banking unit of GMAC.

Ally is building its brand on an evocative brand identity, a Web-only channel strategy, and a very specific value proposition. The brand identity is a success, the channel play might turn out to only be table stakes, and there are serious cracks in the foundation of the value proposition.

The brand identity is great. Ally’s name is stunning in the way that Orange, a UK telecom provider, and Happy, a perfume from Clinique, are stunning – it utterly breaks from category norms. The logo, which seems to offer an outstretched arm, brings a degree of warmth to banking that’s hard to find at other national banks. The identity is arguably so strong that it’s almost a shame that there are no branches to extend the look and feel to.

The channel strategy might, however, not turn out to be a source of competitive advantage. Ally is a Web-only bank. But there are plenty Web-only banks, from start-ups to business units of established players. In fact, being Web only may actually be a competitive disadvantage in two regards: Ally’s competitors’ do not carry into cyberspace the baggage of being associated with a corporate behemoth; and the pre-recession branch building boom attests to consumers’ need for physical footprints. The impact of this competitive reality is that communications might have to treat Ally’s web-only status as a point of parity rather than as a point of difference.

But it’s Ally’s ability to support its value proposition that calls into question the brand’s long-term prospects.

Ally’s proposition is based on the brilliant insight that consumers hate the “mouse type” at the bottom of ads that pretty much make it impossible to take advantage of the offer that’s just been made. Airlines are notorious in this regard and banks aren’t much better. Ally is different because they’re “straightforward”, as the tag line declares. Ally drives this insight home in a recent ad that can be seen on You Tube.

http://www.youtube.com/watch?v=nKdIKP1arF0

If the “no hassle because we’re different” positioning sounds familiar it’s because that’s how Saturn initially positioned itself. And just as Saturn could not sustain a strong brand because of GM, Ally might have similar difficulty escaping its lineage. Corporate parentage, in other words, is important.

Ally is owned by financial giant GMAC, not the kind of association one wants these days. Moreover, GMAC was until recently 100% owned by General Motors and is now 49% owned by GM and 51% owned by a private equity firm. The “G” and the “M” in GMAC’s name are, of course, a vestige of its corporate history.

The GMAC association might hurt the “straightforward” positioning because the relationship between GMAC and Ally is portrayed inconsistently. Deep in the Ally Web sit there is a note that the bank is “built on the foundation of GMAC Financial Services” – which makes the relationship sound at arms length – and the TV ads don’t connote the relationship at all. Conversely, on the GMAC home page Ally Bank is front and center as one of the giant’s 9 offerings.

This disconnect might diminish the brand proposition for four reasons.

First, Ally positioning arguably necessitates adhering to a higher degree of transparency - beyond straightforward products and toward transparent relationships. Second, consumers are hard wired today to look beyond what marketers say. One commentator, from Cambridge’s business school, noted that “the “spin”-aware 21st century consumer is proficient at examining brands and looking for discontinuities—discontinuities between the information that they have received from other sources, and the information that is embodied by the brand. The difference or similarity between the two pictures is one of the ways that today’s stakeholders judge responsibility and accountability”. Third, in a post-Citibank post-Madoff world where only a third of Americans trust banks**, putting all your cards on the table is just good business. Fourth, with 36% of American shoppers responding in recent JD Powers survey that “brand image” is the most important factor in choosing a bank, wouldn’t Ally want to make sure that their images was unassailable?

* De-emphasizing one’s corporate parentage is a common enough practice. Blue Moon Beer, for example, does not mention on its site that it’s owned by giant brewer MillerCoors while the corporate page of MillerCoors lists Blue Moon as one of its “craft” beers. But most people don’t hold beer brands to a higher standard just as a third of Americans don’t mistrust beer manufacturers.

** According to the Chicago Booth/Kellogg School Financial Trust Index. http://www.financialtrustindex.org

Previously Published Articles Now Available

The two articles that I had published on BrandChannel.Com, a prominent branding journal published by global branding agency Interbrand, are now available at the following URLs:

 

http://www.scribd.com/doc/16393654/Article-Customer-Experience

http://www.scribd.com/doc/16393641/Article-Private-Label

Article on Emotional Branding Now Online

My article on how brands can create emotional connectivity was just published by the Association Forum, which represents Chicago's trade association community, the nation's second largest. It can be accessed online at:

http://www.associationforum-digital.com/associationforum/20090607/?pm=2&zin=162&u1=texterity&pg=28&z=63 

Same As The Old Boss

The article in last week’s New York Times about major companies that revamped their corporate identities to project a softer image during this recession missed two stories that call into question how scarce marketing dollars are being allocated.

The article asked readers to “behold the new breed of corporate logo – non-threatening, reassuring, playful,

even child-like. Not emblems of distant behemoths but faces of friends”. The new identity for New England-based grocer Stop and Shop, for example, moved the Company from an unfortunate look that commanded consumers – STOP and shop - to a softer type treatment coupled with a simple image depicting a bountiful bowl of food. Similarly, Sysco’s redesign migrated the company from looking like a second tier manufacturer in a stagnant industry to the market leader that it is.

Author Bill Marsh missed, however, related stories lurking behind the Wal-Mart and Kraft redesigns.

The Arkansas retailer hit the ball out of the park by employing an inviting typography and creating a symbol that’s a cross between a punctuation mark and a low key starburst. [It’s happy! Just like Wal-Mart’s long-used smiley face!] Moreover, the company wisely eschewed the “big bang” corporate re-identity launch in favor of folding the redesign into a multi-layered strategy that includes refreshing many of the stores and introducing a new tag line. It’s worth noting that the new tag line - “Save money. Live better” - is extraordinarily powerful in the way that it marries functional and emotional benefits, among other reasons. The timing of the logo refresh, therefore, makes sense relative to the retailer’s other efforts.

But why invest in a new retail logo when it’s your corporate brand that needs the most dusting off? Leading corporate identity experts, such as Landor, contend that a corporate identity works best when it serves as a platform for announcing something big. Corporate Wal-Mart has been trying its hardest to go green, show its commitment to diversity, and otherwise claim that it’s a new day in Bentonville. Communicating a new day / new way vibe isn’t a low item on the behemoth’s to do list because the Company regularly finds itself the subject of any number of class action law suits, government actions, or generally nasty press. If any major company needed to visually communicate a break with the past, it’s Wal-Mart.

The redesign of the Kraft Foods corporate logo is another odd example of how scarce resources are being allocated. The Glenview, IL-based company, the second largest food enterprise in the world after Nestle, created a logo that included (in the words of the Times) a “smile and ‘flavor burst’. The mark also includes a new tag, “make today delicious”. The new logo and tag can be seen on the corporate site and will soon be their public face at investor conferences and similar venues. Kraft Foods’ new corporate ID is great. That said, it’s not clear why executives in Glenview thought that they needed a new corporate identity. Unlike Wal-Mart, which has several brands under its corporate umbrella, Kraft corporate and Kraft consumer are basically the same thing. Moreover, why on Earth did Kraft corporate get rid of its familiar but dated “racetrack” logo only to retain it on their packaging? Marsh noted in The Times that the old design would be retained on packaging, an offhanded remark that doesn’t recognize that packaging is Kraft’s most important touchpoint. Deloitte and other experts have estimated that at least 2/3 of decisions are made at the point of sale. Kraft has acknowledged as much by undertaking wholesale redesigns of salad dressing packaging and other well-known categories.

Kraft’s packaging redesign is, therefore, stunning in both a good and a bad way. The good news is that Kraft products are actually easier to shop, with color

cues and other design tactics employed to make shopping easier. The bad news is, however, that the racetrack logo - which wasn’t good enough for the corporate brand – remains like an awkward party guest that just won’t leave. Moreover, it’s front and center on the packaging. Someone in Glenview probably won the argument by saying something along the lines that the racetrack has “brand equity”. Of course it does. But that doesn’t mean you should keep it, particularly given the massive investment the Company is making to look more contemporary. There are plenty of examples of evolving an old visual element or gradually eliminating it. As one leading brand strategy expert noted recently, companies like Kraft “never have the time to do it right but always have the money to do it again”. Perhaps. Or maybe they just like racetracks.

Weak Coffee: Why Via Is Good for Sales But Bad for the Starbucks Brand

There are probably more than a few stunned managers at McDonald’s and Dunkin’ Donuts corporate headquarters who simply cannot believe their good luck. Just as McDonald’s was investing considerable resources to introduce espresso-based drinks and Dunkin’ Donuts was continuing to invest in their anti-Starbucks positioning of “coffee for the rest of us”, Starbucks did the inexplicable and introduced Via, an instant coffee. And while Via, which comes in a single serving packet that costs about $1 per cup, might drive top line growth over the short-term, it will, arguably, cheapen the Starbucks brand over the long-term.

 

Starbucks holds a special place in the American imagination, an everyday luxury (at least until recently) and a so-called “third place” between work and home. They’ve worked hard to build a premium brand. When Starbucks leadership thought that they had let the brand slip off course they attempted to right the way through the introduction of the Pike’s Place blend, an initiative that was, again, supported by everything customers see (touchpoints) and everything customers feel (operations). The result of these efforts has been to turn Starbucks the brand into a $3.9 billion corporate asset, according to global brand consultancy Interbrand. Their book value increased almost 50% in just three years. Because of this uniqueness, critics have lodged ferocious attacks at the Seattle company when they’ve thought that a given initiative was at odds with maintaining and expanding a premium brand. Critics, for example, contended that the expansion into supermarkets would dilute the brand by over-exposing it. Whether this criticism was founded or not – it seemed reasonable given how other premium brands jealously guard their channel exposure – the fact is that expanding distribution was an acceptable business risk. According to Starbucks 2008 Annual Report, net revenue derived from company-owned stores was 84% of the total and net revenue derived from packaged coffee and licensed items was 4% of the total. Any potential damage, therefore, would be relatively small. Expanding distribution channels, however, is a calculated risk compared to shaking up your core business, a move that Via represents.

 

Before discussing why Via represents such a threat to the Starbucks brand it is worth noting the two reasons why the company probably brought the item to market. First, CNN noted that instant coffee accounts for 40% of global coffee sales so Via represents an opportunity to drive global revenue without having to open more stores around the world. Second, assuming that the product represents an incremental in-store sale rather than a substitute for brewed coffee, Via also represents an opportunity to grab a larger share of the nearly 50 billion cups of coffee Americans drink at home every year.

 

So Via might end up being a big money maker. But it will hurt the Starbucks brand for three reasons. 

 

First, Via will hurt the quality attribute of the Starbucks brand because the quality of Via will be less consistent than the quality of most other Starbucks products. The core of the Starbucks brand has been consistency: the look and feel is consistent across touchpoints; training and other operations support the brand’s positioning as a different type of place; and, with the exception of whole beans ground at home and a few non-Starbucks products available in the stores, the Company controls the entire value chain from bean to cup. The Via experience, by contrast, will be subject to the availability of clean coffee mugs, sweeteners, and dairy / non-dairy products. This last item is an essential component to why the Via quality will be relatively lower. We’re a nation of dairy users. According to The University of Wisconsin, per capita half and half consumption in the United States has steadily increased over the last decade. The explosion of milk-based drinks made with either coffee or espresso further illustrates the point that we like our joe with a little milk or cream. It’s not for nothing that while Starbucks offers ½ and ½, whole milk, skim milk, and soy milk at their stores, they don’t offer non-dairy creamers. Drinking Via – a “bold delicious Starbucks coffee” - with Coffee Mate will, over the long-term, hurt the brand. 

 

Second, Via will not perform the classic role of a sub-brand, expanding the meaning of the master brand, and might even hurt the master brand when it comes to building the convenience brand attribute. The Via positioning is at odds with the Via experience. It’s just not ready-to-go. You need water, something to drink from, sweetener, and a dairy / non-dairy product. Double Shots in cans, Frappuccinos in bottles, and the uber convenience of not having to leave your car to get your coffee are all convenient. Via, on the other hand, is not and no amount of well-produced point-of-sales materials showing young people on the go is going to change this fact. 

 

Third, Via confuses the Starbucks portfolio of products, making decision-making more difficult at a time when time-pressed and over-messaged consumers are crying out to make things easier. The myriad of in-store drinks are for one channel. The bottled and canned drinks are for alternative channels and (oddly) available in the stores as well. Ground beans are for home and for some offices. Where exactly does Via live in this ecosystem? If it’s for home it competes with ground beans. If it’s for on-the-run it competes with bottled and canned drinks. And it’s not positioned for the office even if it might be used there. Moreover, the in-store attention being given to the product can’t be helping their other products. 

 

The fourth source of damage to the Starbucks brand is, perhaps, the most damaging. Via gives McDonald’s, which is trying to stretch its brand upward, and Dunkin’ Donuts, which is trying to maintain the middle market positioning they’ve worked so hard at, a rare opening to grab share. If Starbucks isn’t special then what is it?