Quantifying the value of brands is one of the marketing industry’s most beloved endeavours. Top 100 lists are produced, methodologies are trademarked and an industry-wide "comfort blanket" confirming the dominance of the brand and, by extension, the role of marketing in business is created and maintained.
However, at a time when Airbnb, the world’s biggest accommodation provider, owns no real estate and Facebook, the world’s biggest media-owner, creates no content, what constitutes brand value is fundamentally shifting. This is a trend that raises several uncomfortable questions and challenges for brands.
Research firm Forrester predicts that in 2017, one-third of all businesses will restructure to what it describes as "customer-obsessed operations", resulting in several leadership changes.
This evolution will reflect the fact that most teams were not designed for a market in which customers and technology develop so quickly. In fact, Forrester believes that it will result in the departure of one-third of CMOs, as chief information officers take a leading position in shaping digital strategies to avoid being replaced by chief data and digital officers. Making incremental changes is no longer enough in a fast-moving and customer-led market.
The unsharing economy
The future value of brands lies in the sharing economy; a consumer-driven environment of access not ownership. Anneke Schogt, managing director of digital influencer marketing specialist IMA, says that this means we don’t need to make a distinction between brands or data being more powerful because they are of equal worth. "It is even more important that brands and marketers alike focus on getting to the roots of their authentic selves; determining what they stand for and why their customers need them," she says.
In the midst of this disruption, businesses will become more experience-based, with new business models and personalised brand interactions coming to the fore. This trend has led Forrester to predict that "people will gravitate towards superior on-demand experiences rather than product ownership".
Even the most customer-oriented go-to-market strategies won’t work in organisations still set up around internal product or business unit silos. Forrester suggests that in 2017, at least one-third of marketers will restructure their marketing’s role to align it more closely with customer segmentations or journeys.
Owning the customer journey is important in a market fuelled by extreme convenience, where established brands can quickly be usurped by new players. Uttara Masting, group strategy director at brand design agency JKR, says that in the era of the "internet of nothing" brands can come from nowhere – with neither heritage nor authenticity – and decimate the competition.
"HMV didn’t create iTunes, InterContinental Hotels didn’t create Airbnb," she says. "When entry-costs to the market are so low, the brand has to be everything." According to Masting, this means that brands must allow for more flexibility both in how they create and value brand assets. "People today don’t buy what you make as a brand – it’s how you do it."
Marketers can no longer simply brush off the wave of disruption that is buoying competition across the industry.
"The rules of the game have changed," explains Simon James, vice-president, global lead data analytics, at SapientNitro. "You don’t need to spend millions on advertising. The creative agencies’ misguided belief that digital is the digitisation of creative assets is simply an attempt to inflict an old-world model on new technology." Such thinking has led many brands to fall behind the brutal, data-powered efficiency of Amazon, among others.
According to James, this approach is too narrow. If the CMO is to succeed in assuming ultimate responsibility for the complete customer experience, then they must broaden their thinking. "The real challenge today is about structure, and the CMO needs to have a clear mandate to understand and engineer the customer experience," he argues. At a time when the industry faces a tipping point in start-ups, unencumbered by existing process and legacy systems, the value of the single customer view and joined-up thinking has never been higher.
The battle for the customer interface
Increasingly the value of a brand lies beyond the comforting reassurance of endless brand-valuation surveys, in owning the customer interface. "A lot of start-ups are simply adding a layer of customer service to existing products and services," James notes.
Isabelle Baas, managing partner, digital, at media agency Starcom, believes that, to maintain competitiveness, brands need to stay close to changing consumer behaviour. "The heart of the experience economy is the way in which data can be used to deliver meaningful experiences with low friction that are in sync with consumer expectations. As we are at the start of the data journey, there is room for improvement. Even recommendations from Amazon, the king of personalisation, can still be clunky."
With commoditisation and choice at a high for consumers, switching brands should be the norm. "It’s important for brands to keep differentiating themselves in the way they provide a service," Baas says. "Data will help get the communication and operation of their business fine-tuned. Brands can’t exist without great actionable data and vice versa."
This evolution demands a fundamental reappraisal of the role of marketing in business; from ancillary creative thinking to data-driven insight to inform the creation of strategic insight, services and products.
Brian Cooper, chief creative officer at Oliver Group, says much of the value is going into digitally and data-led marketing. "A lot of creatives are scared of data as it demands a shift towards a more digitally culture-led approach." In essence, this means that how you write and generate creative ideas must change. "What happened before was a very top-down approach, but now we need to embrace more collaborative approaches. That is what the digitally cultured world has given us, and it demands we embrace different ways of working," he adds.
Joy Bhattacharya, managing director of digital agency network Accenture Interactive, says three macro forces are in play when it comes to navigating the "internet of nothing". First, customers have "liquid expectations" of products and services. Second, the emergence of internet of things technology has added the complexity of multiple devices. Lastly, the "convenience factor", which fundamentally demands that brands refocus on collaboration, comes into play. "Say, for example, you are BMW and you have a connected car. When you go to a drive-through Starbucks, it should know your name and your order." He adds: "Marketers need to get comfortable with thinking about what services can be offered together across a wider ecosystem of partners."
The transformation agenda
The danger remains that as established businesses struggle to jettison their legacy systems, silos and processes, smart new players, burdened by none of that baggage, will crush their margins simply by delivering a better customer experience. Bhattacharya contends that while traditional digital and creative agencies have been focused on communication, marketers should focus on the end-to-end customer service journey. This means marketers must have a laser-sharp understanding not only of their existing consumer, but their future consumer. For example, a fast-food franchise operation might be so successful that its outlets simply could not cope with any more footfall, but the speed and convenience of delivery could feasibly extinguish the brand value fairly quickly.
Leo Rayman, chief executive of Grey London, argues that brands built in the midst of this algorithm-propelled culture have to transcend the noise and clutter, primarily via emotion.
So, brands will remain, but ultimately their position and relationship with consumers will be challenged.
"If you look at the growing impact of [brands such as] Walmart who offer consumers 15% off their shop if they use click and collect, you can see the shifting context in which brands must prove their intangible value," Rayman says.
It is an evolving ecosystem that many believe must translate to a cultural change in the marketing industry. "Embracing digital and data as an, at times, uncomfortable way of driving cultural change is key," Bhattacharya adds.
He also advocates that marketers should make themselves accustomed to taking a "partnership and pilot" approach to better understand how their brand fits into the customer journey.
Bhattacharya points to work Accenture is doing with a white-goods man-ufacturer to collaborate with brands on the creation of a smart fridge. He predicts that a growing number of industries and sectors will come together to create better seamless customer experiences.
"The companies that are struggling with this change the most are the FMCG companies; they don’t have enough customer data," he says.
As this experience economy continues to grow, marketers must open themselves up to collaboration like never before. The shape, structure and role of marketing is changing irrevocably.
"Over the next ten years you will get sick of hearing about business transformation," James says. He predicts that, once this phase is complete, brands will compete on an emotional level once more.
Technology means marketers know more than ever about how consumers act; but understanding their underlying emotional motivations sometimes remains elusive. The future of brand value is changing at its core. Increasingly it resides not in rankings, but in the ability of businesses to deliver the kind of flawless customer experience that never sits still.
Expert view #1
What does the sharing economy mean for brands?
Rather than the more benign, "friendly" form of capitalism that the sharing economy was evangelised as, consumers are realising that many who work under the aegis of the leading sharing-economy brands, or those who aren’t direct beneficiaries of sharing-economy services, are in fact directly suffering due
to their success. In the case of Airbnb, this results in community anger at rising house prices and municipalities passing legislation to limit the number of Airbnb properties. In Uber’s case, there is consumer guilt about the poor working conditions of its drivers as news stories detailing their lack of labour rights and subsequent pending court actions against rideshare operators fill the newspapers.
The knock-on effect of this will slowly transform these industries, currently based on the provision only of intangible platforms and the syphoning of money back to Silicon Valley HQs, into more equitably distributed models based on physical assets. This can be seen in its nascent stage through projects such as Airbnb’s establishment of its innovation laboratory, Samara; its first project is a community centre in Nara, Japan, which includes a series of rentable flats that locals will use to generate income for themselves.
Recently we’ve also seen the launch of car brand Lynk & Co, which is based on the concept of owners being able to share their vehicles for profit when not in use, as well as Tesla hinting that, in the near future, customers will be able to operate their vehicles as self-driving taxis to earn them extra income. In short, ownership models might not be as radically and irreversibly transformed by the sharing economy as we first thought, both for brands and for consumers.
Consumers are becoming more aware of the value of their data and its potential to earn income. As computer scientist Jaron Lanier wrote in his 2013 book Who Owns the Future?, this drive for consumers toward "economic dignity" in the internet age, through proportional remuneration for their data and content output, will continue to pick up pace. People.io is among the companies that already provide ready-made platforms to facilitate this, but brands such as Facebook will have to rethink their models if users no longer see free access to their platforms as a fair exchange for the revenue that the companies derive from their data.
This means the future battleground for brands is likely to be based on being able to establish trust with consumers, not only in terms of security of their data, but also through accurate reporting of how it is being used and monetised, and what sort of programmes they have in place for fair remuneration.
In an age of constant feedback across various social channels, all brands are involved in an ongoing conversation with consumers on very granular issues about their ethos and activity, meaning that any initiatives that establish a brand’s ethics are magnified – great if they are genuine, but terrible if they look opportunistic.
Brands are having to take a position on a range of issues, even if obliquely through actions and ethos, and stick by it, saying "we’re for this" or "we’re not for that", even if that means irritating or alienating certain demographic groups. In a world in which brands must have this much better defined persona, it is impossible for them not to sit somewhere on the political spectrum, be that by internal definition or consumers’ external projection. Look at how Indian clothing brand Biba took on the divisive issue of arranged marriages, for example.
What’s more, given the turbulent political climate, brands’ consumer bases are far more politicised than they have been for a generation. This has been accelerated by the way in which social media has become the primary forum for political debate, at the same time as brands are increasingly using those same platforms to interact with customers in more intimate ways, specifically through chatbots and apps. As brands try to establish a more intimate relationship with consumers on such platforms, it will be difficult for them to stay out of any prevailing conversations about issues that directly affect customers on a social and economic level.
Peter Maxwell, senior journalist, LSN Global/The Future Laboratory
The data dilemma
With marketing value increasingly built on the accumulation and analysis of consumer data, have we reached an inflection point in how people value their own information?
Chris Clarke, chief creative officer, international, at DigitasLBi, believes this issue is key to the evolution of the creative industries. "What I worry about is, are we slowly seeing a shift away from the control of capital?" he says. "The operating systems of our lives are being taken over." According to Clarke, this means people are less informed and less able to grasp complex issues. "The danger is that all we have is the ‘data shadow’ we leave behind," he adds.
Matt Boffey, founder of London Strategy Unit, says that the adoption of smartphones has led to brands appropriating different spaces.
"I’m endlessly disappointed with data," he adds. "From a consumer perspective, you exchange your data for better services, but often they don’t deliver."
Many in the industry believe that, as a result, we are approaching a turning point in consumers’ relationship with data. Paul Rand, president and chief executive of digital and social-media specialist Zocalo Group, says the internet has led to the collection, indexing and exploitation of data and information unlike anything in human history. As such, it is making its way into every aspect of our economy and lives.
"If your business or category has not been disrupted yet, just wait. It will be soon," he warns. "We’re now seeing industries ranging from razor blades [to] airlines working to evolve their business models to catch up with those who have used data and branding to identify and exploit market blind spots."
Nonetheless, in the drive to transform, brands must be wary of playing fast and loose with consumers’ time or data.
Clarke believes too many brands participate in a self-reflective loop. "The whole idea of a social-media calendar is about making every-thing the same. On ‘International Talk Like a Pirate Day’ some wanker will put out a tweet about how ‘you too can be a pirate’. It is far better to have a point of view."
Expert view #2
Why big data is driving the ‘internet of nothing’
Brands in the sharing economy are nothing without the big data they need to run. Without its platform of connecting passenger to driver, would Uber have a business? Airbnb is worth more than the Hilton hotel chain – without owning any property. But without the right data and algorithms, is Airbnb special enough as a brand to stand out against future competitors that will use similar approaches?
Brands, in this sense, aren’t in fact providers. They’re facilitators. And as the trend for unbundling ownership continues, the brands that will win in the near future are not necessarily the ones that are only engaging and warm – they’re the ones that will manage to develop their platforms and use consumer data in the best way, first. And they need to have a consistent narrative, no matter where consumers come across them.
"An element of trust has to be fostered by any brand that wants to take its relationship with its consumers seriously"
Although data is what has made the sharing economy viable, it is not without its own concerns. People are growing increasingly worried about how their data is used, and the impact this has on their privacy. There’s a disconnection between brands that rely on collecting data, and consumers who would prefer this data isn’t seen by others – especially when it comes to location-tracking. So, to make headway in this area, an element of trust and transparency is going to have to be fostered by any brand that wants to take its relationship with its consumers seriously.
The future of marketing, as a result of all this, seems to be a fluid one. Passively generated data that’s produced as we go about our daily lives is becoming valuable as we drive for deeper understanding of audiences, their behaviours and the underlying psychology of why certain people do what they do. Big data is what gives brands the power to create new services and/or products that are immediately useful in our current economic context. But in order to retain consumers, a balance has to be struck. Data helps us understand people better, and better understanding leads to better engagement.
This balance will see brands collecting and using data from its consumers, but in a way that is fully transparent and trustworthy. And because this can all come across as cold, the brands that are really going to win the day are the ones that can take these aspects of big data and combine them with a solid narrative – a warm, engaging and valuable purpose for existing within today’s world. One that has a moral stance on what it does in the world, and acknowledges its place as a global citizen.
The patrons of our digital age have become the power-brokers. Data is the new currency, with tremendous wealth being generated by those who own it. Like the Medicis, our new patrons have the power to shape the new economy and cultural landscape for centuries to come. With that comes tremendous responsibility.
Alex Van Gestel, chief executive, Verbalisation