Brands in cri­sis

Finweek English Edition - - ADVERTISING & MARKETING -

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.”

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