Brands are built  to influence

Brands are built  to influence

The role of brands has fundamentally changed in the digital era. It’s not all about getting attention anymore, but about influencing peoples’ behavior. But to succeed in this takes trust – something many big brands of today are struggling with.

Who influences you the most? Family you might say, then friends, or colleagues? Probably also people who represent political, religious or other values that are important to you. People you admire? Would you have mentioned companies and the brands that represent them? If not, let me state my case for why you should have. Chances are that from the moment you wake up and reach for your phone until the last ­episode you stream before bed, businesses influence more choices in your daily life than any living, breathing person. Many of the everyday decisions you make have been effectively outsourced. A frightening thought?

For example, your social media curate your feed and thereby influence what you experience of the world. Your media outlets choose the news they deem most important based on your editorial profile. Services you use throughout the day – whether Slack or Starbucks – nudge, suggest and direct your actions and attitudes. Linkedin and Tinder even influence who you build new relationships with. Your life is shaped by the habits they induce, and the recommendations and the choices they make on your behalf. Consider the influence of tech companies that have fundamentally changed the way we live, work and play. It’s difficult now to even imagine a world without brands like Microsoft, Apple, Google, Amazon, Airbnb, Uber, Netflix, ­PayPal or eBay. They simply make everything so ­convenient. These brands not only influence us as customers and users, they introduce and disrupt entire categories.

New categories emerge and for each new category the brands’ main task is to influence our behavior towards adopting the behavior of the category, rather than seeking to influence preferences between brands in the category. When Alipay gets a staggering number of people to invest small amounts of their savings, you get the phenomenon Yu’e Bao, the world’s largest money-market fund that has traditional bank heads spinning. When Spotify gets people to subscribe to all music month by month rather than buy one record for forever the whole music industry is shaken to its core. Behind these successes is the fact that the brands know a lot about us and are willing and able to use that knowledge to create “sticky services”. Sometimes it’s a great idea realized. Other times it’s the business model itself that’s sticky. Most digital businesses have elements of both. You need a business model to realize a great idea, and a great business model will not fly without an idea for people to engage with. All of this has changed the way we now define brands.

Names with the power to influence

In the beginning a brand identified the maker of the pot, the wine or the plough – it was personal. With the industrial age and its faceless factories, the brand replaced the personal connection between maker and user, becoming a substitute identity carrying the promises of products and services. As the number of competitors grew, brands evolved personalities, values and lifestyles to target specific segments, and as a consequence brands became cultural identifiers. The most commonly cited definition of brands in this sense comes from Keller and talks about brands as “a set of mental associations”.

Today a brand is tasked with influencing ­behaviors in a more fundamental way. Just as brands have extended beyond the sphere of consumer products to include movements, institutions, people and places, a brand’s power to influence must go beyond establishing preference between a finite number of competing products in an existing category. A set of mental associations is simply no longer sufficient. The French brand expert Jean Noel Kapferer has suggested “a name with the power to influence” as the new definition of brand. A brand’s influence can be exerted in subtle ways and may be integrated into the product or service rather than communicated through the traditional means of brand building such as advertising. I’m willing to bet you can’t name the marketing campaign that made you download Instagram or start using Google maps.

Brands and products blur

Since the 50s brands have played out their personality and promoted themselves through the ad, the 30-second spot, sponsorships and similar. This kind of thinking is still very much alive and lately perpetuated by the micro targeting that follows your every click. The exposure traditionally had one goal; create awareness, interest, desire and action (AIDA) for the ­advertised brand. The customers would – based on their experience, the reputation of the brand, the social status the brand provided, etcetera – decide whether to become loyal or choose a different toothpaste, car or insurance company next time. The product or service brands carried most of the relationship, the companies behind them were less visible (and if they were visible it was mainly to stakeholders like the finance community, governments or their ­industry).

Today the distinction between the product brands and the companies behind them is ­becoming much blurrier. New categories often emerge through stories of bold missions ­undertaken by the founders, and users not only let these brands into their lives, they also act as brand ambassadors and sales reps through recruitment of friends, family and colleagues. Now that we are becoming aware of how intimately these companies know us and how we spend our time, it is no wonder people expect (want and hope for) the “parent” company to be a force for good and not evil.

Close and personal

It is interesting to see how the global megabrands are struggling to address this gap ­between how effectively they are able to influence us at an individual or product level and how ineffective they have been in exerting that influence as a company when trying to effect, for example, policy changes at the EU level. So far, people either cannot or will not live without the services they have come to depend on, even if they are uncomfortable that the companies behind them are not paying taxes, eradicating local businesses, not having a satisfactory stand with regard to privacy issues and perhaps even criminal business practices and so on. What was once a corporate reputation issue far removed from the everyday branding and sales efforts, has become much more close and personal today as people are starting to grapple with the effects of these issues. This means that brands that seek to establish, maintain and own a lasting relationship of trust with consumers and other important target groups like partners, investors and talent – in order to influence their behaviors – need to bridge this gap somehow.

Visible mother brands

However, people seem to be seeking ways to re-establish the kind of relationships we had to the original maker’s marks, like in the times before mass production. One trend you may have noticed that could indicate that we are indeed craving such a ­responsible entity is the emergence of visible mother brands such as LVMH or Unilever. These are brands that represent some uncompromising values, purpose or meaningful narrative that permeate all their product or service brands. Over time, people are given an opportunity to get to know, trust and have a sense of loyalty towards the mother brand. The mother brand invests carefully in this relationship, including shared datasets and services, as it introduces and retires brands to and from the family in accordance with that overarching understanding between the brand and people. Take Axe as a case in point. From being the deodorant that magically made ordinary guys irresistible to women, the brand now encourages men to celebrate their individuality, the same way Dove does for girls. Without Uni­lever’s “sustainable living brands” philosophy the gap between the old and the new Axe could have been too wide for customers to leap across.

A stronghold on behavior

While there is no doubt that the digital megabrands have a stronghold on user behavior, their power to influence authorities and the public at large has shown itself to be limited when it comes to defending their interests. GDPR will make the exchange of data in exchange for convenience much more visible. Public discussions and transparency activists might speed up policy making that shifts the power balance between people and companies back in favor of people.

Since the core role of brands has changed from grabbing attention to influencing behavior, understanding the relationship between people and brands is more crucial than ever. If brands are names with the power to influence, it is time for businesses to stop seeing their brands as marketing vehicles and start using them to create great companies, great products and great societies – all at the same time.

Marketplaces are here to serve you

Marketplaces are here to serve you

Changes in consumer behavior are driving the change in marketplaces. New players will solve narrower user needs, but far more conveniently and smoothly than before. All based on machine learning and data.

Rapid growth in new marketplace models such as Farfetch, Rebagg, Glovo, and Frontier Car Group are great examples of this quick change. These models demonstrate how convenience and flexibility are shaping our attitudes towards spending and how easy it is to switch to a new player in today’s competitive landscape. New marketplaces are moving away from owning unique supplies of goods and content. Instead, by using machine learning and data, they can easily find what we need in a specific niche, where it is available for immediate shipping. This will happen whether we’re looking for a car, for real­ estate, jobs, home appliances, education or any other segment. This is why there is a verticalization of marketplaces. High relevance is the new black in the market. Medwing is a great example of this in the health area, as is Zenjob for job search, helping students get jobs.

Immersive marketplaces

Usually this kind of approach means higher risk, since it involves handling transactions and logistics, getting temporary workers on the payroll, financing the deal, providing warehousing and relocation services. But the aim is to remove unnecessary friction and barriers to make good deals happen. These new marketplaces do not only sell leads and visibility anymore, they help users to transact and fulfill their needs end-to-end. As an example, a student using the Zenjob app can work whenever it’s convenient between exams, classes and on holidays without the hassle of applying for a job at Zara or H&M. These new models are still at an emerging stage but major VC funds and investors are betting billions to make them dominant in major markets in Europe.

We used to think that you need to build a strong brand to become a destination for certain needs. This still applies, but there is no room for many apps in people’s phone habits anymore. Therefore, we can also see new immersive marketplace models popping up inside mobile apps where we engage on a daily basis. Tomorrow’s winners use machine learning to identify and match patterns in our behavior, learn our purchase intents from P2P communication and integrate themselves seamlessly into communications platforms we engage with every day. We have already seen social network based marketplaces, such as Threads, without a destination site, just living in Messenger apps, and popping up at a relevant moment. I bet these models will appear in social channels like Slack in the coming quarters.

A new era for cars

Car manufacturers are already testing out sharing services based on flexible subscriptions to access a car you need, making it clear that the era of electrical cars will be quite different from the combustion engine cars we know today. There are also new kinds of aggregation services launched for micro-mobility, using bicycles and e-scooters. Behind this is the fact that more than half of our car rides tend to be less than five kilometres. The era of new network based transportation market­places has started giving us easy ways to access a vehicle. Mobility companies like Tier, Bipi, Drover and Cluno are great examples in Europe, similar to their US based peers like Uber, Lime and Fair.

The tech needs to mature

The boom of blockchain and cryptocurrencies motivated many teams to discuss how the trust in marketplaces could be solved in a new way. Companies like Listia, Open­bazaar and Origami Network have been leading the way and protocols such as INK have collected capital to develop the technology. However, as always the new technology needs to mature and become more scalable to win over older models. But in three to five years time, the development around blockchain will probably pass the threshold of convenience, speed and scalability, making it a viable technology for decentralized marketplaces for mass markets. The underlying blockchain based models will help build highly scalable marketplaces and solve how we transact across different transaction cultures, taxation models and payment structures. It is yet to be seen which protocol will win, but it is evident that the benefits of a fully transparent and trackable marketplace are there.

Trends in Brief

Trends in Brief

It’s called persuasive design, and almost all big tech companies use it. By hiring psychologists, mental health professionals and behavioral science experts, companies can create products that are addictive and that actually manipulate our behavior.

The ethics of tech design

It’s called persuasive design, and almost all big tech companies use it. By hiring psychologists, mental health professionals and behavioral science experts, companies can create products that are addictive and that actually manipulate our behavior. The concept of persuasive design is nothing new, some researchers claim it all started with Socrates’ storytelling techniques (there’s always a Greek at the beginning, right?). However, the manipulative design has now moved far away from storytelling, and into the thing modern humans use the most; our beloved tech. A group of American psychologists is protesting against these “unethical and dangerous” practices, pointing out that these “hidden manipulation techniques” especially affect children, and the tech companies know this.

Tech’s energy problem

Listen, I know we all love our tech, but it comes with a very heavy energy price tag. Climate researchers are saying we have to cut our emissions in half by 2030, so that price tag is a problem. Many techies believe we could innovate ourselves out of this mess. However, we have been trying that for years, and even though electrical cars have become the hottest status symbol (thanks Musk!), 2018 will still be a record year for carbon dioxide emissions. Also, all new tech that excites us is not as environmentally friendly as clean cars. Mining cryptocurrencies alone now makes up one percent of the world’s total energy consumption. So if we want to innovate our way out of this, we need to focus on the innovation that matters before forcing everyone to use Bitcoin.

What comes after China?

Investors who entered the Chinese startup scene early have made fortunes on the country’s economic boom. Now, the country’s startup world is ­maturing and eager investors are looking for their new cash cows. Many investors believe sub-Saharan Africa is next. The region only has three unicorns so far, but due to expected high growth in population, internet penetration (currently under ten percent in most countries), and resources, the market could grow very fast. Others believe Latin America is the next unicorn machine and give Argentina as an example. The country has had a tough couple of years, but the “chronically dysfunctional economy” (a phrase used by Argentina’s minister of technology, ouch!) has actually helped startups flourish. High inflation and changing rules have forced them to be crafty and adapt a fighting spirit.

Ellen Montén