Saturday, January 29, 2011

Whats all the fuzz about 'BRANDS'?

As we continue to move into the 21st century, we do so in a world where brands are becoming a dominant force in business. They are often the catalyst for major mergers and acquisitions; they can be valued, and valuable, assets on a corporate balance sheet; they can change the way
companies organize and conduct their business. As they have evolved, so too they have evolved the business world around them.

And yet - here's the strange thing - we can't seem to agree on an accessible, universally acceptable and plain English definition of the word 'brand'. Indeed, over the years, definitions of the word have multiplied and become increasingly out of touch with the real world. It was not always thus. The word 'Brand' actually started out as meaning marks on cows. Now there at least is a clear definition.

But since that beginning, it has variously been described as 'a set of promises made by a product to a consumer' ; 'the means of distinguishing one producer's goods from another's'; 'a guarantee of provenance' ; 'a company's most important, and most intangible, asset', 'a significant sustainable wealth creator' and a whole host of other definitions. One of the world's leading brand consultancies defines it as "a mixture of tangible and intangible attributes, symbolized in a trademark, which if properly managed influences and generates value".
Phew! Think we prefer 'marks on cows' to that one!

None of these are intrinsically wrong, but few of them would be readily understood by the man on the Clapham omnibus. Few define the word with an accessible concept that makes it both transparently clear what a brand is, and why it is important.

Many people for instance use the word 'brand' simply as a substitute for the word 'make' ; as in "I buy this brand of cornflakes" has become the same as "I buy this make of cornflakes". Technically this is not incorrect usage. But the overall definition is incomplete - a brand is much more than just the name on a product. And it doesn't help us understand why branding matters.
Why branding is so much more than the logo on your letterhead. Or indeed why you should employ a brand agency…

The time is long overdue therefore for a definition that is readily understandable and applicable. And to explain, we begin with an analogy.

If you've ever been in the position of hiring someone to do a job (whether at your home or your work) chances are that you've made this decision based on two apparently simple (but actually rather mysterious) criteria.

First of all, their apparent expertise (i.e. what they can do and their ability to deliver this effectively) and secondly, their personality (i.e. how they do what they do, and whether they will 'fit' in).

Brands are no different!!

When we buy a product, or a service, (as household consumers or corporate customers) we do so on the basis of the same essential criteria : a) its expertise (i.e. what we believe it can do and its ability to deliver this effectively) and b) its personality (i.e. how it communicates about what it
does and whether it 'fits' with us).

The optimum mixture of these two attributes is of course rarely 50:50 and can vary massively both between product/service categories and also between brands in those categories. Small cars for example ooze personality, family saloons less so. But they are both cars! It is this combination of a specific expertise and a specific personality that makes a brand individual. For this reason at gospel we call this combination a product or service's individuality.

So if you want a simple and accessible equation of what a brand is, we believe it to be:

Brand = Individuality.

Individuality = Expertise + Personality.

It is an equation that leads to your products possessing uniqueness and often therefore significant added value.

Now let's define these broad terms in more detail. First, Expertise:

Expertise we have said is about what a product/services does. But this does not to be purely a focus on your defined job. It is possible (and often desirable) to take a familiar category and bring new and relevant expertise to it.

E.g. You are an insurance broker : the expertise you communicate does not have to be just in broking good deals. It could instead be an expertise in making the whole insurance procedure easier for customers to handle. Which is how Direct Line created a brand. (Or look at Virgin Atlantic who created an expertise in airline travel that was more 'fun' : a totally new
dimension to bring to the world of air travel).

In fact, expertise can comprise a whole number of different elements all
relating back to your basic skill. For example:

what you can do ; what it costs ; relative value for money ; relative value for time ; your provenance ; your reputation (and many others, including category dependent dynamics)

You'd think, especially in commodity markets, that Expertise might be enough on its own. Why is this rarely the case? First because skills on their own rarely differentiate sufficiently. (Especially nowadays when all companies are expected to be excellent at what they do).
Consider that well known promise of 'Quality. Service. Value' : what more could a customer want? Maybe nothing - but the problem is that everybody says it! It neither differentiates you, and if it does it is not wholly protectable - someone may, and probably will, copy you.

Bananarama have rarely been quoted as an expert source on branding before but their words hold true - "It ain't what you do, it's the way that you do it, that's what gets results". Often, whilst Expertise can be critical in establishing credibility, it is how you express this expertise that gets you noticed - in other words Personality.

It is generally personality rather than expertise that makes all brands unique. No surprises here- if, as we say, brands are like people, then it is also personality that tends to make different people unique.

As expertise can comprise many sub-elements, so can a brand's personality. For instance:
what it looks like ; how it speaks ; how it acts ; what it believes in ; who
its 'friends'are ; what it wants to be (etc., including other category-dependent

As noted above, the optimum balance of Expertise vs. Personality may vary considerably from category to category. A manufacturer of sheet metal, for
instance, may want to prioritize Expertise, but a soft-drinks producer may
find the opposite more appropriate.

Whatever, it is the total mixture of all these various sub-elements, grouped into the two main qualities of Expertise and Personality that make up a product or service's Individuality- its branding. We believe that for a business to succeed in the long-term it must have a powerful sense of its own Individuality and apply that across every aspect of its relations with its customers. The way it looks to them, reaches out and speaks to them.

Such an exercise is therefore about much more than just defining the way a brand looks, in the same way that my Individuality is (hopefully) defined by more than my haircut. It includes all levels of activity from name to staff behaviour; from visual identity to the words it uses in its letters to customers; from the values that it holds to the values that it rejects.

(As an aside which is explored in more detail elsewhere, often much of this Individuality is just the beliefs or personality of the company founder writ large).

Good branding can give a company or its products a massively unfair advantage and set it far apart from its competitors, irrespective of the size of that company or the field in which it operates.

Just as people can define category stereotypes ("he's a typical accountant"; "Kylie is the perfect girl-next-door" etc ) so strong brands can indeed possess such a consistently powerful and a charismatic Individuality that they can come to embody the category itself, and become the lodestone against which others are measured. So Cadbury's has come to mean 'chocolatiness' and the FT is a symbol of the City. Such a strength can allow brands to extend into other related categories.

This definition embraces all others (e.g. sure a brand is a valuable intangible asset - so is Individuality. But which one brings the notion alive more?) but hopefully gives the word 'brand' a meaning that is readily accessible in both the boardroom and on the shop floor. It's also universally applicable, from manufacturers of cornflakes to manufacturers of sheet metal.

So, when you embark on a branding exercise, you are simply trying to develop the most charismatic Individuality for the company or its products, in order to increase your clarity, attraction and differentiation within your market.

Similarly, when you 're-brand', you are endeavouring (as people do as they mature or their situation changes) to refine this corporate individuality. Branding helps companies develop and bring to maturity their Individuality. To find the best, truest, and most differentiating way of making a company magnetic and special.

Friday, January 28, 2011

Facebook introduces new advertising program based on users’ status updates

Facebook is ramping up its advertising efforts with a new word-of-mouth feature that will take status updates where users "check in" to a location using a business name and place them in a special advertisement that will appear on their friends' profiles.

The announcement also comes as Facebook has said that every application and game available on the social network will be forced to use the site's own credits system, in a move designed to drive up revenue ahead of a likely IPO in 2012.

Facebook's new feature, "Sponsored Stories", works by having businesses sign up to the program. Then, whenever a Facebook users "checks in" to a location that features their business name, that information is shared with that users' friends.

The move to leverage these status updates is a testament to growing power of location-based marketing. For months now, researchers have been saying that social networking recommendations among friends are far more powerful than reviews or other types of ads.

In the new program, a box will appear on their profiles featuring the word "Sponsored Story", and below it will have the user's status update, and then a link to that particular business's website.

Facebook has said that businesses wanting to be a part of the program will need to sign up, but the cost is unknown at this stage.

Facebook says the system leverages the power that personal recommendations have over traditional advertising.

"Companies and organisations are already seeing the benefits of marketing that includes people and their real friends through our core ads product – more effective, more engaging and more personalised marketing," the site says.

"Like News Feed, it's just another way to share and see what your friends are doing. Some actions people take with companies, products or apps on Facebook, will appear not only in the News Feed, but also as Sponsored Stories on the right side of the page."

The system is a type of sponsored word-of-mouth marketing, but relies on businesses having a presence on Facebook's locations feature.

While some Facebook pundits have already pointed out that users will be unable to opt out of seeing these types of ads, the site counters that by saying the information being used are only status updates that have appeared on news feeds anyway, and the update won't be used outside of Facebook.

However, it is still unknown how Facebook will differentiate between negative and positive status updates. An Australian spokesperson was contacted for comment this morning, but no reply was available before publication.

"A Sponsored Story may also appear on my friends' profile or homepage with the same check-in story. This creates another way for businesses to drive predictable word-of-mouth marketing between friends at scale."

Meanwhile, Facebook has also said that it will force game developers to use Facebook Credits for purchases from July 1, and will provide incentives to those who start switching over early.

The announcement comes as the popularity of Facebook games has exploded over the past year, with millions of people now logging on every day to play game such as FarmVille.

However, some developers have kicked up a fuss, which is why Facebook has said that it delivered the news early in order to have discussions with developers about the change.

But the real reason for the switch here is revenue. Facebook needs as much as it can get, and with a 30% commission from all payments made using Facebook Credits, making the switchover mandatory will potentially mean a lot of money will be flowing into the site.

Analysts suspect the company will announce an IPO for April 2012, thanks to a remark in the company's filing last year which stated that "even before the investment from Goldman Sachs, Facebook had expected to pass 500 shareholders at some point in 2011, and therefore expects to start filing public financial reports no later than April 30, 2012".