Deborah Schultz

The Economics of Brands

I absolutely love the conversation that Umair has started over at his new HBS blog on the Economics of Brands.  Umair and I have had numerous discussions on this topic as we are both pretty passionate about the subject and working on the challenges and issues from related spaces.  He even mentions P&G in the discussion - [perhaps a veiled allusion to the Social Media Lab I am developing with P&G...;) ]

What I love about this discussion is that it puts the topic in logical economic terms.  At the core of why brands do not control the message is the fact that they no longer control the medium - as the world flattens and the cost of communication disintegrates it is indeed the customer who can increasingly compare notes and attitudes and create the value.

As Umair points out:

In fact, when interaction is cheap, the very economic rationale for orthodox brands actually begins to implode: information about expected costs and benefits doesn’t have to be compressed into logos, slogans, ad-spots or column-inches – instead, consumers can debate and discuss expected costs and benefits in incredibly rich detail.

I love to quote Scott Cook on this one:

“A brand is no longer what we tell the consumer it is - it is what consumers tell each other it is.”

I would even argue that was to a certain degree - always the case - it is just that today we are all connected - you can't snow me anymore.  This is SO much bigger than mere branding - it lies at the core of your business model.

So what are the new brand building models? I think many of them have yet to be worked out  but I know it is NOT traditional advertising.  I also know that what it DOES involve is empowering your customers, listening to them and putting the aggregated feedback into action. 

The larger questions of scale and financial models that work are the tough nuts to crack,the large advertising industry with its vested interests and deeply entrenched silos is gonna need some prying apart. 

What is  the culture of your company? [copy paste wrong window]

[UPDATE - missed these related links from Brian & Tara ]

Facebook SocialAds - the missing feature

Nuf said.

Snackbyte - Once again - i am not a bullseye

As the pundits, brands and geeks all gush on Facebook's SocialAds, Beacon and the future of advertising:

I once again remind you. 

• I am not your bullseye.
• I am not your target.
• My behavior belongs to me.

Stop thinking like hunters.  Getting my friends to hunt for you is still being a hunter.  If you are lucky I will come running.  Or you can look at it this way.

photo credit

Continuing on the theme of complexity

The Relationship Economy is forcing a need for new standards and new metrics  in how companies engage with customers.  If you are a start-up you benefit from the ability to  build a community groundswell and start at the grassroots level.  But what if you are a major brand and mass marketer? How do you engage and interact in this new landscape in a way that is smart and efficient.  Jeremy Liew smartly points out the need for new advertising standards.

I whole heartedly agree that standards are needed.  But I would like to see us go a step further.  I'd like to see networks develop opportunities for brands to engage and interact in ways that are more integrated than slapping on some banner ads.

Check out this screen shot from IAB's standard units page.  What does this Filemaker ad do for me here? If I have clicked on this page I am in "solution seeking mode" and buying Filemaker is NOT on my mind.

Thoughts?

Banner ads and PV - I wish they would just die already

So, the new IAB numbers are out and Om and Jason are debating the future of banner ads.

I say - die banner ad die.

They are a lousy extension of 'spray and pray' ad models from TV and Print.  Granted they are more efficient, but they are still incredibly lacking in meaningful connection (or engagement if you prefer a buzzword). 

Banner ads as the central vehicle will most likely die an excruciatingly slow painful death.  For now, they have a place in branding and special promotions and events – especially if they are entertaining and fun.  But building an entire sustainable business model on them is just plain stupid.

Yes - I live in an idealistic future universe where customer and company have a meaningful exchange of information and contact.

Is that SO crazy?

With all the incredible innovation going on today, it saddens me that new businesses are STILL focused on the old models. Do I have all the answers? No. What I do know is that the Live Web changes everything and we CAN do better than the "last time". We can't settle for a universe built only on old ad models.

The exciting opportunities are coming.   They will arrive in the not too distant future, and then the customer will actually have a certain (I am a realistic idealist) amount of control over their intent and engagement and participation (and their data). 

It is still early in this arena.  The VRM (Vendor Relationship Management) work Doc is doing with The Beekman Center, the potential of some of the Semantic web initiatives, Identity standards, along with some other cool whispers I have heard, demonstrate that something interesting is definitely afoot.

These initiatives are not replacements they are augmentations. I agree with Ross that nothing will ever replace multi-layered human organic discovery, and banner ads will continue to exist, but we can be more efficient and smarter about how we interact and measure both online and offline activity (and integrate the two). 

So for now, we will live with the old models as huge ad agencies, the big media players and the current technology infrastructure in place continues to plod along.

But I see the future.  I may be a pie-in the sky idealist - today - but the times they are a changing.

Advertising is dead...long live advertising

Jeff Hicks, CEO of Crispin Porter + Bogusky on DMA News

“We think the future of advertising is great products that have marketing embedded in them"

This is hopeful.  Slowly uncrossing my fingers.

Then I read this paragraph and my excitement completely deflates (unclear if Hicks or the reporter is saying this):

"The role of advertising is to push consumers toward products. At the center is the product. Advertising is at the periphery, with packaging and customer relationship management and distribution as the layers between it and the product."

Shudder. This is just so wrong on so many levels.

At the center is the CUSTOMER and I don't want things PUSHED to me and I don't want to be MANAGED.   This strongly demonstrates the dramatic need to create new attitudes and language around how to interact with the customer.  This means redefining the traditional silo-ed roles of marketer, advertiser, pr, customer experience, product design.

It also raises a few serious questions:

• Is Crispin Porter now in the product design business?
• Are the Agency's and traditional marketers ready to shift their budgets and resources?
• Are they ready to bring in the talent necessary to shake things up and do it right?
• What is the best way to educate and bring along the 'old guard' or is it just a lost cause?
• When will people stop talking about subservient chicken as the answer to an advertisers prayers?

I am excited about all this fuzziness of roles, but many will be very very threatened.  Mark Hurst has as a great little example of how this will be impacted internally at client and agency.

You can also check out Chris Carfi posts directly from the Forrester Conference at which Hicks spoke. 

[thanks Mark and Scott]

Egg on You - "Intrusive"

Yes, CBS will be advertising their fall line-up on eggs.  They have gotten a lot of press about it - good and bad. I applaud their efforts to do something different.  It is inventive, but so what? 

What really caught my eye in the New York Times article was this quote by George Schweitzer, president of the CBS marketing group,

"The best thing about the egg concept was its intrusiveness. “You can’t avoid it,” he said.

Sorry George - you are missing the point. 

You are just replacing one intrusive medium (TV ads) for another.  You can do better.  There goes that last 20% rule again [rule #6] - you were thinking creatively but didn't go far enough.  Now , I am not familiar with the CBS line-up, but I am sure for the money they are paying for the egg-brigade,  they could have banded together another interesting promo utilizing fans of existing shows that would get  people participating and involved in actually watching the shows.  I will admit they got some good pr out of it - but not sure if that will transfer to any market share growth.

Also, the article points out that as makers of the technology,

"EggFusion sees it, consumers look at a single egg shells at least a few times: when they open a carton in the store to see if any eggs are cracked, if they transfer them from the carton to the refrigerator, and when they crack them open".

Uh, unless I am missing something, eggs are placed in packages vertically and the promos are placed on the side of the egg horizontally (see photo).  I am not going to see that promo more than once --right after I crack it open, bleary eyed for Sunday morning breakfast.

Yup - the devil is in the details [rule # 8].

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