Markets, media channels and consumer journeys are being digitalised. Will this reduce the value of brands? Or will brand thinking become more important than ever?

BI RESEARCH: Brands

Customers turn to digital channels when searching for information and making purchasing decisions. Social media creates new digital touchpoints between customers and brands. It is easy to assume that this development entails that traditional brand management is no longer warranted.

What is the purpose of great brand awareness and loyalty if a Google search provides you with everything you need?

David Taylor calls this dilemma “the battle of the branding beliefs”. He thinks today’s digital marketing practices has become too short-sighted and tactically focused at the expense of a strategic and long-term branding strategy.

Old concepts - new times

The basic principles of brand management involve two concepts: identification and differentiation.

  • Identification is the customer’s ability to recognise and recall a brand in the purchasing process.
  • Differentiation concerns how the brand stands out from the competition in a positive and relevant way.

The question is whether these two principles have been challenged in the digital age. The answer is not straightforward.

On the one hand, nothing has changed. Whether consumers base their decisions on newspaper ads, Google searches or influencers, does not change the underlying psychological processes.

Today, customers are more likely to complain via Twitter, but the content of their complaints is quite similar to what their grandmothers would share across garden fences fifty years ago. On the other hand, new technology and new media channels challenge the framework of these principles.

The challenges facing brands in the digital age

The internet and smartphones have made information easily accessible to the customers. Many of them make use of this access both before, during and after their purchase. Why concern oneself with brands when everything is searchable?

Paradoxically, the richness of information is exactly what makes brands more important than ever before. Customers need a sorting mechanism, a way to find meaning in the clutter of information. Brand awareness and clear brand positioning become guiding lights to navigate after.

Nobel Prize laureate Daniel Kahneman’s popularisation of how we employ our brain’s system 1 and 2 to think, can be used as a framework. System 1 is automatic, unconscious and quick, while system 2 is slow, conscious and reflected. Not surprisingly, strong brands are often connected with system 1.

However, the problem is that a lot of digital marketing implicitly require system 2. For instance, content marketing generally calls for the customers to actively reflect on the content. That being the case, even though the customer in theory has a good access to information - how often and when are they really going to make use of it?

Data does not equal insight

The brand managers of today have analysis possibilities that former generations could only dream of. We can follow the digital consumer journey, analyse every click and optimise digital campaigns.

This creates new challenges. Focusing too much on tactical and short-sighted marketing efforts, reduces the attention paid to more strategic and long-term branding indicators. There is a danger in underestimating the important data not found online. In addition, data does not equal insight. Even if data can thoroughly explain customer behaviour, it will not necessarily provide us with insight into the motives behind their behaviour.

Digital touchpoints

Brand communication used to be a one-way process. We developed creative communication, placed it in mass media and gambled that the customers were paying attention. Social media and digital technology has changed the landscape. Today, customers have a range of options to react to this communication. Not only to the brand itself, but just as much to other customers.

Digital word-of-mouth, which is only a few clicks away, allows for the sharing of positive and negative stories with thousands of other customers. Virality has become an important buzzword and its effect is formidable.

As a consequence, brand managers must pay attention to transparency, sustainability and ethical business practices. Any deviation is quickly discovered by customers, and is spread even faster. Brand builders cannot just claim to be responsible, they must actually behave responsibly.

Brands of the future

New technology, media channels and customer behaviour changes branding in terms of its theory and practice. This also opens for new opportunities, but does not suggest that every established principle is invalidated. Brands are still to be recognised and recalled by genetically ancient customer brains. A deep consumer insight, a solid understanding of the consumer journey and well-positioned brands will remain important in the future.

References:
• Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.
• Taylor, D. (2017). The Brandgym: A Practical Workout for Growing Brand in a Digital Age - 3rd Edition. London. UK: RedDoor Publishing.

This article is based on:
• Olsen, Lars (2018): Future of Branding in the Digital Age. Chapter in Sasson (Amir) (editor): At the Forefront, Looking Ahead, Universitetsforlaget. Scientific anthology published in connection with the 75th anniversary of BI Norwegian Business School.

Text: Marketing coordinator Eivind L. Johansen.

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