Modern Marketing

Are brands really dying?

By Michael Feeley | Founder and chief exec

Tayburn

|

The Drum Network article

This content is produced by The Drum Network, a paid-for membership club for CEOs and their agencies who want to share their expertise and grow their business.

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May 21, 2015 | 5 min read

A recent report from The Drum drew our attention to something apparently troubling.

Tayburn marketing director Richard Simpson.

A recent study in the Harvard Business Review would seem to suggest that brands are in decline. Christof Binder and Dominique M. Hanssens traced the changing dollar value of assets as revealed across a decade of published merger and acquisition data — assets including IP like trademarks, product names and domains. Bracingly, as Binder and Hanssens put it, the data suggest that brand valuations have declined by almost 50%. Acquirers are seemingly less interested in strong brands and instead putting their money behind strong customer relationships.

All of this is in the context of digitisation: customer relationships aren’t one-way any more. Reviews are everywhere, brand and product recommendations are proximity based, real time, crowd-sourced. Information is everywhere. Cue the panic

But are brands really dying? I honestly don't believe so.

To consider the question you have to understand what brands are. Sadly, in business generally there is a misconception of what brands and branding is. Brands aren’t logos, visual identities, mar-comms and products or services. Brands incorporate all of these elements and quite simply put are gut feelings we have about things. Human beings are highly emotional animals and brands play important roles in our lives providing us with a variety of intangible value such as status, security, comfort and so on.

But people don’t love products or services because they love the brand. They grow an affinity for the brand because of their fondness for the product or service. It’s because of consistently exceeded expectations that people develop a love for specific brands and that stems from the product in Apple’s case or the service in the case of a brand like Zappos.

The commercial value of a brand to a company resides in it’s ability to do two things. Firstly, reduce the cost of customer acquisition by getting people to do your marketing for you through advocacy and word of mouth. And then to increase the lifetime value of a paying customer through strong customer relationships. Both of these are created by remarkable experiences, which all relate back to the brand and it’s positioning.

When we talk about the value of brands falling, what specifically does that mean? Value is subjective and as human beings all we are programmed to do is compare and contrast. Brand valuations only exist to create an intangible asset that companies can add to their balance sheet — especially if that company is listed on a stock market. Brands can’t be valued in that way, it’s all too subjective.

The performance of brands can be measured and crucially, held to account, if we as marketers develop and embed relevant metrics that prove the effect of investment in the brand to generate commercial returns.

That investment can come in the form of great marketing where there is a blurring between what was traditionally known as advertising and customer service. You can have great ads from John Lewis, great tech from Netflix and then “Random Acts of Kindness” from Umpqua Bank, which are effectively free services used as marketing tactics. All of which get noticed and talked about and make the brand all the more stronger.

Brands aren’t dying; they’re thriving thanks to the possibilities of the digital age.

Richard Simpson is marketing director of Tayburn

Modern Marketing

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