Why brands will always be important
We’ve been getting brands wrong in the digital age. Their real value lies not in love, but in trust
Advertising and marketing people generally defend brands on the wrong premise. They like to talk about "added value". But there is no such thing as "added value". There is only value. And value resides not in the factory or in the supply chain, but in the mind of the person making the purchase.
You can produce the cheapest, safest and best performing tyre in the world, but until someone trusts it enough to put it on a car, it is essentially worthless.
A distinctive, ownable identity – a brand – is an essential component of this trust. After all, if you are not trying to own, build and widen a reputation for quality among the people who use your product, who are you trying to impress? How likely is it that your product is any good? And what incentive do you have to make your product or service better?
The reason brands command a price premium is because consumers know, through instinct and experience, that unbranded products are much more likely to be rubbish.
If you do not trouble yourself to make sure that satisfied customers can easily recognise you and buy from you again (or can boycott you in the event of disappointment), how likely is it that you have confidence in what you are selling?
Someone selling a branded good inevitably cares about the customer’s propensity to buy from them again. Someone selling an anonymous commodity does not.
The main value of a brand, then, is not in the creation of love, or even fanatical loyalty, but in the reduction of doubt. Contrary to the recent fad for building cult brands and the idea of "lovemarks" (an aspiration to create fanatical brand devotion which is much more appealing in theory than it is attainable in practice), a very large part of the value of a brand is not the passionate enthusiasm which the brand arouses in the purchaser, but the level of unconcerned, blas indifference.
When people buy famous, familiar and trusted brands, their brains do not register more mental activity when making the purchase decision than when they buy unfamiliar products – they register much less. What the brand is doing is ticking at the subconscious level a whole series of boxes which the conscious brain no longer needs to tick.
Tyre merchant: "i’ve got a set of new pirellis for you." Customer: "yeah, that’ll be fine. They make all the tyres for formula one cars, so it’s pretty likely they’ll know how to make the tyres for my car."
Contrast that with the conversation which will ensue if a merchant tries to sell an unfamiliar brand. "Who the hell are they?" "where do they come from?" "Is there a guarantee?" "How do i even know they are safe?" "Have you got anything else?" "Are you just trying to foist worthless rubbish on me?" We instinctively feel comfortable buying famous-name goods – it’s something the advertising guru and self-styled "brand architect" Robin Wight calls "the reputation reflex".
Now it takes time to build this kind of trust, and the kind of marketing activity which builds it is distinct from the kind of promotional focus which drives short-term immediate sales. We sensibly trust people who seem to be investing in their long-term reputation more than people interested only in making a quick buck with a single isolated transaction. This is not irrational – it is highly intelligent.
Yet when we use digital media we are prone to neglect this simple insight. Because digital media allows you to measure short-term effects very precisely, we tend to prioritise making a quick sale in a one-off transaction at the expense of longerterm brand-building investment. This has been good news for tech companies, but bad news for the longer-term health of brands.
Over the next 10 years we shall slowly realise that it’s time for the pendulum to swing back.
