Brands in crisis
THERE’S A COMPLACENT belief among brand practitioners that as long as you’ve got strong brands you’ll survive the worst that modern life – and economic meltdown – can throw at you. But as marketing gurus grapple with the impact of the recession of the past two years, new evidence is emerging that it’s not that simple. The conjunction of the worst recession in our lifetimes and the emergence of digital media – particularly social media – has brought about a catastrophic collapse of consumers’ trust in brands.
Peter Stringham, New York-based CEO of Young & Rubicam Brands, calls it “The perfect storm “ – after the eponymous film in which two storms at sea combine in evil harmony to more than double their impact. The marketing storm has shaken faith in traditional media and societal institutions, creating issues that will take a decade to unravel.
“That’s never happened since the idea of marketing was invented,” says Stringham, in a discussion with The damage to brands was started by the failure of financial services to cope with the global recession. They didn’t predict it – in fact, they caused it – and when things went wrong they had no answers.
“Transparency is a big part of trust, but what happened was a total shock to consumers. Some people who put their money into huge funds – such as pension funds, where they thought their money was safe – lost half their capital,” says Stringham.
And that was done by companies who supposedly had their best interests at heart. Vividly articulating this collapse in trust,
magazine famously called Goldman Sachs – the world’s most powerful investment bank – “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
That problem was accentuated by the emergence of social media. “The worst thing that could happen in conjunction with a recession,” Stringham says.
What social media do is put information into the hands of consumers. That gives them control. And with that comes greater trust in yourself than in others – brands included. Institutional voices of authority, such as the media, the financial institutions and brands, were no longer trusted. People valued the opinions of other people more.
Previously, you’d resolve a complaint about customer services by complaining to the company. Now you go on Facebook and the next second it’s all over the Internet. They have to respond because it won’t go away.
And as the esteem of the social media went up, so that of traditional media – such icons as of London,
and went down, in almost perfect correlation.
But what really surprised was that brands that deliver best on promised performance are the ones that have survived best. Here again, financial services fared worst. In effect, the attitude is: I don’t care if you are polite to me, just don’t lose my money. “It’s very worrying for the brand. It’s rearranging the way people see media. This is the huge challenge for us.”
Will brands survive? Stringham says yes. Or will their numbers decline? “I’m not sure.” But now, says Stringham, brand differentiation is everything. That will drive margins, with 100% correlation. “But it’s getting harder to do. Even if you have high levels of differentiation you have to keep on doing it because your competitors quickly match you. Brands need a unique differentiation that comes out of their own DNA.”