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The Importance of Branding in the Digital Age

2009 November 18
by Greg

Many believe that brands will become less important as digital technology marches onward.  They will surely be disappointed.

In fact, it is likely that branding will become more important in the digital age.  With more media and more brands, consumers have to more to filter out.  In order to cut through the clutter, marketers will have to work harder to build brands that inspire loyalty.

To understand why, let’s start at the beginning…

Creative Kings in a Consumer Age

After World War II, most of the globe went through several decades of seemingly boundless economic expansion.  Consumers had ever more money to spend and business expanded to meet the demand.  It was the dawn of the branding age and marketers strove to make their products popular with consumers hungry to join the consumer culture.

It was also an era of mass media.  There was a limited amount of TV stations and programming was geared to mass audiences.  Popular broadcasts like The Ed Sullivan Show in the US could reach more than 50% of the population.

In this environment, creativity was king.  Advertising pioneers such as David Ogilvy and Leo Burnett developed powerful brand images that transformed the landscape of commerce.  Great creative work combined with mass audiences proved to be a powerful combination.  Brands evolved into consumer icons and built enormous profitability for the companies that owned them.

The Media Revolution

Cable and satellite technologies transformed media in the 80’s and 90’s.  New, thematic channels chipped away at mass media, making it harder to reach audiences and increasing clutter.  With the exception of special events like the World Cup and the Super Bowl, advertisers had to cobble together mass audiences by aggregating smaller ones.

In the new media environment, brand messages became harder to get across.  Media fragmentation emerged as the new reality.

Advertisers started to look for alternatives to mass communication.  New techniques such as Guerilla Marketing and Communication Planning vied with upgraded forms of direct response marketing.

In this new environment, creative strategy became just part of the picture.  You had to present the right message, to the right person at the right time for the right price.  Brand promotion evolved into an exponentially more complex animal.

Computer technology had a major role to play in the media revolution.  Much like the financial revolution that preceded it, the media revolution involved greater access to data and sophisticated analytical techniques that were enabled by cheap computing power.  Expenditure databases and ratings optimizers replaced “gut feel” as marketers struggled to adapt.

A New Analytical Age

The revolution continues today as digital technology fragments audiences further and creates even more data to be parsed.  Analytical rigor has become a core competency for any marketer.

One of the pitfalls of analytical rigor is that you can lose sight of the subject of the analysis.  With so many numbers flying around, it’s easy to forget that essentially marketing communication is about how people interact with products emotionally.

People love some brands, hate some others and don’t think much at all about most.  How the consumer feels about a brand will determine whether she is willing to buy it and what price she will pay.

Marketers know this and invest millions of dollars every year to track how consumers feel about their brands.  For instance, a fast food company would track factors such as value, taste quality, etc.

Brands and Direct Response

Heavy investment into brand image is confusing for many direct response marketers.  Why wouldn’t a business want to see a direct relationship between investment in marketing actions and sales?  Surely smart business people must value suppliers who can deliver definitive results?

Well, not exactly…

A typical scenario is encapsulated in an experience I had with planning for a fast food restaurant brand some years ago.  The operations people loved sales promotions.  Every time they ran sales oriented campaigns, business performance would improve.  They made money and achieved measurable sales ROI.

However, as perception of their brand attributes in tracking research declined, so did the efficacy of sales promotions.  In effect, each sales promotion was stealing from the next one.

While brand campaigns lacked the direct response jolt of sales promotions, they increased the performance of future sales promotions.  While ROI was harder to measure directly, long term sales increased.

In reality, direct response is highly dependent on brand equity.

The ROI Trap

Many people in the digital world believe that advertisers will eventually see the folly of traditional media and enter a new era of Digital ROI.  They expect to offer quantitative proof that their media is effective, something they feel that the marketing world sorely lacks.  They are bound to be disappointed for several reasons.

Firstly, for many products, immediate response isn’t feasible.  People who just bought an iPod, a car or a new TV aren’t very likely to buy a new one soon no matter how much they might like it.  Maintaining brand equity over a long product cycle is a major concern for many marketers and how Digital Media affects perception isn’t very well understood.

A second point is that many marketers are reluctant to spend more in Digital Media is because they have less access to audience data and measurement.  While there is literally decades of demographic and psychographic data about TV, Radio and Print, nobody really knows who watches a web video.

Finally, as Digital Media grows in importance and improves its ability to deliver content, it will become more like traditional media.  In order to take on a bigger role in marketing products, Digital Media will have to be able to demonstrate that it can build brand equity effectively, not just produce direct response.

Brands in the Digital Age

In the years to come, we can expect the basic trends to continue.  There will be more media channels and more brands vying for attention on them.  Clutter will increase and consumers will continue to filter out more brands than they take in.

Therefore, we can reasonably expect brands to become more important, not less.  As consumers are offered more choice, their preferences will become more important.  Some brands, like Apple and Google will enjoy strong loyalty, low acquisition costs and high margins.  Others are going to struggle and pay more to make each sale.

If digital media is ever going to become a profitable industry, it will have to learn how to build brands, not just produce direct response.  Ironically, to build the consumer brands of the future, today’s digital marketers will probably have to learn a lot from the ad giants of the past.

– Greg

39 Responses leave one →
  1. November 18, 2009

    In the end, things may just end up coming full circle. I think there may be an epiphany that a new balance needs to be created between new and old in order to build successful brands.

    [Reply]

    Greg Reply:

    Momblebee,

    I think you’re right. The Major agency/marketer perspective is diametrically opposed to the digital zeitgeist. While digital people think that eventually major brands will get religion and see the virtue of direct response and simple ROI metrics, major marketers already know the importance of brand equity.

    The gatekeepers of the really big budgets want to see digital perform more like TV.

    For the communications industry, there doesn’t seem to be a whole lot of talking going on…

    – Greg

    [Reply]

  2. November 18, 2009

    Greg –

    Nice coverage on a very important topic!

    My take on it is that brands must get ahead of the socialization of their product/service. They must find ways to have strong influence on their brand – yes, they do not have complete control. I cover this in an article “Brands in the Age of Social Media” at http://bit.ly/KDqkk

    Best,
    Social Steve

    [Reply]

    Greg Reply:

    Thanks, Steve.

    – Greg

    [Reply]

  3. November 18, 2009

    I think the future of digital lies less in the creation of campaigns and more in the creation of programs & platforms. It’s not going to be about creating advertisements, rather creating useful things that advertise.

    I also think that more focus will be put on the audience rather than the consumer. A quote from Adpulp says it best, “A consumer is someone who intends to buy, an audience member is someone who has already paid the price of admission in some way and now, intends to be entertained.” (David Burn – AdPulp)

    Digital makes entertaining a lot easier and more accessible.

    [Reply]

    Greg Reply:

    Mike,

    Interesting perspective. Thanks for sharing.

    – Greg

    [Reply]

  4. Peter permalink
    November 18, 2009

    Aha – a voice from the wilderness in all the flurry of social this and digital that and Brand Bubble Bestsellers and so on. One good response/take on the old question of branding vs promotion and how much brand equity gets destroyed by promo tactics. I think and hope that we will see not a return to sanity, as the social web is MUCH too powerful a phenomenon to discount. Why? Because it is intrinsically, like a good brand, a platform/media that embraces and is often driven by….yes, emotion! Sharing your opinion and ideas is an emotional act, it can radiate sincerity like no other, it engages others at an emotional level, and other people pick up on that instinctively – emotion = human, not some hollywood depiction of it. But as you say, branding will become more not less important. Anyway, good stuff, I enjoyed it.

    [Reply]

    Greg Reply:

    Peter,

    Thanks, I’m glad you liked it.

    – Greg

    [Reply]

  5. M. Amin Thepdawala permalink
    November 18, 2009

    As you would all agree that a branded product is associated with a set of values which distinguished it from the other contemporary products available in the market. But what I have observed in these days that the buying power of the consumer has been hard hit due to economical crises world over, increasing inflation, increasing lay offs, joblessness etc. etc. kind of situations have forced peoples to opt for the cheaper products which fall withing their budget even if they are not branded. Therefore, the mushroom industries manufacturing unbranded products are taking full advantages of the marketing efforts of a similar branded products because of their unbranded products being cheaper and economical.

    [Reply]

    Greg Reply:

    Good point. In a recession, non branded discount goods tend to do better. Nevertheless, recessions end.

    – Greg

    [Reply]

  6. November 19, 2009

    Good article. Branding has become incredibly important. The proof is in the actions in the markets and the law. Branding has become increasingly hardball. Individuals and companies do someone nasty things with domains and trademark registrations. Trademark laws have been increasingly strengthened in the last 10 years. All this points to the importance of branding.
    Your article and the discussion seem to be dealing with larger trends, but an interesting phenomena of the Internet and email marketing is that everyone now must be concerned with branding. This is particularly true for small businesses for a variety of reasons. I advise my clients to seek out a good marketing consultant/design firm and make an real effort to develop a unique brand.

    [Reply]

    Greg Reply:

    Eric,

    Thanks for that. Trademark law is an aspect I hadn’t thought of. Great point.

    – Greg

    [Reply]

  7. November 19, 2009

    Good article. I like what you said- “People love some brands, hate some others and don’t think much at all about most. How the consumer feels about a brand will determine whether she is willing to buy it and what price she will pay.”
    – for many advertisers and their agencies, this is something that they can’t get their arms, legs and brains around. The typical spend, spend spend (disrupt, disrupt, disrupt), isn’t going to work A brand that they don’t think much about can easily become a brand they hate. It’s a paradigm shift.

    [Reply]

    Greg Reply:

    Joe,

    I agree. Often there’s so many numbers flying around that it’s easy to forget what is actually being analyzed: the interaction of people and brands.

    – Greg

    [Reply]

  8. November 19, 2009

    The following was also put on linkedin.

    There’s a lot to be said about branding in the digital age and a lot of people will refer this to being good content about something. But because of the
    growing social activity on the web to support brands you do fall into a situation where content can get lost in conversation making it more difficult to stay connected with a brand. That is surely the challenge and where good branding must find great solutions.

    [Reply]

    Greg Reply:

    Steve,

    I like Kotler’s definition best: A brand is a promise. Although over time I think it’s become clear that brands need to be a bundle of promises.

    For instance, Apple has always been about technology AND design. One promise reinforces the other. More recently, they’ve added learning to their brand with Apple stores.

    Another good insight comes from Clayton Christensen. He points out that people hire a product to do a job.

    I think a good brand encompasses all of these things. It must show that it does an important job and also must build credibility in it’s ability to do that job consistently.

    I don’t see that social activity and promotion are mutually exclusive. In fact, they can be mutually reinforcing assuming that the brand actually delivers on it’s promises.

    – Greg

    [Reply]

  9. Stuart Nicholson permalink
    November 19, 2009

    Interesting post, Greg,

    I agree with everything thats being said here.I think its interesting that there is still a divide within the communications business between digital specialists and traditional media people, with the latter providing most of the strategic thought behind brand plans.

    The senior digital people, for purely historical reasons, seem to come from a DR background (purely due to the fact that after the false dawn of web 1.0 the whole digital area devolved into DR companies).

    So for digital specialists the priority is on measured short term consumer actions and ROI proof.They have little interest on who might have been exposed but took no action as this is a valueless insight.
    Increasingly, as brand categories that have not been much involved in the digital space start to take more part (particularly FMCG) they are interested primarily in head count and exposure (or connection) with audiences.They dont neccessarily need someone to click, but they would like to measure some of the metrics in traditional media ways (reach GRPs).Currently the digital industry sees no point in spending money in “old world” metrics and will point to the wealth of other, more personal information that can be gained from it.As web usage gets bigger there will be a lot more exposure and probably less physical transaction as a proportion of this.The exposure and its value needs to be captured and understood better.The ways that we have looked at brand metrics in traditional media work well also in the digital space.
    Hopefully as digital and analogue platforms fuse and we cease to distinuish old from new, this will occur naturally.

    [Reply]

    Greg Reply:

    Stuart,

    As always, some great points.

    One thing that I think is profoundly different about digital is that everything runs off the same platform. It used to be that specialists of different disciplines could pretend that their specialty was the whole ball of wax. Nothing else had to exist.

    Of course, that was never actually the case, but it could seem that way. Now that everything is going digital, it’s much harder to pretend and even more difficult to hide.

    – Greg

    [Reply]

  10. November 19, 2009

    great article. Clearly articulating the difference between a sales promotion and brand building argument through the evolution of media. Let’s remember that the Internet (as we know it) started in about 1995. That means companies like SCJohnson and others have been advertising on the web for fifteen years now. We are also ten years into the social revolution started in year 2000. Brand building online is present and online promotions are a quick ROI builder for your clients that really don’t get why they need a web extension of their advertising. Why is Yahoo or dogPile relevant today when Google has market presence? they have a niche audience. In the future you will see platform specific niche audience more often. for what it’s worth…. good analysis.

    [Reply]

    Greg Reply:

    Thanks, Scott.

    Increasingly, general audiences are becoming important on the web as well. One danger of digital targeting is that it is so accurate. It’s easy to exclude consumers who might be valuable.

    – Greg

    [Reply]

  11. Girish Mahajan permalink
    November 21, 2009

    The current digital conversation age is the one where all the age old branding theories of ‘manifestation of a brand’, ‘brand personality’ etc can truly be delivered and brought to practice. Unfortunately it will also require the mighty marketing powers to wake up from their slumber and start acting on what they been preaching forever on pretty ppts.
    But a shift in this thought processes shall require a whole new approach of creating and nurturing digital branding specialists rather than repackaging DR people

    [Reply]

    Greg Reply:

    Girish,

    As much as things change, they stay the same:-) If we ever got in completely right it probably wouldn’t be any fun.

    – Greg

    [Reply]

  12. November 22, 2009

    DR people will become more analytical- digging into the analysis of numbers of a campaign rather than seeing the entire spectrum of the brand. I am consistently looking at ways to increase brand perception in segments of consumers. But DR from what I can see is really number crunching and building tools that support number crunching which has a place too, but to be relevant the brand building industry as a whole will support strategic thinkers. Agencies at this point are still pushing traditional channels with digital extensions. This has to change.

    [Reply]

    Greg Reply:

    Scott,

    Your point is well taken. However, I think it’s also important to stress that what is most important is not to demonize DR people, or brand people, or TV, or anything else.

    The real problem is finding an overarching trend and generally people like to believe that trend is whatever they are doing. Many people work in emerging fields that are growing robustly, so it’s natural to think that what is growing is the wave of the future.

    The real trend is toward greater diversity. The future will be more of everything (except for newspapers).

    – Greg

    [Reply]

  13. December 8, 2009

    Thank you Greg. This article certainly has stimulated thought. It seems there is a sense of coming full circle, which is interesting. I look forward to reading more of your insights. Regards, Jacqueline Fairbrass

    [Reply]

    Greg Reply:

    Jacqueline,

    Thank you for your very nice comment. It made me feel absolutely fabulous:-))

    – Greg

    [Reply]

  14. December 11, 2009

    Greg,

    Excellent points, as usual. To me, the paradigm shift will travel at the pace of metrics. As metrics to measure audience in the social media world evolves, the market for it will follow.

    The “clutter” you speak of in the social realm is unnerving to many brand stewards. They evil they know is more on the traditional media end, even as many of them feel the tide turning as newspapers fold and TV HUT levels skew.

    The metrics took an interesting turn today as well. Facebook’s revision to their Privacy Policy that will impact how audience trends will be measured. How users deal with these changes (and how that information is used) will be an important indicator of the pace and the trajectory of bell curve of this evolution.

    [Reply]

    Greg Reply:

    John,

    You are right about metrics. One of the things holding digital back is a lack of data, especially for online video.

    I’m still very skeptical at how much big social media will ever get. After more than a decade, digital only makes up for 10% of ad spend (except in the UK, where it’s in the mid 20’s). Radio and Outdoor which are enormous industries, make up only about 10% together (the proportion varies by country).

    If Social media can get up to 2% in a decade, that will be a big (and achievable) success, but it will still leave the other 98%.

    The problem is that it’s just not a good broadcast medium, and that’s what advertisers need to spend money on. They need to get ideas out. Social media is great for extending broadcast and managing perceptions, but not very good for getting out new ideas.

    – Greg

    [Reply]

  15. December 11, 2009

    Greg, Do you ever sleep? Keep ‘em coming! Big brands go hand in hand with big media which is why we’ll probably see big new media consolidation coming soon to a screen near all of us.
    Roger

    [Reply]

    Greg Reply:

    Roger,

    New media is still growing a bit too fast to consolidate as an industry, but you’re right in that “merge to win” seems to be the new strategy. Instead of russing toward an IPO, strategic investors are in vogue.

    – Greg

    [Reply]

  16. January 21, 2010

    I think branding is more important than ever, as you said. With the emergence of more and more websites each day, people need to know how to distinguish you from everyone else out there. If your presence will move from the retail to the online environment in the next few years, you need to almost re-brand yourself online.

    [Reply]

    Greg Reply:

    Kristin,

    Great points. Thanks for sharing them.

    – Greg

    [Reply]

  17. February 2, 2010

    I’m new to your blog, but this is a great string, built on an intriguing and intelligent article. Excellent comments from your readers, too.

    Having owned a couple of “traditional” ad agencies myself during the 80s and 90s, I’m now working primarily in the zeitgeist of online video abd web-based marketing systems (www.voodooviral.com).

    I can say without reservation that traditional media and branding expenditures won’t (and can’t) go away. At the same time, I can also say that the process of enhancing brand equity and legitimizing a company and its products and services can be built in the online marketing process, depending on the business model you subscribe to.

    One of my company’s clients launched a new product under a new company name about two years ago. They bought regional radio to drive traffic to a video-enhanced website that romanced the brand equity initially generated by the radio campaign.

    From the beginning, the site has been converting over 10%, and often as much as 15% of unique visitors into buyers. Most of them come from radio, but many come from social media and blogs, along with a smaller number from SEO links and PPC.

    But it’s what happens after the initial purchase that really makes things interesting. Our systems automate the company’s post-sale outreach, carrying video messages thanking the customer, explaining how to use the product, offering encouragement at the moment they’d otherwise be likely to stop using the product, offering discounts to keep customers well-stocked, surveying them about their satisfaction, asking them for product and packaging improvement ideas. Finally, after 3 months of automated hand-holding and trust-building, the systems offer the customer an auto-ship option.

    This company is effectively selling without a sales force. Their product returns are negligible, which is pretty much unheard of in the DR world. 62% of recipients fill out the survey, and over 40% commit to an auto-ship subscription. And because of the way these web-based systems work, our client always knows exactly who’s opening the emails and watching the videos.

    We watched the company grow from 0-$2 million sales in year one. Then, as they bit off additional regional radio markets, they grew from $2-10 million in year two. Still no sales force needed. Still less than 1% product returns.

    This year, now that their manufacturing operations have been geared up to handle additional demand, they’re shooting for $50 million in sales. A chunk of this new business will be generated by the implementation of a new video-enhanced (and measurable) pass-along system we call “Referral Magic.”

    What I find interesting is that even though the company’s web-based presence and tools (website and Voodoo systems) are handling so much of the brand-building, sales and post-sale customer experience, it’s doing all that work at a tiny fraction of the cost of the radio ad spend.

    Based on documented success like this, traditional brand-building media and online sales and marketing (DR and post-sale outreach) can and should go hand-in-glove, and probably will for a long time to come.

    [Reply]

    Greg Reply:

    Robert,

    Thanks for a great story. I’m a true believer in the media multiplier. The real media trend is toward media diversity:-)

    – Greg

    [Reply]

  18. February 2, 2010

    Love the term “media multiplier”! That’s really what we’re all striving for.

    [Reply]

  19. March 12, 2010

    Very interesting post. Why anyone would think brands will become less important with the utilisation of digital technology amazes me. Brands have to market to their audience using the means by which their perspective audience are absorbing information. They will have to become more creative to capture the interest of their target market, the wonderful thing about this is that if it is managed and marketed correctly the mind works in pictures not words so the correct picture for your target market may get the desired action to grow your sales and also to provide the business with the opportunity to recieve on the spot feedback and recommendations from your customers. Then we have word of mouth selling taken to a new level.

    [Reply]

    Greg Reply:

    Imelda,

    I admit, it’s a strange notion, but not completely crazy. The basic reasoning, as I understand it, is that the internet has made direct marketing exponentially more efficient and therefore there is no reason to “waste money” on brand image.

    Utterly mistaken, but not totally insane.

    Thanks for your comment.

    – Greg

    [Reply]

  20. June 6, 2010

    Hey Greg whats up? I just had some time and was browsing the internet to get some ideas for my website and found your. I see that you are doing a great job with the marketing end and have a great site. Branding in todays market is as crucial as the product itself. Very good article for the times. I believe companies and individuals must find the shifts before they happen and so many try to play catch up. Oh by the way I am running a contest to find out the best marketing stratagy come by and check it out. http://clintmello.com/online-mlm-lead-generation-strategy
    MLM Income Kid´s last blog post ..Online MLM Lead Generation Strategy

    [Reply]

    Greg Reply:

    Thanks, Clint. Good luck with the contest! Let me know how it goes.

    – Greg

    [Reply]

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