Branding in the Post-digital World

Branding in the Post-digital World

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Creating and managing brand value

TM

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Branding in the Post-digital World

Introduction: At Interbrand, we have a vision that shapes the way we think about brands. It is that Brands have the power to change the world. This may sound like a bold statement, but its true. Brands are everywhere, inuencing peoples daily lives. Everyone aspires to certain brands, is dened by the brands they buy into, and derives comfort and reassurance from the brands they associate themselves with. Peoples behaviors, attitudes and even their values are all inuenced by brands on a daily basis. As we work with our clients around the world, we have noticed a subtle and increasing trend away from consumers simply being inuenced by brands, to the point where brands are increasingly being controlled and shaped by consumers. The brand is certainly owned in a legal sense by the company, but it is increasingly cocreated and evolves on a daily basis. The primary drivers of this distinct trend are, of

course, the huge changes in the way people live their lives in this digital, or post-digital, age. Brand owners need to address these changes soon, or risk being left behind in a fast-moving world. During 2011, we surveyed more than 800 companies about their digital strategy and uncovered some worrying implications for brands. Some 16 percent said their company was digitally inactive and although most respondents feel that the objectives of their digital strategy are clear, two-thirds acknowledge that decisions relating to this strategy are made in a fragmented way. As this paper outlines, this lack of consistency and clarity will heighten the challenges of brand management in a world of digital conversations and interactions. Almost more worryingly, less than half of the digitally active companies we surveyed have a social media policy, and as we will demonstrate, being part of the all-pervasive conversations is critical to successful brand management in a post-digital world.

1. The holistic view how brands must catch up with consumers It is clear that the explosion of digital media from social networks and smartphone apps to online forums and blogs has fundamentally changed brands and branding. In what is often called the postdigital world, digital is not just another channel or a bolt-on to how brands are managed it is fundamental to the way brands are. So when we speak to our clients about digital, we stress the importance of creating a holistic strategy for the brand, not merely a digital strategy. In other words, a complete brand strategy t for the world we live in today, where many if not most brand touchpoints will be digital, or digitally enhanced. Why? Most of us have always wanted to experience brands as a series of seamless, connected experiences, where visiting an organizations retail outlet, talking to a staff member or visiting their website all feel the same. Marketing professionals have all heard

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Finance
Human resources

Sales

brands also need to be protected and nurtured if they are to grow and reach their full potential. This is especially true in a postdigital age, when brand owners no longer have total control. If brand management used to be a passive, monitoring process largely focussed on brand identity, nowadays it has become an active leadership process that affects beliefs, actions and behaviours across the whole organization. In this new world, brands cannot be created in isolation. They exist in many dimensions, with many incarnations and with changing or evolving expressions. Understanding this new, dynamic context begins with a new way of thinking about the relationship between business and consumers. 2. From B2C and B2B, to B&C and B&B Many of you will be familiar with the language of B2B and B2C (business-tobusiness and business-to-consumer). But those phrases belong to a time when brands were largely seen in terms of communications, with messages being dispatched from businesses to consumers. As the Cluetrain Manifesto1 predicted, markets have become conversations and these conversations are expanding in scope every day (consider how Twitter has changed online debate). In this complex web of interaction it is ineffective to simply issue brand guidelines in the hope of guaranteeing consistency. Brands dont just exist in 2D form anymore they are experienced in 4D, sensual surround sound, and they are heavily inuenced by the evergrowing conversations within markets. This change had already started to happen before digital media came along, with organizations placing increasing importance upon listening to consumers, research and relationship marketing. But branding in a post-digital world requires a genuine leap. As Figure 2.0 illustrates, the worlds of businesses and consumers are increasingly overlapping. Consumers and businesses now co-create brands, facilitated by the explosion of digital media and interaction. This

Business strategy

Brand strategy

Marketing

Manufacturing/ Operations

Distribution R&D

Figure 1: Using the brand to bring the business strategy to life

this in focus groups; some choose to listen to it, and others dont. The difference is that thanks to digital media, we, as consumers, can now demand a seamless experience, compare and discuss alternatives offered by competitors and quickly switch brands if we see t. In order to at least keep up with this new reality, we must increasingly view the brand strategy as the business strategy brought to life across the organization (see Figure 1.0 above). Moreover, companies need to deliver

against this in a compelling, distinctive and desirable way, which people (employees, customers and other stakeholders) can easily understand, relate to and act upon. At Interbrand, we therefore dene brands as living business assets, brought to life across all touchpoints, which, if properly managed, create identication, differentiation and value. If you think of brands as living business assets, then you start to think of them as being alive, organic, uid and dynamic. They do need managing, but

Levine, Locke, Searls and Weinberger (second ed, 2001) The Cluetrain Manifesto: The End of Business as Usual. See www.cluetrain.com

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behavior of the brand and for brand, read business. 3. The value of brands in the post-digital world Every year Interbrand produces the Best Global Brands ranking. Based upon our internationally approved (ISO 10668) valuation methodology, the ranking demonstrates that brands are assets of signicant value in many cases they are a companys most valuable asset. The model examines economic value added, the role of brand in consumer choice and the strength of the brand in generating loyalty (and hence revenues) over time. Translating these factors into the actions and behaviors involved in making a purchase (we measure actual purchase rather than views on likeability or likelihood to purchase), we talk about the role brands play in driving choice, commanding a premium and building loyalty. Digital is signicantly affecting all three of these fundamental areas. Choice is changing It is fair to say that the balance of power between consumers and businesses is undergoing signicant change. Think back several hundred years to the marketplaces of old where individuals did business with individuals. Each knew the other and there was a sense of equality in the relationship, enabling the buyer to easily hold the seller to account on price, quality or any other considerations. After the Industrial Revolution there was a gradual increase in the power of companies and a reduction in the inuence of buyers. The post Second World War period of consumerism saw the growth of huge corporations, which employed marketing techniques to direct consumer behavior and began to dehumanize consumers as they targeted, penetrated, segmented and used mass media to manipulate purchasing behavior. By the 1990s, we began to truly feel the impact of these trends. As markets saturated, consumers became more savvy

B2C (1980s)

Business

Brand communications

Consumer

Business

Brand dialogue

Consumer

Brand experience

B&C (today)

Business Consumer

Brands exist today as a constant relationship between business and consumer

Figure 2: The world of B&C, not B2C

overlap means that brand managers need to focus more on understanding, inuencing and engaging, and less on regimenting, controlling or educating. Nowadays, brands need to be moulded, shaped and guided to ensure relevance to, rather than being imposed upon, customers and staff alike. Consequently, at Interbrand, we increasingly think in terms of businesses and consumers

working together to create brands: B&B or B&C, not B2B or B2C. Consumer-created content and conversations are steering brand image, reputation and choice. Certainly, the degree to which the business and the consumer overlap will depend on the category in which the brand operates. The task of the brand owner is to understand that overlap and how it affects the role and

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and companies began to engage in dialogue with their customers. The tables were turning, but not very rapidly. Social networking, or web 2.0, has redressed this balance of power with startling swiftness and huge implications. Put simply, the individual customer is getting stronger and the company is getting weaker. We have all entered the world of the conversation. The increased power that rests with consumers has increased the width and depth of corporate accountability. BP, Toyota, Nestl and many others have all felt the wrath of dissatised markets via social networks, but the real change is more subtle and far wider-reaching consumers are fundamentally changing the way they buy. For most purchases, the old model of a straightforward funnel with well-known brands entering at the consideration stage, followed by a shortlisting phase when a smaller number of brands is selected, with a chosen brand emerging at the end, is now out of step with reality. In 2009, McKinsey & Company reviewed this funnel metaphor and proposed a new model called the Consumer Decision Journey, where consumers tread a more complex path. Brands are added and subtracted at different stages of the purchase journey, according to personal and sector knowledge and experience. For example, on average, car buyers add 2.2 brands to their initial set of 3.8, while skin care shoppers add 1.8 to their initial 1.5 brands.2 As Figure 3.0 shows, consumers views of brand choice start in a familiar place: passive awareness of many brands followed by disposition to a few within a category. But when consumers start actively considering

Awareness

Disposition

Inuence at all stages

Consideration

Brands a dded

Brands subtracted

Purchase

Feedback loop is the expression of Brand Expectation vs Brand Experience

Figure 3: A revised model of brand choice

At Interbrand, we increasingly think in terms of businesses and consumers working together to create brands: B&B or B&C, not B2B or B2C.
2

McKinsey consumer decision survey, 2008, US auto and skin care categories

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brands, they add and subtract to their shortlist dynamically. This completely distorts the shape and linear sequencing of the traditional purchase funnel. The particularly interesting aspect of this development is that what other consumers say about a brand is increasingly becoming the most important input in consumer decision-making. In a way, this is nothing new word of mouth has always had incredible inuence on purchasing. The big change, of course, is the dynamic way in which opinions are heard, and how fast and far they spread. Today people can log their opinion instantly, knowing it may be read by thousands (sometimes millions) of people within hours. It is often said that three times as many people take time out to complain than to praise and bad news has always travelled faster! In a 2011 survey conducted by Lightspeed Research in the US, 56 percent of US consumers said they trusted the reviews of other consumers on the internet, compared to only 28 percent who thought reviews on company websites trustworthy. Between one and three bad reviews will deter the majority (62 percent) of consumers from purchasing a particular product or service.3 The big change is that digital has facilitated a never-ending snowstorm of information, reviews, opinions, feedback, gossip, anecdote and (above all) experience and companies have no way of stopping this. This means that other consumers can inuence brand perceptions at every stage of the customer journey, either as passionate advocates or powerful detractors. Theres always someone ahead of you on the journey, someone who has stayed where youre planning to stay, bought what youre thinking of buying, done what youre about to do and wants you to know how they feel about it. Their experience shapes your expectations. They can disqualify a brand you thought you might buy, and they can

introduce one you had never considered. According to market research conducted by Nielsen, more than two-thirds of global internet users seek online product reviews, recommendations from discussion forums or feedback from social media sites when making a purchase decision.4 And dont be fooled into thinking that this is only relevant to the most digitally advanced consumers. Among 5564 year-olds, one or two bad reviews led 31 percent to reconsider their choice of brand.5 But reviews and feedback are not the end of the story they are part of a much bigger pattern of engagement that consumers are developing with brands. At Interbrand, we believe that the changes may be more profound and farreaching than suggested by McKinseys revised funnel. That approach still, to a degree, assumes that a largely passive consumer is drawn through an inevitable process. This seems to underplay consumers practical and emotional decision-making, as well as the inuence of brands, peers or group dynamics and greater access to the experiences and opinions of others. We believe that consumers engagement with brands is increasingly dominated by their ability to pause, fast forward and rewind the purchasing process, rather than simply play. Digital has played a part in this by making time less linear. It has even reshaped consumer expectations of time. This obviously places more demands upon brand owners in terms of immediacy of effect and speed of response, but it isnt just about being fast. It is also about being appropriate and timely to the needs and lives of consumers. Premium justied In Interbrands experience, many brand

marketers think of digital platforms as promotional tools rather than opportunities to enhance the brand experience and create value for the customer. Digital experiences all too often focus on discounts and vouchers, which can undermine the image of a brand, rather than seeking to provide a means to ensure positive disposition and purchase. Many of us now have email inboxes full of Groupon or CouponsDaily messages informing us of the latest voucher codes and while this may drive short-term sales, over time it can have a detrimental impact on brand perceptions, and ultimately brand value. The secret is balance! In our view, digital can and should be seen as central to all brand building activities and should have a role to play in reinforcing premium price points, not just communicating discounts. Back in the days of the dot.com revolution, a number of articles heralded the end of brands. Their basic premise was that we would all become perfect consumers (in the economic denition), and brands would be usurped by perfect information, easy comparison, transparent pricing and constant availability. While this apocalyptic (for marketers, at least) view never came to pass, the effect of digital media upon choice, consumption and the ability to charge a premium is clearly evident in virtually every sector. The perfect consumer is indifferent to all but rational points of comparison: size, shape, speed, color, price, availability etc all powerful drivers of demand in their own right. However, this view completely disregards the human condition and the need for trust in a transaction one of the primary roles of a brand. In the process of seeking to understand choice, Interbrand looks closely at Drivers of Demand. These are the factors that

Lightspeed Research (2011), US data Nielsen (2010) Consumer Condence Survey, Q1 5 Lightspeed Research (2011), US data
3 4

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inuence decision-making, and they will, to a greater or lesser degree, always include price. In highly practical purchases like fuel for a car, rational factors such as proximity and price play a larger part in consumer decisions. In these cases, brands primarily play a trust and reassurance role there may be four or ve brands that consumers would happily buy or substitute. Lets take this analogy online and consider purchasing light bulbs, and the same basic rules apply. Consumers may trust a number of manufacturing brands, the retail brand adds another lter on trust and consumers can compare different brands and retailers prices quickly and easily. And then the magic happens along come the opinions of 10,000 people who have been there before, via social networks and blogs. Lets be clear light bulbs are a low interest category for most consumers, but even here online reviews and discussions exist. As we move towards high interest categories and major purchases, these inputs increase signicantly. So in this context does price move higher or lower in your category, or does the conversation take pricing off the agenda? Do you have greater price sensitivity for online pricing than offline? Only by taking account of social inuence in your pricing analysis can you hope to understand this vital part of the business and brand-building puzzle. The choice/price dimension is changing in the post-digital world, but it isnt as simple as it may appear. Indeed, Interbrand increasingly uses discrete choice methodologies to separate out this issue and examine it alongside the effect of social media. At the other extreme are the luxury and meta-luxury categories. Here, brands are

primary drivers and the role of price is to reinforce both quality and exclusivity. Such is the magnetism towards these brands that where prices increase, demand either remains constant or even increases. Therefore, the basis of desire for a leading luxury brand lies not only in its relative exclusivity, but is rooted in its perceived unparalleled quality and authenticity. Understanding the role of digital media in maintaining a premium for the luxury sector requires a deep understanding of social structure as well as the ways in which opinions and beliefs are created within the category. It is crucial to understand the dynamics of opinion, the formers of opinion and the ways in which these ows are changing shape in the digital world. Burberry has used digital to great effect within stores, as a way to keep its customers up-to-date and as a giant shop window. However, it is worth remembering that the companys troubles in the early 2000s were caused by overexposure and increasing associations with the wrong type of user imagery. Social networks can accelerate these risks for luxury brands in general, and if not properly managed can easily affect a brands premium position and its pricing. Even our hyper-sensitive Brand Playback mechanism (see page 12) needs a rening lens for the luxury sector. If pricing in the luxury sector is all about perception then social inuence must be a critical input, and yet we have seen little evidence of serious attempts to link the digital conversation with pricing models. Building loyalty Understanding and managing digital conversations in the post-purchase or ownership/usership stage are critical to building long-term sustainable brands and

business. The lifetime value of a customer becomes as much about the continual maintenance of customer opinion and experience as triggering repurchase or postsales service strategies. Here, it is important to consider: how digital strategy can help secure future loyalty for a brand how loyal consumers can be better managed to become active and committed brand advocates, impacting positively on the brand choices of other consumers how you can use digital to create a truly seamless experience.

It may seem obvious, but purchase does not guarantee loyalty. Whether it is done in a moment or over a period of time, consumers assess and appraise brands. And then there is a moment of realization (at Interbrand we call this the loyalty moment) when they sense that this brand is for me or not for me. After that, there are two roads consumers can take. The rst runs smoothly: enjoyment, repeat purchase, advocacy and loyalty (or bonding). The second is less smooth: uncertainty, dissatisfaction, complaint and/or rejection (see Figure 4.0 on the next page). But remember that bad experiences can often lead to the most loyal customers if you respond with well-timed and well-executed brand actions. The game is not over until the buyer actively rejects a brand. Up to that point, digital is a key tool in reaching out and engaging consumers by responding quickly and constructively. If digital is a key tool in responding rapidly, we were surprised that our 2011 Digital Dimensions survey, conducted with more than 800 leading brand marketers, found

Digital can and should be seen as central to all brand building activities and should have a role to play in reinforcing premium price points, not just communicating discounts.

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Impacts consideration of others

Impacts consideration of others

Purchase

innovations around the idea of never leaving. Their online recommendation system, one-click shopping button, loyalty program Prime, their own credit card and app all work hard to drive repeat purchase. The big picture Combining Interbrands map of the post-purchase/loyalty phase and our earlier picture of choice would require an impossibly complex visual. In Figure 5.0 on the next page, we have tried to show a highly simplied version of our thinking around the loyalty process and consumer choice. It neatly summarizes the two paths that consumers might take post-purchase, but still highlights the fact that negatively disposed consumers arent necessarily lost for good.

Usage / ownership

Appraisal

Inuence at all stages

The loyalty moment

Dissatisfaction Still in play/ can convert Complaint

Approval

Repeat purchase

Lost

Rejection

Advocacy

Select new brand

Loyalty

Figure 4: A revised model of customer loyalty

that 25 percent of respondents claimed that their company does not actively solicit customer feedback of any type on their post-purchase experience.6 The powerful feedback that this kind of post-purchase activity provides to the intending purchaser cannot be overestimated. These users

experiences are, after all, shaping future users expectations. And remember, customers are talking anyway, whether brand managers are listening or not. There are some great examples of brands using digital interactions to encourage loyalty. Amazon for example uses

Interbrand Digital Dimensions research (Aug 2011), n=803 brand marketers involved with digital strategy

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Awareness

Disposition

Brand experience didnt meet expectations (dissatised complainers)

Consideration
Brand experience met expectations (loyal advocates)

Brands added

Brands subtracted

Lost customer

Purchase
Loyalty Loop: Consumers weigh brand expectation against brand experience and feedback opinions that inuence the purchase decisions of others

Repeat purchase

Figure 5: The total brand choice / loyalty process

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4. Digital: the third strand of the red thread Interbrand often refers to the notion of a red thread when explaining how we think about the way in which brands should operate within businesses. The rst strand of this thread refers to the unique story or proposition of the business. Think Disneys commitment to magic, Apples to humanizing technology, BMWs to driving experience, Coca-Colas to putting desire within arms reach. As noted above, this unique story or brand proposition should permeate every aspect of the business, across all departments, experiences, environments and communications. The second strand relates to value understanding how brand value is generated across the business. This provides a model for investment, focuses corporate messaging and drives activity to ensure maximum return. The third strand relates to the role of digital. The starting point for any clear thinking on how to employ digital within brand strategy is a simple one: that both online and offline (virtual and real worlds) are now merged into one ongoing experience. And that experience how audiences encounter and perceive your brand increasingly determines the vitality of your company. Your customers are living in a seamless, hybrid world where online and offline experiences are entwined. Smart devices and the physical world constantly interact in a nonlinear and decentralized array of touchpoints ranging from websites, apps, social media presence and online ads to billboards, broadcast, retail, real estate and other environments. The question is: are you managing this complexity to create simplicity and value for consumers? Within this context, digital should be viewed and used as the glue or missing link between the often disjointed and disconnected experiences of the real world. Consider the customer and their wide array of inputs and inuences to be the center of the universe.

Your task is to create a preference for and loyalty to your brand in a world where the competitors are only a click, or three negative reviews, away. In practical terms digital provides the opportunity to create not only new experiences, but also (and more importantly) to enhance reality and to at last generate true seamlessness. So, a fashion retailer becomes browseable anywhere, can pipe interactive communications to all stores, offer purchase on-device within stores via barcodes or QR codes, connect customers to other fans, turn their likes into product previews, reward introductions The potential is endless, but the common theme is the digitally-enabled opportunities to turn every business into an always on, always relevant business. What this means for brands is that nothing is ever in isolation. Digital has multiplied the number of potential touchpoints or connections that consumers can have with your brand, and, in this context, building a seamless experience for your brand holds the key to genuine customer involvement and loyalty. In the same way that Apple has lured us into an interconnected world of devices, apps and user experiences, every business now has the potential to create a fascinating web of experiences, interactions and conversations for its customers. This is the world of B&B, or B&C (as explained on page 2). Constant advances in technology are creating new opportunities for brands. These work best when they build upon the brand proposition and create more meaningful connections with core consumers just like traditional brand touchpoints should. In 2011, Tesco created a virtual top-up supermarket on a billboard in a South Korean subway station. Commuters could scan the QR code of any product on the billboard, purchase it and have it delivered within 24 hours. Every little helps indeed.

Adidas brought its brand to life with a set of ve Originals sneakers in 2010. Each shoe was embedded with an augmented reality (AR) code, which unlocked access to an online interactive environment. This neatly tied together the brands target youth demographic, its streetwear credentials and its commitment to innovation. In a clever twist, the sneakers also acted as game controllers within the environment. LEGO uses AR in a similar way for an entirely different audience. When they hold any LEGO box up to a Digital Box screen instore, children and their parents can see an animated, fully constructed 3D model of the kit in their hands. LEGO gures and vehicles move around sets, demonstrating the play possibilities a great t for a brand that is all about construction and imagination. But beware these kinds of strategies rely heavily upon holistic thinking and execution, a capability in short supply within large businesses that are characterized by internal silos and division. We will return to this subject later (see page 13). It is very important to note that not all digital strategy is sound brand strategy. In Interbrands experience, too often businesses take a fragmented approach to digital. Our 2011 broad-based survey of the digital strategies of more than 800 companies revealed that there is much room for improvement when it comes to using digital strategy as part of brand strategy. We view Brand Strength as a powerful tool to align brand experience, both internally and externally. Within the context of these 10 components of Brand Strength, our survey asked businesses to rank themselves on a number of questions. The key ndings were provocative and show tremendous opportunities (or threats), depending upon your perspective.

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Authenticity
The brand is soundly based on an internal truth and capability. It has a dened heritage and a well grounded value set. It can deliver against the (high) expectations that customers have of it.

Clarity
Clarity internally about what the brand stands for and its values, positioning and proposition. Clarity too about target audiences, customer insights and drivers. Because so much hinges on this, it is vital that these are articulated and shared across the organization.

Relevance
The t with customer/consumer needs,desires, and decision criteria across all relevant demographics and geographies.

Commitment
Internal commitment to brand, and a belief internally in the importance of brand. The extent to which the brand receives support in terms of time, inuence, and investment. The degree to which customers/consumers positioning distinctive from the competition.

Interna l Factors

Protection
How secure the brand is across a number of dimensions: legal protection, proprietary ingredients or design, scale or geographical spread.

External Factors

Consistency
The degree to which a brand is experienced without fail across all touchpoints or formats.

Responsiveness
The ability to respond to market changes. challenges and opportunities. The brand should have a sense of leadership internally and a desire and ability to constantly evolve and renew itself.

Presence
The degree to which a brand feels omnipresent and is talked about positively by consumers, customers and opinion formers in both traditional and social media.

Understanding
The brand is not only recognised by customers, but there is also an in-depth knowledge and understanding of its distinctive qualities and characteristics (Where relevant, this will extend to consumer understanding of the company that owns the brand).

Figure 6: Ten Brand Strength Components policy at all. Although 74 percent felt the objectives of their digital strategy were clear, twothirds worried that their digital strategy decisions were made in a fragmented or decentralized environment.

On the internal dimensions of Brand Strength: Despite using social media in their marketing, half of the responding companies (49 percent) did not have a dedicated social media group. More than one third of respondents felt that inadequate resources have been dedicated to their companys digital experience and presence. One third believed that their companys investment in employee education on their digital strategy has been inadequate.

On the external dimensions of Brand Strength: The majority (65 percent) of respondents from digitally active companies believed their brands to be very distinct and yet only 13 percent claimed to audit competitors continuously. More than a quarter of respondent companies were not soliciting customer feedback to develop appropriate digital experiences and encourage consumer bonding with their brand. Only 44 percent of digitally active companies had a social media

It is clear that tremendous opportunities exist for companies who take the time and make the investments necessary to create a holistic strategy and execute it across their whole brand experience, both internally and externally. Once the seamless experience is dened and delivered, there is a clear brand management task: to try and steer the experience closer to the ideal at every touchpoint before, during and after

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purchase. The goal must be a smooth, seamless and rewarding experience from rst consideration of a brand through purchase, ownership and on to repurchase. It is important to be pragmatic and recognize that your service and product will not always be perfect. However, the notion of the ideal

experience allows you to plot the reality of your customers journeys and identify where the gaps between the real and the ideal are (or are likely to be) at their smallest and largest. Interbrand has worked with many clients to rigorously identify touchpoints, consumer

Setting the strategy

attitudes and behaviors at each stage of the customer journey, and examine how the experience at each touchpoint could be enhanced to improve engagement, enjoyment or purchase. Finding ways to harness the power of consumers, and ensuring that each experience clearly reinforces brand positioning, is becoming increasingly vital. Everyone loves branded experiences, everyone hates bland experiences. These endeavors should ideally be backed up by a value-based model to ensure the best return on investment. As we advise clients about these new digital dynamics, it is clear that many old brand management philosophies have little place in todays world. Centralized command and control structures and systems have necessarily given way to more exible and responsive approaches. If you, like us, believe that brands are living business assets, then it makes sense to seek greater opportunities to show connections to and anticipation of customer needs. This will enable you to generate involvement, evolve as necessary and demonstrate that your brand is as alive as the market it serves. As we mentioned above, the opportunity of the post-digital world is not only to create new experiences but, more importantly, to enhance reality for consumers and to at last generate true seamlessness in their brand experiences. 5. The power of voice Through digital media, consumers are giving companies permission to listen to and join in their conversations for the rst time. In a world where every brand is in a constantly evolving relationship with consumers, characterized by numerous conversations, tone of voice and messaging what you say and how you say it become increasingly important. In a context where conversations ebb and ow from positive to negative, brands require clarity of purpose and position

Impact of digital

Brand management task

Purchase

Desired customer journey

Real customer journey

Target audience reached

Figure 7: Ideal and real customer journey

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rather than just remaining engaged and dealing tactically with issues that arise. People expect a clear position from the brands they interact with. Indeed, they expect all of a brands conversational contributions to be consistent with its personality and values, much in the same way as people expect politicians to be principled and consistent (even if they dont agree with them). Most brands have numerous inuencers who speak on their behalf the many people within an organization, while speaking to consumers as part of their role, and through what they choose to share after hours on Facebook. So, as well as clear positioning, organizations require deeper brand understanding to give employees, ambassadors and consumers the ability to speak in a way that reects what the brand stands for and resonates with consumers. For many companies this new reality is just dawning. Today, consumers expect to have a near personal relationship with companies. While technology like Siri, Apples rather entertaining voice-interactive system, and the powerful opinion and behavior engines created by digital businesses such as Amazon can certainly ll part of the void, in the social world people are still very much in charge. People need to connect the brands people choose, keep coming back to and recommend to others are the ones that resonate with who they are and what they hold dear. The right tone of voice and messaging are vital in this context. A clear voice a distinct way of speaking and communicating across all touchpoints ensures that a brand is heard, quickly recognized and easily remembered by consumers across numerous conversations. The ability to clarify the true nature

and impact of the conversation is vital. Nowadays, marketers need to understand how and in which digital channels the conversation is evolving, and the degree to which their brand is clearly positioned and understood by consumers. But many of the current methods of examining the myriad conversations surrounding any given brand are at best crude and at worst, misleading. There is a lot of buzz about buzz (what people are saying about a brand or sector), but how meaningful and actionable are the many buzz metrics in use by marketers? At Interbrand we dont believe it is enough to monitor and report on conversations. Instead, organizations need insight into the quality and direction of conversations, combined with a clear understanding of how to position brands in a complex landscape. That is why we created Brand Playback. This tool analyses conversations and behaviors to establish real-world perceptions of brands, what interests and engages key audiences and how organizations can use this knowledge to put the consumer at the center of the brand experience and build stronger, more valuable relationships with them. Are you paying meaningful attention to, and engaging with, your consumers in a natural dialogue? Look at your brand messages. Do they intersect with the interests expressed online by your audience? Does your brand voice t with how your audience speaks? Do you have a brand presence where your audience spends time? In this age of dynamic dialogue, when there is a real temptation to address the most immediate noise or the loudest audience, it is vital to hear and understand what consumers want. Only then can you nd the most authentic way to connect with them that truly reects the essence of your brand. 6. The ability to innovate In 2001 AG Laey, then CEO of Procter &

Gamble, announced that in the future the majority of the companys new ideas would come from outside; a huge shift in strategy. Some 10 years on, a new idea is more likely to have sprung from a start-up, an agency or a customer than the R&D team. Crowdsourcing, consumer panels, Facebook likes, tweeted thoughts and online, realtime qualitative research The sources of new brand ideas are endless, which is both a blessing and a curse. But how do you best harness the new potential streams of ideas and innovation? Do crowdsourcing and consumer opinion and suggestion represent the misery of choice, or the true power of the market? Henry Ford is credited with saying that if he had simply listened to his customers he would have invented a faster horse! Real-time R&D is an important ingredient in this fail fast world. Its true that the volume and range of options presented by crowdsourcing can be part of a winning formula, but when it comes to looking for a world-shifting (or business-shifting) idea, such approaches, which generate a torrent of ideas or solutions, can quickly obscure the best options. It is worth remembering that most people can only react it takes a very special type of brain to innovate and create. Most of the new opportunities offered by the digital world can be broadly categorized into collective intelligence, crowd creation, voting/opinion and research. Procter & Gambles new product development program Connect + Develop, My Starbucks Idea and AT&Ts Mark the Spot are all examples of collective intelligence, and of course everyone knows about Linux. They harness the power of interested parties to provide ideas and thoughts as they happen, like a permanent, active feedback loop. Within this context we see a gradual increase in the perceived value of ideas. It can be argued that ideas, in their broadest terms, are becoming a commodity.

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Interbrand | Pg. 13

Companies have a myriad of inputs from staff, consumers, consultancies, and of course from accelerated and deeper conversations facilitated by social networking. There are hundreds of companies on the web and in the real world who wield the power of the crowd, and the economics are certainly seductive you issue a brief and submit it to the crowd, you receive ideas for free and pay on selection. It would appear that the buyer cant lose. But dig a little deeper or try to engage this torrent of ideas, and it quickly emerges that it is the ability to select and protably execute an idea that delivers greatest value to an organization. Most companies could spend the rest of eternity reviewing all the ideas generated through these inputs which is impractical, at best. This supports the old adage that success is 1 percent inspiration, 99 percent perspiration and is a strong argument for a well-managed and controlled process for developing products and services, and indeed innovating in any way. One of the great benets of connected communities is the ability to work with individuals or small groups who might otherwise be impossible to nd, let alone work with in an efficient and effective way. The best way to harness this resource is to rene your crowd, or build your own network of different crowds for different situations. Interbrands experience suggests that we will see an increasing need for creative

consulting high-level creative leadership and advice to help companies control the torrent of ideas, and indeed to inspire the torrent. Great creative leadership isnt simply about editing, it is about inspiring, leading and recognising potential. The ability to nurture a good idea into a great one will become increasingly important in the relationship economy brought about by digital platforms. As markets become more saturated, and are currently economically restricted, the value of differentiation increases exponentially. The really good creative leaders are visionaries (think Jonathan Ive at Apple) with the power to enthuse and motivate even the most riskaverse of business leaders. Talent like that doesnt usually exist in crowds it tends to be very individual, and consequently extremely valuable. Interbrands experience so far suggests that crowds can certainly accelerate the exploration of an idea, add richness and context and provide a useful extra head in the room. Vitamin Water and Pepsi have both demonstrated how stronger conversations with their markets can create more desirable products and services, and that getting consumers involved in wider, values-based or interest-based activities can generate both consumer loyalty and enjoyment. 7. Structure stretched In the networked world businesses are increasingly having to reconsider their

understanding of concepts such as power, authority, communication, decision-making and innovation. In most businesses there is an emerging and growing disconnect between the increasingly exible external world of social networks, (ie the market, and indeed the private lives of employees) and the internal world of strict hierarchies, rigid structures and organizational fragmentation. Many modern business structures, particularly in companies more than 20 years old, are based on those created in the consumer boom years of the 1950s and 1960s, a time of supply-side thinking where markets were far from saturated and, as Henry Ford once said, any customer can have a car painted in any color as long as it is black. Ford was one of the founders of mass production and the specialisation of labor. Such systems deliberately created separate departments (or divisions) within businesses to support efficiencies in production to meet demand, but over time they have turned into rigid bureaucracies or silos. In a world where markets are rapid, uid conversations, can such structures continue to have relevance? How can companies possibly hope to keep up with both the market and emerging competitors? Consider the organagram for your business. It probably resembles an essentially xed pyramid. If we drilled into a department, a product group or a market team, the chances are that they would look pretty similar. Now consider the shape of social networks constantly shifting webs of

Businesses are increasingly having to reconsider their understanding of concepts such as power, authority, communication, decision-making and innovation.

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Interbrand | Pg. 14

connections, with opinion leaders and subjects at the centre. According to the pattern and focus of the conversation, the hubs may shift and conversations themselves may converge or trend. Interbrand isnt suggesting for a moment that organizations should abandon structure and seek a completely at and exible approach. After all, even Google has recently opted for a bunch of blooming owers rather than continuing with its let a thousand owers bloom approach to product development which, according to Sergey Brin, created a glut of products that were not always up to Google standards.7 However, what we are observing is a growing distance between the behavior of markets and the behavior of businesses. Responsiveness and Relevance (see the Brand Strength factors listed on page 10), are two factors which clearly identify whether there is a gap between an organizations internal behaviors and its external promise, and hence whether there is a serious brand issue here or a structural one. Responsiveness is one of the four internal measures of Brand Strength, relating to the ability to move swiftly within an organization to keep up with the market. The ability to spot external trends and act upon them in accordance with business and brand strategy is critical and is inuenced by an organizations decision-making approach and reporting lines. Imagine a company where the research department reported through a separate line to product development, marketing and nance. How long would it take for the organization to hear, consider and act upon vital market data, and how long would it take for the results of those actions to be interpreted? Within that context, consider how Relevance, the ability to remain in tune with your market and to be relevant to its needs, might be affected. As the market moves faster, brand response becomes harder and Relevance suffers.

This cycle will also begin to affect brand Presence and Differentiation over time. The smartest companies are creating cross-discipline working groups and teams, enabling key personnel to focus on specic issues. But culture eats strategy for breakfast, as they say. The danger is

that such attempts will become dogged by unclear decision-making, vertical approval processes and grandstanding by individuals who are still rewarded via their division. The role of digital brand strategy and execution within this context is twofold. In the short term there is a huge

Dominant vertical approach

Dominant horizontal approach

Figure 8: Vertical and horizontal approaches

Alexei Oreskovic (October 2011) Sergeys secret Google projects, and the challenge of 1,000 blooming owers, Reuters blog, http://reut.rs/mTYljU

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opportunity within companies to create infrastructures for, and encourage the use of, internal social networking tools, enabling employees to connect and collaborate. In simple terms the opportunity is to create an internal digital environment which seeks to emulate social behavior outside the work environment bringing the outside, in. This is precisely what IBM has done with its internal social networking site, Beehive. The site gives IBM people a rich connection to the people they work with on a personal and professional level. It helps employees make new connections within the organization, track current friends and co-workers and renew contacts with former colleagues. In the longer term, organizations need to create digitally-based culture shift programs and business processes which gradually move the structure away from a dominant vertical approach to a dominant horizontal one (see Figure 8.0.) Greater attention to the internal understanding and appreciation of the brand is a powerful agent in this context. Clearer understanding of the brand (the business strategy brought to life) in every aspect of the business facilitates the ability to think and act across the organization, which is necessary to keep pace with market change. This must be met with similar protocol and policy changes to encourage greater internal enterprise, clarify authority and accountability and to reect this in performance review and reward systems. This need for change to keep up with markets has the greatest impact upon the future role of middle management. A vital control function within a supplyside organization and necessary to enable control and efficiency, within a demandside organization, this group presents the greatest barrier to corporate speed and responsiveness. Most companies need to rethink and rewire this group to create

signicant change. Many executives at this level are rewarded based upon individual, team and divisional performance. Their ability to effect change beyond their own immediate team is limited, and advancement is often based upon the ability to argue the corner of the division and maintain the status quo, particularly in divisional power and budgets. This group could, and should, be the agents of collaboration and connection, the high-speed communicators who seek opportunities and act together across the business. This new way of working lends itself immediately to digital approaches, combining work and collaboration with smart systems to hasten decision-making and enhance innovation. This reshaping of middle management towards an external focus requires considerable care and involves signicantly rethinking objectives, rewards, career development plans, etc. The biggest issue will, of course, be culture and the time it takes to genuinely embed new behaviors. One vital ingredient is the need for key performance indicators and measurement systems that cut across an organization and focus on increasing overall value generation for the common benet. Samsung, Nissan, Philips, HP and a host of others successfully use brand value, or measures of brand value creation, as a performance indicator. Brand value focuses the mind on the creation of value, based upon Drivers of Demand (see page 6) and helps the organization to think about itself the way customers do, as a single entity. It is then a short step to integrate research and nancial data into smart systems and create a real-time environment to fuel collaborative behavior and decision-making. 8. Leadership in the post-digital world As the world changes around organizations, so does the nature of and the demands upon leadership within organizations. The post-digital world requires leaders and

leadership teams to place greater emphasis on clarity, focus, speed and the richness of communications. Four of our 10 Brand Strength factors relate to the internal world of organizations for good reason purpose comes from within, and ultimately emanates from the thoughts and deeds of leaders. Add this to the evolving shape of organizations mentioned on page 13, and it becomes clear that the successful businesses of tomorrow will have leaders who learn how to best harness: the power of the connected digital world the changes required to create horizontal decision-making the changing attitudes towards authority that will shape the employee base of tomorrow.

The BP and Toyota brand challenges back in 2009/10 were perfect warning signs that signicant changes in leadership were required, simply from a PR or brand management perspective. In our view, both companies failed to properly connect with the conversation going on around them Toyota underestimated the groundswell of opinion, and BP showed a lack of nesse by trying to shout back only with big budget advertising, rather than truly engaging with the discussion. From a brand perspective, Toyotas saving grace was to restate its vision of quality and safety over volume, even though it took several months and the CEO to do this. BP still leaves us guessing about its purpose as an organization, which must have longterm implications both inside and outside of the business. If there are simple lessons to learn from these extreme situations, one must be that restating your brand vision is critical in times of trouble, and another is that engaging in the digital conversation is mandatory. Tomorrows business leaders, both at the top of and within organizations, will have

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to be adept digital players. Richard Branson of Virgin is an avid tweeter, who uses digital methods to solicit opinion and input from both inside and outside the organization in a non-authoritarian and highly inclusive way. The secret is to use digital methods to enter into a genuine conversation with the business, and then to unlock its potential to better serve markets by allowing and rewarding greater internal contribution and collaborations. AT&T runs an internal idea generation site called The Innovation Pipeline with over 100,000 of its people. The pipeline is proving to be a very successful source of new ideas for the company. The site has signicantly changed AT&Ts structure and how it inspires the AT&T community to contribute potentially breakthrough ideas that can be commercialized. By the end of 2011, 15,000 ideas had been generated in the areas of product/service, internal IT infrastructure and customer service, resulting in around 50 new patents for the company. In addition to communications and connectivity issues, leaders must also contemplate the nature of authority, accountability and their own roles. As the business context changes through shifts in market and employee behaviors, leaders need to focus on building cultures which encourage greater degrees of authority and responsibility over common notions of command and control, simply to speed up the operation. Many businesses have operating structures based upon geography or business sector, but this approach is largely built around the notion of creating localized mechanisms for command and

control. Close examination of many fast-moving, young businesses which have emerged and ourished in the digital world reveal a strong sense of internal entrepreneurship (Google), constant innovation (Facebook), marketfocused and autonomous teams (Procter & Gambles Clay Street Project) and purity in customer focus to ensure the highest levels of service (Amazon). All are clearly in sync with the brand and instinctively create products and services, experiences and communications that build and reinforce brand value. At Interbrand we believe that digital platforms offer opportunities to create smart systems to help teams better understand and live the brand. This facilitates the continuous development of a coherent and attractive brand offer across the whole business from product to environment and from service to culture. Imagine Siri connected to best practices, your top experts and intellectual property, your library of imagery, communications and images of your operations, all ltered by those proven to be the best at building value for your brand. One of the primary reasons that we believe that leadership must evolve is because those who are being led are changing signicantly. The so-called millennial generation is highly demanding. For them, respect and authority are most denitely earned, and no longer simply given. People now expect to interview and choose their lawyers and doctors. Consumers review the claims made by companies about their products and services with their friends or those they

trust in their widest social and business networks. Likewise, employees are becoming more demanding of their employers and they expect companies with a clear purpose, a distinctive brand, and operational approaches which allow them to work with more than a nod to their digital lives outside work. This attitudinal shift is accelerated by increasing levels of self-condence, combined with shifting value sets regarding work/life balance and career expectations among the better educated. These factors set the tone for very different styles of management behavior inside organizations. Any business which fails to provide clarity of purpose and clarity in their communications and working methods is likely to nd itself behind in the war for talent. This adds up to one simple fact: Businesses must have clear, compelling and well-articulated brands on the inside, and offer employees ways to interact with and contribute to these brands. 9. Brands as future drivers of success If the majority of this discussion has revolved around the notion of what digital means to brands, perhaps we should spend at least a moment considering what brands mean to digital. The dot.com boom heralded the death of brands, but that never came to be. This is because brands are about people and human behavior. They enable us to build constructs within, and around, businesses which enable people to understand and simplify markets in an evermore complex world. Brands represent the meeting of person and organization in every sense, from expectation and interpretation, to evaluation and ultimately satisfaction.

Tomorrows business leaders, both at the top of and within organizations, will have to be adept digital players.

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A strong brand provides a sense of collective leadership, involvement, identity and values to people inside and outside the organization. As stated at the beginning of this paper, Interbrand denes a brand as a living business asset, brought to life across all touchpoints which, if properly managed creates identication, differentiation and value. And our creative manifesto stresses the importance of; anticipating consumer needs, generating involvement and participation, and constantly evolving to create a living, exing expression. In short, brands are or should be business strategy brought to life. Internally, brands should culturally unite an organization, reduce the need for hierarchical governance and allow for more open, exible and rapid interactions with the market. They represent a powerful culture and provide a sense of purpose, identity and direction. Brands can help businesses achieve this by overcoming the barriers of internal silos, replacing divisions with a common purpose and a set of objectives that can only be delivered collectively. Beyond this, brands provide a way to identify, monitor and optimize value creation across an organization, leading to better deployed resources and capital efficiency in the form of a seamless, branded and valued experience. Externally, brands satisfy the critical need to differentiate in the ever-more competitive marketplace, providing a way to engage consistently in the conversation and to dene and deliver the seamless experience demanded by todays consumers. At Interbrand we believe that a wellconstructed and well-managed brand holds the balance of power in the post-digital world. From creating a clear leadership narrative within an organization, to establishing the basis for a consistent consumer experience and providing an enterprise-wide measure of value-creation,

a strong brand creates positive momentum, reduces decision-making complexity and focuses the organization, collectively, on the customer and success. The internal restrictions and organizational inertia of many of todays businesses threaten to turn them into social notworks in a world of social networks. Greater attention to building stronger brands, both internally and externally, could be the catalyst that many organizations need to catch up with the digital upstarts, or fast adopters. In conclusion Mention the word digital and many marketers are immediately on their guard. Much of this caution comes from fear, or a belief that they dont fully understand digital. In Interbrands 2011 Marketplace survey, we found that 32 percent of brand professionals did not feel they had the ability to use digital applications and social media effectively.8 In large part, this is due to the perception that digital is a toolkit for executing marketing campaigns. Seen through that lens, it is obviously a scary proposition for professionals not trained in digital tool development. However, as this paper shows, digital is no longer a mere tool it has become both an experience and a behavior, woven into the daily lives of consumers. And from a brand perspective (as explained on page 9), digital is the third strand of the red thread. Business and brands have never seen such a signicant shift encompassing changing business models, shortening value chains and rich, interwoven brand experiences to mention but a few. But at its heart, the digital revolution and the post-digital world that we now inhabit has always been about people and behavior. Understand people, understand their behavior, and the business and brand opportunities quickly present themselves.

Nowadays, it is impossible to develop an appropriate brand strategy without digital interactions being an intrinsic part of it. Digital has a key role to play in driving consumer choice, commanding premiums and building loyalty the primary ingredients of Brand Valuation and building brand value. A brand strategy that doesnt take account of the changes brought about by the post-digital world is simply not t for purpose in 2012.

Interbrand Marketplace research, July 2011, n=231 marketing executives

Jez Frampton Jez Frampton is the Group Chief Executive Officer at Interbrand. He leads the Interbrand network by shaping strategy and growth for all of its worldwide offices and by enhancing its brand value generating services to a prestigious roster of clients.

2012 Interbrand interbrand.com

Creating and managing brand value

TM