Brands Aren’t Dead, But
Traditional Branding Tools Are Dying
Jens Martin Skibsted and Rasmus Bech Hansen
Back in the days when the internet was young, many believed
that as it grew brands would become a thing of the past.
Leading information economy thinkers propagated this view,
including Carl Shapiro and Hal R. Varian, who published the
highly influential book, Information Rules, in 1999 (Varian is
now chief economist at Google). The book predicted that the
power of brands would shrink as people had access to more
and more free information. This has clearly turned out to be
wrong. In fact, the web has become dominated by, yes, a few
big brands.
Still, the notion that a bigger world wide web means smaller
brands is surprisingly resilient. Most recently Stanford
professor Itamar Simonsen and author Emanual Rosen
have argued in their new book Absolute Value: What Really
Influences Customers in the Age of (Nearly) Perfect Information
and in their recent blog post here that marketers need to
reevaluate the idea that brands are critically important in
consumer’s purchasing decisions. They claim: “…brands
are less needed when consumers can assess product quality
using better sources of information such as reviews from
other users, expert opinion, or information from people they
know on social media.”
The case for the decline of big brands follows a strikingly
clear logic: The primary role of a brand is to make it easier
for consumers to choose which products to buy. If consumers
have immediate access to information that helps them make
those decisions such as user reviews and expert opinion, the
value of a brand will fall. Proponents of this theory point
to the explosive growth of the mobile web as compelling
evidence. It’s undeniable that we are not far from a future
where most Western consumers have instant access to the
accumulated mass reviews of every product that Simonsen
and Rosen describe.
But this doesn’t make the “death of the brand” theory any
truer than it was 15 years ago when Varian and Shapiro put it
forward. In fact, the exact opposite is true. As digital disrupts
more marketplaces, brands become more important and
more valuable. Take a look at the various brand rankings:
Digital brands such as Apple, Google, Microsoft, IBM, Intel,
and Samsung are in the top 10 of most rankings. This is not
because the likes of Coca Cola, McDonalds, and Mercedes
have become less valuable. The digital brands have just
turbocharged past them. If brands are truly unimportant in a
digital world, why is it so brand dominated? Why do so many
people choose Google search over Bing when only experts
can tell which has the most accurate results? Why has Apple
become the most valuable company in the world with overpriced products and inferior functionality?
Because brands still matter immensely. The mistake Simonsen
and Rosen make is to confuse the value, role, and meaning
of a brand in today’s digital economy with the methods used
to build the brand. What sets the Googles and Apples of
the world apart from older brands is how they’ve built their
brands. Google has hardly spent anything on traditional
advertising (although the company wisely, as all its profitable
revenue comes from advertising, doesn’t brag about it).
Instead, the company has kept the brand meaningful and
relevant to people’s lives through free services and cool
ideas. Apple relaunched the brand with the ad campaign
“Think Different”, but has since withdrawn from imagebuilding ads and kept a much smaller marketing budget
than peers, focusing it brand efforts on creating an insanely
well-designed, holistic product experience. The company’s
advertising is limited to boring product shots.
The role of a brand is—and never was—just about solving
an information problem. It’s about providing meaning and
satisfying emotional needs. These fundamental human needs
have not changed. To the contrary as consumers experience
information overload, there might be a tendency to gravitate
toward what’s known and comforting. Sure, disruptive digital
services explode and take over the world in an instant, but to
go from being a popular service like Pinterest and Whatsapp
to a brand that commands a proper price premium is still a
long road.
So instead of discussing “brand versus not brand” marketers
and executives should ask themselves: How can we strengthen
our brand when the traditional tools such as advertising,
corporate identity programs, and PR are becoming impotent?
Part of the answer is in making the brand more—not less—
central. In a hyper-transparent digital world, consumers
instantly know the difference between what a company says
and v