19 Sep The end of brands?
Coming back from a global research project on digital natives, Cyril Maury argues that in a context of information abundance, brands are losing relevance, both as proxies for product quality and as identity building blocks.
To participate in a global research project is one of the most rewarding activities of working in an innovation consultancy. We recently conducted such a project, with the objective to understand how the attitudes and behaviours of digital natives’ (a group we defined as people born in the 2000s) differed from previous generations.
One of the insights that surprised me the most is how little brands mean to this generation. As Christian, a participant in Sao Paulo, put it: “Why would I trust a brand? I don’t want to limit myself – I just buy what I like”.
If the early signs we witnessed are revealing an emerging trend, we could be looking at a major disruption. In this article, I discuss the evolution of the environment in which brands prospered, and ask how relevant they remain today.
What value do people get from brands?
According to Brand Finance, a consulting firm, the cumulative value of the top 500 most valuable brands doubled from 2008 to 2018, reaching the incredible sum of $5,904 billion (understandably, branding consultancies are not particularly interested in telling their clients that the overall value of brands is declining).
Where does that considerable value come from? Said differently, what is the value people get from brands?
When modern branding emerged at the turn of the 20th century, the function of a brand was to guarantee a minimal product quality. Harley Procter’s star product, “The Ivory Soap”, was marketed as being “99% pure”. People bought it because they knew it cleaned well – which is not much, but more than they knew of other unknown soaps. That remained the main brand function for decades: that’s why people stayed loyal to Procter soap, Heinz ketchup, or Quakers oats.
Over time, brands became more sophisticated. Moving beyond the realm of functional characteristics, they became a way for people to signify whom they aspire to be. People buy Diesel, Gucci, or Nike, not only because it’s a superior quality product, but also because they feel it represents their ideal personality. In that context, the function of a brand is to allow people to express their identity in a social context.
Of course, the two dimensions are linked, and some of the most successful brands play on the synergies between both: Apple evangelists will swear by the products’ quality and ease of use, and recognise themselves in the simplicity and sophistication that characterises the brand.
How relevant are these two brand functions today?
1) Brands as proxies for quality
Brands’ usefulness as proxies for quality is correlated with the level of information asymmetry between producers (companies) and buyers (consumers). Simply put, people need brands to help them identify which products are of fair quality only as long as they have no better way to do it.
Before the digital era, consumers depended on physical stores or commercials to be informed of certain products. The act of going shopping was as much a product discovery experience as a purchasing one. Now they can just stay at home and Google search or Instagram scroll.
Consumers also relied on brand marketing to identify which products were of good quality. Now they can read reviews, ask specific questions, and based on the information they receive, judge if a product or offer is suitable for their use. Why then, would someone rely on a brand to know if a product is relevant for their unique needs when they can rely on more specific, trustworthy, and easily available information?
2) Brands as identity building blocks
Two characteristics have made brands powerful tools to express one’s identity:
– Visibility. Iconic brands share one attribute: when someone uses them, they can easily be seen – hence the importance of logos. In a sense, using a brand is arguably the first form of “one to many” communication available to the masses.
– Potential universality. The message you are “broadcasting” can be easily understood by people from different cultures.
Combined, these attributes gave brands the potential to become the lingua franca of a globalised culture.
Seizing these opportunities, companies built and nurtured brands as a collective body of belief. Brands became a medium: shared signs used to express one’s identity with peers in a language everyone understood. The downside of this language: convenience and universality came at the price of subtlety (there is only so much one can say about himself by wearing a Nike shirt) and approximation (there is a potentially significant difference between what you hope to say by wearing that shirt and what others will understand by seeing you wear it).
Yet again, digitalisation broke the equilibrium.
As people are now building their identity as much online as offline, they can draw from an endless pool of meaning-rich signs to express who they are. Better yet, they can create multi-media content to precisely paint the persona they aspire to be and effortlessly broadcast it to the world.
Brands are still one of the signs they can use to tell that story. But they can also reveal it through existing content (one of the stickiest Spotify features is the constant social broadcasting of people’s playlist), capturing their life in pictures or videos (e.g. me and my wife eating at this delicious yet not too formal Korean BBQ joint), or even directly stating their opinions or preferences (causes, surveys, likes, status, etc.).
Brands arguably used to be the main type of social identity building block. Now, they are just one of many. They are shifting from being the most to the least efficient way to create and broadcast one’s identity.
Ironically, branding experts understood that shift long ago. As brands are created meaning-poor, marketers try to enrich them with content – what they call “brand content strategies”. Yet if brands require content, content doesn’t need brands, leaving brand strategists to fight an uphill battle (perhaps brands that are closer to content will find it easier to remain relevant).
Brands made sense in a mass-market world, less so in a long-tail one
This conjunction of factors is conspiring to retire the brand as the most practical unit to simplify people’s lives. Brands – whether as proxies for quality or as bricks to build identity – are just not precise enough any longer.
The people we spoke to during our research came back to the idea that the product or offer – not the brand – was the unit that made sense to guide their choices. They go online, check and compare reviews, and ultimately decide if a specific product or offer is good for them.
Relatedly, we asked tens of digital natives what their favorite brands were. Of the few who did name a brand (most did not), only three named a clothing brand: Nike, Adidas (both for functional attributes: comfort and durability) and Gucci. Brands just did not seem very relevant for them to build identity.
In contrast, virtually all the digital natives we spoke to were using digital content (which they sometimes created themselves and sometimes borrowed) to build and express their identity.
People now fully expect companies to adapt to their unique needs
Whether playing on functional or emotional chords, brands prospered in a context of information scarcity, from which an asymmetrical relationship between people and companies developed.
We see clear signs that this is coming to an end. Underpinning the rejection of brands is peoples’ increasing self-confidence and the belief they are able to:
– Evaluate if something is good for them, based on unique, endogenous criteria
– Precisely define their identity using a vast range of signifiers, including content they created themselves.
In a self-reinforcing loop, this belief is fueled – and fuels – the hyper-personalisation that characterises the current business world. As companies are able to target individuals with relevant offers, people are increasingly expecting products and offers to be relevant to their unique and contextual needs.
What does this mean for brands moving forward?
The fundamental needs once fulfilled by brands will not vanish. People still require the convenience to know what product works for them, and ways to express their social identity.
Yet as the power dynamics between companies and people shifts, executives need to recognize that people are increasingly demanding and sophisticated customers.
Rather than the end of brands, our insights point to the need for companies to rethink how they can help people by:
– Simplifying their choices without disempowering them
– Building and projecting their identity through a rich, precise and convenient language
Christian, like many participants we interviewed, was hard pressed to name a brand he particularly liked. Yet in the end he came up with one: “Marvel – because I always wanted to be the hero”.