What does brand mean in the digital marketplace?
A decade ago, global management consultancy McKinsey published a paper that challenged one of the great pillars of marketing theory. The famous 'funnel', said McKinsey - a model which described purchasing decisions as a linear process of narrowing down choices under the influence of advertising and brand promotion - was dead. Instead, based on extensive studies of consumer behaviour, McKinsey's revised Customer Decision Journey depicted a broader, cyclical relationship between brand and consumer in which the experience was all important.
The drive of this fundamental change in the dynamics of marketing was, claimed the authors, the arrival of digital commerce. The internet had empowered consumers to look beyond the marketing messages emblazoned across advertising, giving them access to information which they could use to make better-informed decisions. Instant communication, including social media, had unleashed the potency of word-of-mouth recommendations, giving customers a stake in the building up or knocking down of brands through reviews and sharing their real-life experiences online.
Plus, of course, digital fundamentally changed the way people can shop. Suddenly with hand-held smart devices and delivery to your door, convenience for the consumer became a key point of difference. The experience became everything.
Ten years on, McKinsey's analysis is still highly relevant to understanding the role of brand in modern commerce. The discipline of branding - attempting to manage the thoughts and emotions consumers associate with a company or product, in order to drive recognition and buy-in - was developed in very different times. Pre-internet, brands could control their messages tightly via only a handful of available media channels. They had billboard-sized visual real estate to play with, and the conversation was very much a one-way thing, in brands' favour.
With shrinking screens and social media, the vast multiplication of channels and the empowerment of consumers, things look very different nowadays. People often ask us, given the changes in the retail environment, if brand even matters online anymore. Our answer is, yes it does, but with certain qualifications, as the way we think about brand and branding in the modern age needs to change. I've presented my thoughts on this in a new article (which you can download here) - with some of the key points below...
Brands as the sum of all your parts
One thing that brands fear nowadays is that the dominance of online marketplaces, led by Amazon, works directly to undermine their brand value. The issue can be put like this - when a customer buys your products from Amazon, eBay, Alibaba or any of the other marketplaces, are they 'buying in' to your brand, or are they buying because you happen to be on their preferred platform?
Amazon founder Jeff Bezos famously said that customers are only loyal to Amazon up until they can find a better service elsewhere. This perfectly captures one of the fundamental reasons we have to rethink brand in the digital age - it has to be built around what you do, the sum of the experiences you provide, not just the impression you want to create through traditional branding messages.
This was backed up by the findings of our latest digital consumer survey, The Future Shopper 2019. Quizzing 15,000 digital shoppers across 8 markets about their buying habits and attitudes, we asked what the most important factors were when they bought an item online. The most popular answers were price (mentioned by 96% of respondents), accurate product descriptions (92%), ease of finding products and free delivery (both 90%). Brand was well back on 75%, behind the likes of an easy returns process and strong customer service (both 88%).
In other words, putting all your focus on brand equity - the traditional approach of making your brand recognisable, memorable and likeable - is not enough any more. The key point of difference has to be service, and this is what has driven Amazon's dominance. Our Future Survey found clear evidence that this is a lesson brands need to learn. For example, we found that brands' own websites perform well when it comes to customers using them for inspiration ahead of making a purchase (33%), dipping only slightly when customers want to search for a specific products (29%).
However, respondents told us that just 15% of their total online spend goes through brand websites. In other words, they are aware of brands and like to use their digital resources for inspiration and search, but prefer to go elsewhere when it comes to making a purchase. Given the fact that 36% of consumer spend goes through Amazon, and 22% through other marketplaces, it seems logical to assume that this is because marketplaces provide a better sales experience than direct-to-consumer channels owned by the brand.
From hero to zero-UI? The shrinking of screens
Branding has traditionally been a visual discipline concerned in no small part with logos, colour schemes and the finer points of graphic design. While this continues to be an essential component of web design, digital technology is challenging the visual elements of branding in two important ways.
First of all, online visual real estate is shrinking. Website operators have already had to adapt to mobile overtaking desktop as the most common means people use to access the internet. From a branding point of view, that's a six or seven-fold reduction in the average amount of screen space you have to make a visual impression. For online retailers, this is exacerbated by the fact that marketplaces like Amazon afford brands only very limited space on their platforms for their own branding. Companies are having to think very carefully about how to make their brands stand out with very limited visual resources.
The logical end of this process is the disappearance of screens altogether. So-called 'zero-UI' commerce is already alive and kicking, with smart assistants like Amazon Alexa and Google Home allowing consumers to shop via voice commands, with no visual interaction (such as a screen) whatsoever. Our Future Shopper survey found 33% of consumers already shop using these Zero-UI devices. This completely turns the traditional basis of branding on its head, and challenges brands to think about how they can create and communicate a winning identity in a non-visual world.
Find out more
It would be naive to suggest that brand is becoming irrelevant in the digital age. With so many options available online to customers and so many channels available for them to shop through, standing out from the crowd has never been more important in retail. But standing out is no longer just a question of a clever visual identity or the size and reach of your advertising campaigns.
In a world where consumers increasingly dictate the terms of engagement, brands have to create experiences that give customers a reason to shop with them. As technologies change and channels proliferate, they must think of branding in new terms with new contexts. By thinking of brand equity in terms of service, we have to take branding out of the marketing department and place it at the heart of digital strategy.
For more insights into the role of brand in digital commerce, download this new report where I take a closer look at what's happening to brands in a world where the marketplaces, and not the brands, are defining and driving customer behaviour.