Tuesday, 18 April 2017

Branding Is Being Made Irrelevant By Amazon and Google


Back in 2007 I had a moment. Not a senior moment, but a career-changing insight into a prejudice I'd long held as a 'push marketer':

Hair-netted seniors giving out samples is the lowest form of marketing. NOT!

Turns out they're the highest form. To secure my then wife's job, I took up the challenge of explaining to CIM's CEO and senior team (Consumer Impact Marketing, now part of Mosaic) why they were on the leading edge of a growth business and why they should elevate LAUNCH!, their 'trinkets & trash' department (my ex's description) that produced branded merchandise for contests and giveaways, up to become the strategic and creative lead for their experiential marketing division (LAUNCH! grew steadily to become and remain a powerhouse in Canada). In the process I became a convert to the inestimable value of connecting humans to brands through one on one conversations.

Back then it was exactly ten years since the release of the most momentous new insight into the marketing industry, and perhaps the entire human species, since the Internet was switched on in 1989: The Experience Economy (Pine & Gilmore, 1997). That simple understanding, that after 50 years of consumerism, people had shifted to wanting great experiences much more than they wanted stuff, SHOULD have led to billions of dollars of television spending being shifted into Experiential Marketing – but our human weakness for ‘shiny & new’ distracted us with digital, social and blockchain. (Whatever that is, but hey! Don Tapscott makes a lot of money peddling ‘shiny & new’ to the gullible masses!)

To be fair, probably the single biggest barrier to XM winning the largest slice of the media mix pie that it deserves was CPM. Cost per thousand impressions was such an integral and bedrock measure in the business that comparing pennies to hundreds of dollars was just too shocking a shift, especially with the arrival of the Procurement Department. Still, Admiral Grace Hopper got it right in noting:

Humans are allergic to change. They love to say, 'We've always done it this way.'

Branding is something that we’ve “always done this way” for 100 years, so why is it beginning to fade? Because people, especially young people, just don’t care as much about symbols of status today the way people did after the end of the second of two world wars. Back then the Developed World was transforming as Capitalism drove higher incomes and empowered Consumerism (“Keeping up with the Joneses”). People had increasing disposable income and tourism was in its infancy.

Young people today grew up in relative wealth and even the poorest kids, with easy credit for mom and dad, have had a lot of ‘branded stuff’ growing up and many ‘caught the travel bug’ with family trips to Florida or Cancun. Consumerism is no longer something to aspire to, in fact, if you want to rebel against mom and dad’s values, you are likely to reject Consumerism and embrace ‘Doing Good’ experiences, quitting your new job to build housing in the developing world.

Plane travel and all-inclusive vacations are now so commonplace that thousands of weddings now
take place on Caribbean beaches with the entire group of family and friends in attendance, forgoing wedding gifts in lieu of covering travel costs. Now THAT is a big change versus a few decades ago and reflects the trend toward experiences over stuff. In fact, when couples have already filled their condos with trendy, reasonably-priced stuff from stores like TJ Max, Marshall’s, Home Sense/Winners and Ross Dress for Less, the old idea of the ‘gift registry’ for a set of fine china and silverware has greatly eroded the significance of branding, cheapening all of the brands sold in those outlets immeasurably. I can’t give away my recently departed aunt’s set of fine china.

First the generic ‘own label’ brands at all the major grocery and pharmacy chains (and eventually generic stores like Canada’s “No Frills”) chipped away at the perceived value of brands in consumers’ minds, then the big box wholesale clubs like Costco and Sam’s Club took the process a step further. Today’s young people have grown up consuming no-brand products and are well educated in the “same as branded” generic reality.

“The Extermination of Branding”?

‘Disruption’ is what is going to kill off the now age-old business of branding. The new way to carve out niches for growth is to go after any way of doing things that is “the way it has always been done,” and Google and Amazon have virtually unlimited resources and the constant pressure of the gambling pool for the global rich that we call the stock market. Grow at a minimum of 10% per year or see your stock price slide. In fact, grow at MORE than 10% (Google, Amazon, Facebook, etc.) and you don’t even have to turn a profit!

What these firms are doing RELENTLESSLY is searching for the next business model that they can infect and then hollow out. The opportunity they see with branding is ripe. All the money that marketers invest in building brands is money that Amazon and Google can discount and offer consumers the same for much less. Google is undermining Amazon with algorithms that search the marketplace and offer the same or better prices than Amazon’s. Amazon is using their algorithms to figure out what we need before we need it, essentially undermining Google by preempting search.

Who loses?

Brands that relied on advertising and the consumers’ perceived value of premium branding. If I can ask Amazon’s Echo (“Alexa”) or Google’s Home for double A batteries and I’m offered their own label brand for much less than Eveready or Duracell, with the reassurance from the device that theirs is equal in quality, my new ‘relationship’ with a trusted source of stuff, information and ‘advice.’ If I’m a manufacturer supplying these new online retail powerhouses with a growing supply of generic soap or batteries AND my stockholders are demanding ever more cost cutting…

Who gets fired first?

The Marketing Department. When the manufacturers develop new flavours or products and Amazon or Google can announce the news directly to the family without interrupting their shows or games or conversations, who gets fired next? The advertising industry.

Who wins?

The agencies who put young Brand Ambassadors out into the streets and at events and hair-netted seniors giving out samples in big box stores: Experiential Marketing. And it is these same agencies who should be leading the way to invent and maintain the most impactful ways to engage and maintain relationships with influencers WITHOUT destroying their credibility by paying them for positive mentions.

Watch this 25 min. talk by Scott Galloway on the looming axing of CMO’s and their teams: How Amazon is Dismantling Retail


Kevin is a Concept Inventor: innovative business-building concepts and breakthrough solutions. Want more of his insights and how they can help your marketing efforts? Book a conversation with him today. Some topics you might be intrigued by:

  1. Credibility is Critical to ‘Influencer Marketing,’ yet it DIES When We Pay Influencers.” Are you a guilty party?
  2. “The Death of the Ad Agency Model was Instigated in 1992, Giving Birth to What?” – A template for a new MarCom Agency business model
  3. “If It’s Now All About 1-on-1 Engagement, Why Isn’t 80% of Your Media Budget in X?” – “The Experience Economy,” came out in 1997. We just got distracted by ‘shiny and new,’ but shouldn’t experiential marketing be getting a bigger slice of the pie?
  4. “Bubbles Burst, Always” – The US economy is set to explode very soon, have you and your company prepared for the inevitable crash?
  5. “The Diversity We Cannot Name” – It’s the odd characters who sometimes have the most to offer. I explain who they are and how to get the most out of them.

Contact: Kevin.Lenard@Gmail.com

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