Brands are eternal…let’s debate the right things

Photo courtesy: Carlos Gracia

The idea to write a longer piece on this came to me when I saw my 1200 character LinkedIn post (on the same topic) getting quite a lot of traction. Below is what I wrote originally on LinkedIn:

“A lot has been written and discussed lately on how we are going to move towards a future where brands don’t exist. Much of this utopian future is based on how chatbots (specifically) and AI (generally) will take over our decision making capabilities. Combined with this will be the proliferation of brandless products. A fundamental principle seems to be lost in this whole argument. If this utopia actually becomes a reality then human beings (as a species) would have lost its ability to make a choice. We make choices every second and a large majority of these choices has a brand integrated in them.

The second aspect that has been glossed over is business models of these creators of anti-brand solutions. Will Amazon stop selling Alexa as Alexa? Why is there a need to apply for a trademark for brandless? What are you afraid of? Will someone (nameless) develop a universal chatbot, which will remain nameless? Will we buy a smartphone from a nameless company?

The death of brands is a useless and faulty argument. If brands die, the modern definition of business and commerce should die. And also the concept of money as a legal tender. Money is generated through commerce, which is driven by brands.

Let’s focus on building differentiated brands and not focus on their death.”

One of the less quoted argument against brands is the one of having ‘fewer’ brands. From no brands to fewer brands is a better (and more realistic) argument, but it is still fraught with weakness. It assumes branding is a last resort principle, which it is not and never was. If a business has invested in creating original ideas and has developed a product to deliver them, then it has to ‘brand’ it to bring it into the market. Commodity markets do not exist, and not even in the most undifferentiated categories.

The arguments on ‘no brands’ and ‘less brands’ are flawed due to different forms of confusion, which need to be removed. These elements of confusion can be neatly encapsulated into the following two categories:

  • Proliferation is not only about new brands getting launched
  • Proliferation of communication is unrelated to number of brands

If there is a debate that needs to happen, it needs to happen on the proliferation of communication (and not brands). Consumers hate advertising, but more specifically they hate bad advertising. Proliferation and bad quality go hand in hand.

If there is proliferation happening in advertising, then there is consolidation and fat-trimming happening amongst those for which advertising is created, i.e. brands:

  • P&G sold its whole beauty brand portfolio to Coty for $12.5 billion
  • In March 2017, P&G sold of its European adult incontinence brand Lindor to the Germany based Hartmann group
  • Unilever is looking for buyers of its Flora margarine and Stork butter brands (to enhance shareholder returns)
  • GSK (in 2017) has announced plans to sell-off Horlicks, MaxiNutrition and other nutrition brands, and focus its efforts on its drugs business
  • Adidas sold off golf brands TaylorMade, Adams Golf and Ashworth to private equity firm KPS Capital Markets in May 2017

All these examples (and many others) point towards a strong anti-proliferation, fat-cutting and deep introspective mindsets emerging in global businesses. These mindsets are also being driven by increasing cost pressures, stunted growth environments, uncertain economic and political climates and a general feeling of low confidence.

These introspective mindsets are leading to a wider trend, which we can call as a core brand focus. P&G (at last count) believed it has 64 such brands. Unilever has 400 of them (down from 1600, which is a significant reduction). Mondelez has a handful of global power brands.

As global organisations pick up the pace to cut their flab, there is a slow (and still niche) trend emerging of slow communications. Move away 10" and 30". Come in 10 minutes and 45 minutes. Here are some interesting recent examples:

As consolidation quickens and growth opportunities get crowded out quickly, organisations are digging deeper to realise latent values of their brand assets. Gap recently announced that it is going to shift focus to its Old Navy and Athleta brands, with a target of achieving $10 billion and $1 billion in net sales respectively in the next few years.

According to CEO Art Peck, “Over the past two years, we’ve made significant progress evolving how we operate — starting with getting great product into the hands of our customers, more consistently and faster than ever before. With much of this foundation in place, we’re now shifting our focus to growth. We will leverage our iconic brands and significant scale to deliver growth by shifting to where our customers are shopping — online, value and active.”

Viacom’s strategy over the next few years is going to be no different, with focus only on 6 core brands — Nickelodeon, Nick Jr., MTV, Comedy Central, BET and Spike.

Other emerging or established trends are also clearly impeding brand proliferation. Some of these trends are around highly potent factors like “brand purpose” and “sustainability”. Consumers, through their discerning voices and choices, are already putting brakes on anything being shoved down their throats.

In addition to brand level trends, there are other movements that have the ability to slow down brand proliferation. The number and amount of advertising messages are being impacted by global spending squeezes. Spending dynamics are also changing, with advertisers losing confidence on television as a brand building medium. Although there is high faith on platforms like Facebook, Instagram, Snapchat, Twitter, digital advertising spends are also declining.

If the primary drivers of these ‘brandless’ and ‘fewer brands’ campaigns has been the general annoyance with being bombarded with advertising messages, then the debate needs to shift to more optimum and effective use of ad budgets. That is where proliferation is a problem, and not with the number of brands that we have.

As human beings, we are strongly driven by perceptions. The same ad for a brand, repeated multiple times through the day across different channels, makes us think there are too many brands who are drowning us with their noise. In sum, the number of advertising messages have proliferated, and not brands themselves. This realisation has far reaching implications for the advertising and brand building disciplines:

  • Advertising proliferation is a phenomenon that happens quicker and with ease compared to brand proliferation
  • Advertising proliferation is being compounded by the proliferation of media channels (online and offline), which has driven huge anxieties in the heart of brand builders → This in turn leads to omni-channel campaigns that contribute to advertising noise
  • Our online and offline worlds co-exist and that has always been a hard truth. The number of times we now transition between the two worlds during the day has reached dizzying proportions
  • The emergence of mobile has contributed significantly to the perception of brand proliferation. As advertising dollars get funnelled towards mobile and traditional TV spends decline, there will be more ad content pushed to mobile devices
  • The seamless integration between different online and offline channels has increased our AOTS (Average Opportunity To See) for an ad campaign, which in turn magnifies the perception of brand proliferation

Let us have the right debates, and not misconstrued and misinformed ones. The debate around uncontrolled product launches and the misconception that it leads to higher number of brands will be a part of a separate piece. In reality, more uncontrolled is the innovation, higher is the rate of product failure and lower is the number of brands in the category (although there will always be fleeting glimpses).

You can also read the article in LinkedIn Pulse by clicking here.

Strategy Consultant