Vincent Stuhlen – GEMBA 2010 – September 2010
Brand Management Implementation Essay
“Impact of Digital Engagement Marketing on Branding” 1) The Evolution of the Marketing Paradigm a) The Evolution of Brand relationship
Brands have been part of human trading activities for a long time. Starting with the appearance of certified money, the first modern branding traces were seen see n on "Vesuvinum" wine jars found at Pompeii (dated 79 AD). The “Brand” word itself came from cattle ca ttle marking through “burning” the animals’ skin to mark the producers’ ownership, which then evolved to legal trademarking during the industrial revolution. Brands have then constantly evolved to deliver valuable customer benefits through a known Brand indentity which could be decomposed as its distinctive name, unique visual expression (or look), and character (or values). In the early days, Brands incarnated both a promise and a personality like any person would have, and they actually had a real face behind their name. It was often the founder and owner of the business, and people could relate to that person who transmitted his own values v alues to the Brand that was in fact a proxy to himself. Brand had therefore necessarily a social dimension with a sense of p roximity. During the Industrial revolution and the emergence of branded consumer goods, the industrial scale broke the human dimension of Brands and their social linkage. This phenomenon was exacerbated through mass-media television advertising in the 50’s, which incarnated the one-to-many communications strategy of companies that tried to leverage their Brands’ strength across growing audiences, multiples product categories and geographical markets. It was the apogee of the Push economy that did rule for 50 years. The prevalent “Interruption” Marketing model didn’t care that much about the relationship with consumers, pushing products to fulfil a growing demand for western products and lifestyle that didn’t have much choice at the time, and pushing messages without listening back. Even relationship got automated a utomated in the 90’s through Customer Relationship Management (CRM) systems, simulating a human proximity at an industrial scale. But things changed. First, Globalization increased competition, and the range of alternative products produc ts triggered new behaviour as consumers now had several purchase options. The Digital landscape then emerged in the 90’s, with further democratization of access to information through the Internet at the beginning of the new Century. It dramatically changed the power of Brands and their relationship with consumers. It marked the e mergence of a new economy and Marketing model.
b) The evolution of the new Marketing model: from Push to Pull economy, from Interruption to Engagement Marketing
With the increase of competition and product produc t alternatives, combined with the democratization of Information and Communications Technology (ICT), economists commented to transition from a Push to a Pull economy. It allowed consumers to “pull” information information on products an d Brands more easily than ever before, and then express their freedom of choice by “pulling” (e.g. purchasing) their favorite product or Brand amongst many alternatives. This fundamental behavioral change impacted the Marketing model that shifted from “Interruption” to a now necessary “Engagement” with consumers. “Engagement Marketing”, also called "Experiential” or "Participation Marketing”, is a Marketing strategy that directly engages consumers and invites them to interact and participate to the evolution of the Brand. It is rooted in the insight that human beings are highly social animals, and have an innate need to communicate and interact. Ultimately, Engagement Marketing attempts to connect those co nsumers more strongly with Brands by engaging them in a two-way dialog. The Brand Engagement and related Experience are provided through “Interactive Channels” such as Retail, Live events, and of course Digital channels. Those later completely redefined the rules of Engagement Marketing by providing instant and ubiquitous opportunities op portunities to connect and interact with Brands and an d their unique characteristics. Digital did therefore re-ignite the Social dimension of Brands, with has a huge impact on strategies to create and manage Brand Knowledge, Equity and Value.
c) Introducing the role of Digital Channels in Engagement Marketing
In the last 10 years, Digital Channels profoundly changed consumers’ behaviour, Marketing-Communications (MarCom), and commerce. A lot of data is showing that in mature markets, Digital Media consumption is n ow ahead of all other classic media with a strong growth expected in the years to come (see appendix 1), 1), and eCommerce already represents more than 10% of all retail sales across many industries, and is expected to grow threefold by 2019 in least mature industries such as Apparel (see appendix 2). Furthermore, new usages and new channels accessibility are further accelerating the paradigm change, like the rapid growth of Social Media (that did beat email usage in just 5 years, yea rs, see appendix 3) 3) or ubiquitous Mobile Internet access usage (with already a 21% Global penetration of 3G technology , see appendix 4). It is well known that Digital is the biggest enabler enab ler of this new Engagement Marketing model, and still, the potential is largely untapped with an unprecedented gap between the Digital Channels usage and actual investments from companies (see appendix 5). 5). Furthermore, the proven Digital channels efficiency (see appendix 6) 6) vs. traditional media for MarCom activities is increasing the relative investment paradox. This slow shift of Marketing resources towards Digital channels (see appendix 7) ca n only be explained by the very specific internal skills required to manage those Digital channels properly. In this essay, we propose to analyze the impact of Digital Channels and their specific Marketing and Branding strategies on the creation and management of Brand Knowledge, Equity and Value. For that purpose, we will use the latest thinking in Marketing Funnel transformation, look at the impact of Digital on Brand Knowledge and Equity through the “Customer-based Brand Equity” model, analyze the rapid changes in the InterBrand Top 100 Global Brands ranking, as well as the results of the very first large scale Engagement db study on Brand Engagement. We will also look at the difference between the “Digital Pure-player” Brands, and what we will call the “Digital Analogue” Brands, defined as the one proposing physical products and operating in the real world but leveraging the potential of Digital Channels, as opposed o pposed to other Brands not playing p laying in the Digital landscape.
Finally, we will look at the new n ew rules prevailing in this new Digital space, the required capabilities, and the potential limitations of those Digital Channels.
2) Impact of Digital Engagement Marketing on Branding a) The role of Digital Channels in the Marketing Funnel
The transformation of the Marketing funnel has been recently studied and documented (please look at Strategic Marketing Implementation Essay). Essay). Despite the fact that it obviously became be came fragmented and non-linear, the distinct steps described in classic Marketing are still relevant to describe the purchase process for consumers, and to analyze the impact of Digital on that process and on Brand Knowledge and Equity building. The classic Marketing Funnel construct is the following: Awareness (Aware) Engagement (Interested) Activation (Decided) Conversion (Customer) Loyalty (Loyal Customer) Advocacy (Ambassador) (see appendix 8) 8) Each of those steps can be impacted by specific Digital Media tactics across different Digital channels. Digital Media tactics are classified by RazorFish (leading Global Digital agency part of Publicis Group) the
following way: - Controlled Media (by the Brand, where costs are related to distribution capabilities building and content production) o Websites o eMailing Content distribution through RSS feeds, etc... o - Paid Media (different buying models according to different impacts on Brand) o Classic Media & Portals (CPM = Cost Per Mille, impacting awareness & engagement) Search (CPC = Cost Per Click, impacting engagement & activation) o o Affiliation (CPA = Cost Per Action, impacting conversion) - Earned Media (exposure, awareness, image, evaluation “earned” by free content creation and distribution in favour of the Brand by enthusiastic Consumers) o Blogs and personal sites o Social Networks (e.g. Facebook, Twitter, Orkut, MySpace...) o Content Platforms (e.g. YouTube, DailyMotion, Flickr...) Forums & Wikis o o Etc... These Digital Media tactics can apply across multiple Digital platforms and devices (often described as “Multi-platform” Marketing): - Computer Web browsers - Mobile phones - Tablets - Gaming consoles - Retail kiosks - And more and more connected devices (like the emerging Internet TV...) At each step of the funnel, Online channels and tactics are bringing specific advantages over the Offline ones: - Awareness (Aware): Digital has a much lower average cost per GRP or CPM, up to 10 times cheaper than TV (see appendix 6). 6). There are still few studies about the relative Qualitative impact of each
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channel, which needs to be considered to account for the real contribution of each channel to the Brand metrics evolution, but personal research through Global Brand Equity study conducted by Millward Brown has shown a 3 to 4 incremental performance ratio on Brand Awareness and Image building for Online channels vs. any Offline one (TV, Print, OOH, see appendix 9). 9). Digital has therefore a decisive contribution in driving Brand Knowledge. Engagement (Interested): This is where Digital plays a crucial role and changed the Marketing paradigm most. Digital indeed allows deep consumer interaction with the Brand at rational and emotional e motional levels. In that sense, the classic view on Engagement being the intermediary step between Awareness and Activation is somehow reductive of the true nature of Engagement which can happen at any level of the funnel, with incremental depth as the consumer goes deeper in the funnel. We will study that point in the next chapter. Activation (Decided): This step is often excluded in classic Marketing literature, but it is still interesting to consider it as this is where more leakage happens in the Digital space than in the real world, because of the ease to walk away from the order confirmation in just one click. c lick. But Digital also plays a key role in “pre-activating” consumers and driving them to Retail to finalize their purchase. This “cross-channel” impact is often not considered by many companies. It can sometimes be tracked through technology (with vouchers for instance), but most of that impact can not be directly tracked and is called “Online influence on Offline sales”. Some studies demonstrated a 2 to 6 times turnover multiple (depending on sources and specific Retail industry), and a faster growth of the influenced sales that the online ones (see appendix 10). 10). Conversion (Customer): Even if there aren’t specific advantages for Digital, it is worth mentioning the overall low cost of doing business online, which wh ich yielded either lower prices for consumers or increased profitability (see appendix 11). 11). Another interesting feature is that online transactions necessarily link to Customer Relationship Management (CRM) in the sense that a lot of data from each customer is automatically captured. Even if anonymous Check-outs are spreading, online transactions allow to better target and personalize the offers to increase conversion. Loyalty (Loyal Customer): Another crucial added-value of Digital channels as customer data collection allows a higher performance for repeated purchases, cross and up-selling. The cost for doing the same in the real world involves heavy IT infrastructure and operational costs. Advocacy (Ambassador): This last step in the funnel has been added recently specifically for Digital strategies and Social Media channels. Indeed, Advocacy which consist in indentifying Ambassadors and amplifying their impact, can only be done in the Digital world, at least lea st at a large scale. Digital technology allows to scan the Digital channels and assess the quantity of buzz and quality of Brand sentiment through semantic analysis. Even if those tools are still immature, they are successfully used by an increasing number of Brands to monitor their Social Influence Marketing efforts, which primarily consist in seeding content and targeting key influencers that can propagate Brand messages, what we earlier called “Earned Media” tactics. This last step has dramatically changed the power relationship between Brands and consumers, giving extended visibility for innovative Brands and products endorsed by consumers. Or severe punishment for those not leaving-up to their promise and deceiving consumers’ expectations...
Using the AIDA model (see appendix 12), 1 2), with specific conversion rates from one step to the next one and related investment levels, it is necessary to acknowledge the contribution of Digital in the Marketing funnel, either it concludes by Online or Offline sales (see Strategic Marketing Implementation Essay for more details). details).
b) Sources of Brand Knowledge and Equity in Digital Branding
To analyze the impact of Digital Engagement on Brand Knowledge and Equity, we will use the Keller / Kevin Lane “Customer-based Brand Equity Model” (see appendix 13). 13). This model is useful to dissect the impact on Brand metrics throughout the Marketing Funnel, using criteria that matter to consumers in building their relationship to the Brand.
Building Brand Knowledge
In the model, Brand Knowledge is composed of Brand Awareness and Brand Image. In the Digital space, we will consider that the Brand Knowledge is built in the earlier phase of the Digital Marketing Funnel – Awareness – and in the “non-Controlled” Media space through Paid & Earned Media tactics, e.g. the whole Digital space but the properties owned by the Brand, such as its own websites, because visiting a Brand’s website can already be considered as a form of Engagement. Building Brand Awareness
When it comes to building Brand Awareness, Awa reness, Digital as some key quantitative advantages over Offline channels or Marketing techniques. It allows more precise targeting, che aper cost per reach, real time performance monitoring, tracking across the Digital funnel, and sometime across On and Offline channels when technology allows. As we mentioned before, there is little research on the qualitative impact of Digital Marketing and Communications, but research conducted for Levi Strauss & Co (see appendix 9) demonstrated a higher contribution of Digital channels (for a single campaign based on a consistent con sistent multi-channel creative execution) than the Offline channels (TV, Print, OOH...), with a 3 to 4 performance ratio, impacting both Depth (unaided and aided recall) and Breadth (frequency of exposure). There is also evidence that Engagement tactics, as simple as providing basic interaction with the creative execution helps the Brand recall (reference: Shelly Rodgers and Esther Thorson, The Interactive Advertising Model, Journal of Interactive Advertising, 2000). It also demonstrated tha t there is higher recall of noninteractive Advertising in interactive experiences such as video games, than in linear channels such as TV. Building Brand Image
If Interaction as a positive effect on Brand Awareness, its impact on Brand image has proven p roven even more important. On an Engagement scale, simple Interaction is at the bottom but already proved positive impact on Brand image, at least in the early days of Interactive Advertising. Today, Brands need to go deeper, and some of them successfully implemented real Engagement techniques at the level of the Advertising units or through Engagement activities on Social Networks. Some Ads now propose gaming functionalities within the unit, personalized response or content according to user behaviour and data. New “Engagement Ads” formats emerged on Social Networks such as FaceBook, proposing polls or other ways to engage with the Brand, with higher “Click Trough Rate” (CTR) than traditional units. On those Social Networks, some Brands excelled at earning exposure through “Earned” activities such as contests or viral contents that are distributed by users themselves, but again, the impact goes well beyond beyo nd Brand Knowledge and soon starts building Brand Equity. Building Brand Equity
Indeed, the “Image” & “Evaluation” concepts of the “Customer-based Brand Equity” model did probably blur somehow in the Digital space because beca use of the proximity of the Awareness phase in non-Controlled spaces with the Engagement one in Controlled spaces (the Brands’ websites or other spaces managed by the Brands such as their FaceBook fan pages or YouTube channels). Just one click away. Therefore does the Brand Image construction quickly turn into Evaluation and Equity building. “Functional Image” feeds the “Rational Evaluation”, and “User & Usage Image” feeds the “Emotional Evaluation” (or perception should we say, as this process is less cognitive as the Rational one) in a seamless Digital space. The Functional & User-Usage Image leading to Rational & Emotional Evaluation is done through the total perceived Brand Experience. In the Digital or Interactive Media industry, “Experience” became a key word for describing and designing unique creative expression, interaction, service, and relationship with Brands. Functional/Rational dimension
Digital brings some interesting possibilities that can apply for both Digital Pure-players and Analogue Brands:
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Easy and ubiquitous access to information through Search Engines and Multi-platforms distribution (Web browser, Mobile applications...) - Extended functionalities to discover the product (3D visualization, technical specifications...) - Product customization to meet user’s unique needs need s (Nike ID or Ralph Lauren tailor-made products) - Related services that can “augment” the product or increase service level, also called “Branded utility” (like the Domino’s Pizza Mobile application to order and track delivery) - User Generated Content (or comments) to support product analysis and decision making - Network externalities that bring a Social dimension and new usages to the product (like Nike+ product and related community) - Two-way dialog with a company’s representative, or even better, a fan. All this helps consumers to evaluate the Brand Value and Credibility. Emotional dimension
On an Emotional standpoint, Digital has a set of distinctive characteristics: - Emotional experience: audiovisual content has always been the most emotional vehicle for Brand messaging, and Brands that could not access TV Advertising before can now express their creativity and values through Digital video content, either they have to pay for its distribution (Media buying or paid broadcasting) or rely on its viral potential. Striking a nerve can create Feelings that have a long lasting impact on Emotional Evalution, with far greater impact that Rational Evaluation, as numerous studies demonstrated the importance of emotions in the Brand adoption and purchase process. - Easier access to users and usage information: people spontaneously showcase their favourite products or service on their social profile, distributing this association through their social graph (con nections with other people). If influencers decide to support a specific Brand and related product, it can quickly drive the relevance of the Brand and/or the efficiency of the product. Ultimately, it leads to Social Approval and SelfRespect, one step closer to a Sense of Community that can create deep Attachement to the Brand. - Better Brand story telling capabilities: offering the user the possibility to dive into g reater levels of details and better learn and understand the Brand Personality and Values. - Better transparency & sentiment of security: consumers can access inside & outside company information more easily than ever before. The visible product / service endorsement (or the reverse) is putting pressure on Brands to also adopt a honest speech and more transparency in everything they do, from product conception to production and sustainability. Not doing so can create severe backlashes, now de-multiplied by the social reach of each individual. This self-controlled transparency provides a feeling of reassurance and security that became a crucial emotional factor in trusting Brands. - Co-Creation: Brands truly playing the Engagement game unleash the ultimate emotional bond with their customers. By “letting it go” (in a controlled manner), and allowing their audience to co-create their products or communications campaign, they create proximity and reveal their social nature, re-creating the social link that disappeared during the industrialization phase of Marketing. The holy grail of Attachment
It is easy to understand how the Equity building through Digital leads to enhanced Attachment. Indeed, if the above is done properly, Loyalty, a sense of belonging to a Community, and even Advocacy are the logical consequences. Here again, Digital brings a new dimension to those Attachment criteria: the scale of the Online Community reach is de-multiplied, and therefore the impact of o f Advocacy. When Ambassadors decide to carry the flag of a Brand, they can generate huge exposure and positive sentiment that could not be generated by the Brand alone. Several LS&Co Digital campaigns demonstrated the massive Media equivalent value of Social Influence Marketing tactics (like influencers seeding) at a fraction of a cost. This “Social multiplier” is at the heart of the so-called “Web 2.0”, a combination of content management, social connection, and supporting Browser technologies. A recent study focused on the dominant Social Network, FaceBook, and studied the value of fans for 20 established Consumer Goods Brands across different categories,
looking at 6 criteria that are building blocks for Brand Equity (Spend / Loyalty / Recommendation / Affinity / Media value / Acquisition costs). Against non-fans, fans were spending an incremental 71$ (across all categories), 28% were more loyal, 68% were very likely to recommend a product (28% non-fans), 81% of fans said they feel connection/empathy with the brand (39% non-fans). A fan being a good proxy for describing a consumer with a good level of Engagement with the Brand, those results are a direct correlation of successful Brand Engagement strategies. (Reference: Syncapse Facebook Fan value study, 2010, see appendix 14). 14). Brand Equity is therefore the result of deep and repeated Engagement with the Brand, from the early Awareness phase to repeated transactions and post-purchase services, forming a total and unique Brand Experience. The last step of our analysis is now logically to look at Brand Value on a financial standpoint.
c) Quantifying the impact of Digital Engagement on Brand Br and Value, both for Digital Pure-players and Analogue Brands
If Brand Value has been well researched, with regular Global Brand Value rankings published by InterBrand since 1974, there was little research on the financial Value generated through Engagement Marketing. The first large scale research called “Engagement db” has been released in 2009, looking at the same Top 100 Global Brands of the InterBrand ranking from the Engagement perspective, providing a new light on the key trends of the InterBrand ranking evolution, and new perspective on the efficiency of Engagement Marketing through the Digital Channels. 15) InterBrand ranking evolution and key trends (see appendix 15) Taking a first look at the latest InterBrand 2009 ranking, it is interesting to notice the following key trends that would support our intuition of Brands having successfully embraced the Engagement model: - All new entrants and fastest growers are either Digital Pure-players (Google, Yahoo, eBay, Amazon...), Technology Brands (Nokia, Apple, Sony, Samsung...) with often a large Internet footprint, or Luxury (Louis Vuitton, Chanel, Hermes...) & Lifestyle Brands (Nike, Adidas, Puma...). - Traditional Retailers (H&M, Ikea, Zara, Starbucks...) are also growing, with an improving on/offline crosschannel integration to better service their customers and capture the eCommerce opportunity which represents the biggest growth vector (in Apparel, up to 80% of the total retail growth by 2019 should come from eCommerce according to Goldman Sachs). They are becoming more Digital by necessity. - Luxury Brands are not necessarily great at Digital Engagement, but they are great a Experiential Marketing (the other definition of Engagement Marketing) in their controlled and exclusive Retail environment. Some of them now manage to extend their Brand Experience online (Louis Vuitton in the first place), but the lesson here is that Engagement using whatever wha tever form prevails as a Customer-based Brand Equity building model. - Other Lifestyle Brands, known for being king at Engagement, are strong and still growing (like Nike, Adidas, or Puma). - Finally, Financial firms’ Values have melted through the credit crunch crisis, but they are also showing the least of the Engagement / Interactive Media capabilities and Brand behaviour that can lead to efficient customer Engagement. Purely looking at the InterBrand ranking, the progression of what we called the Digital Pure-players (like Google) and some Technology Brands (like Apple) is striking. But their growth, both on a financial and Brand Value perspective, is not only due to the unique nature of o f their business models or first mover advantage, but also because of their unique Engagement models. This intuition is now confirmed by the latest Eng agement db report issued by Charlene Li from Altimeter in July 2009.
The impact of Digital Engagement on financial performance according to Engagement db study (see
appendix 16) 16) Most valuable Brands in the world are experiencing a direct correlation between their financial performance and a deep Digital Engagement, mostly expressed through Social Media. But a social presence is not enough to lead to Brand leadership, it is the true Engagement across all Digital channels that create Brand Value and subsequent financial performance. According to the Engagement db study, Brands can be mapped against the following Engagement dimensions: - The level of Engagement (measuring both Breadth and Depth of involvement) - The number of Digital Channels used It mapping resulted in clustering 4 distinct Engagement profiles of Brands: - Mavens: high Engagement across many Channels - Butterflies: low Engagement but many Channels (and not persistently) - Selectives: high Engagement on few but targeted Channels - Wallflowers: Low Engagement and few Channels, the followers of the Digital Engagement model. The yearly financial performance differential for Mavens is striking: +18% on revenue growth and +15% on on gross margin growth. Not surprisingly, almost all identified Mavens with the highest Engag ement score are Pure-players, Technology or Lifestyle Brands (see appendix 16). 16). From both the InterBrand and Engagement db rankings, we can make the following further segmentation of the Mavens, the most Engaging Brands is the world: Digital Pure-players
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They represent half of the top 10 most engaging Brands Google: the most exhaustive Digital ecosystem, providing the most accurate Search capabilities, capab ilities, intelligent and personal eMailing solution, and about ab out everything people need for their Digital lifestyle, from picture management to Digital entertainment. Every single tool as a social dimension, can be customized. The Brand is also making sure that it does not look to evil despite the numerous data privacy issues. eBay: democratizing C2C trading and allow many small businesses to emerge. Amazon: the store of the World, with unlimited assortment, dreadful shopping efficiency through personalization, user generated comments, and many Social distribution tools. Yahoo: the Portal to Digital life, from Entertainment to personal services, pretty much like Google but through the old (and still successful) Portal recipe.
Each of those Pure-players have consumer Engagement at the heart of their Business Model, and have secured decisive competitive advantages and some common skills which can be summarized in the following key points: - Consumer data and insights driven Innovation, supported by heavy R&D investments - Iterative process for product design, testing and learning b efore scaling new applications - Co-creation, openly requesting user input from product design to beta-testing - Real-time management of users feed-back by employees or by other users themselves (“self-moderation”) - Technologies allowing in depth personalization of content and applications - Social, having an active presence on Social Networks and providing numerous tools to empower consumers to carry the flag or to connect with each-others - Securing their leading position by providing network externalities, making the cost of switching higher by intertwining applications - Fast, each of those players having secured a “first mover advantage” for their unique Business Model, sometimes in a “winner takes all” configuration (like for Google or FaceBook) - Truly Global, often from day one, benefiting from (almost) uniformed consumer usage across the world and leading to large economies of scale.
In a nutshell, those Pure-players created “Industrial Engagemen t platforms with a Social dimension”. The technology got commoditized, allowing people to focus on (their) content and Social connections, thus inventing the Personal and Social “Web 2.0”. Digital Analogue Brands, each with a distinct Engagement model:
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Starbucks: Social Roots distilled from its thousands of physical outlets, Co-creation to de fine new products and experiences. Engagement is really part of the Brand DNA, starting with its founder Howard Schultz who initiated MyStarbucksIdea.com, and with the wider involvement of many employees, and a consistent and selective use of each Social channel. Dell & Intel: Dialog, using Social Media as part of the job just like emailing, thought leadership from the best leaders of the company through blogs, and Co-Creation at its heart Nike: the sports Apparel leader has shifted incremental resources and its live events expertise to become one of the very best Brands in the Digital space. From viral audiovisual content to intense S ocial activity, Nike is one of the very few Brands that successfully evolved its integrated Marketing Model to get the best of both the Online and Offline Engagement in a complementary manner. Toyota: with a vivid customer c ustomer service culture, the company naturally involved its staff, up to some executives, in the Engagement process to create an ongoing two-way dialog. SAP: even a B2B Brand can do well in engaging its developers community through their Developers Network and a broader SAP Ecosystem that include thought leaders and world-class analysts. Engagement and outstanding customer support is seen as an extension of the company culture.
Those Brands, contrary to the old Brick and Mortar ones, understood the power of Digital Engagement as an extension to their existing consumer oriented culture. A counter example would be the Financial firms, at the bottom of the Engagement db ranking, that cruelly lack all the Brand Engagement characteristics we described above to be successful in the Digital space. Successful implementation of an Engagement Model needs a specific culture, a supporting organization, and tho ughtful leaders daring to embrace the paradigm shift. If there is unprecedented potential for Brand Equity Eq uity and Value building through Digital Engagement strategies, it requires new Branding rules and capabilities. Playing the Engagement game without having the right skill-set can lead to a dangerous counter-effects: Brand Equity and Value destroying.
3) Successful Brand building in the Seamless World & Post-Digital Age a) New rules for building Brands in a seamless world
As we have seen, being good at Digital Engagement requires a specific skill-set and motivation. But even more, it requires to be deeply anchored in Brands’ DNA and to be embraced by the Brands’ management teams. To be successful in this seamless Digital world, Brands need to do the following. Have a purpose and consistent identity
Brands need a consumer facing value proposition, not only to create shareholder value and contribute to the economy. They need to stand for real authentic values, contribute to society, recreate the Social link and nurture their relationship with customers. Brands should have a emotional ap peal that go beyond their products and services. They need to embody with consistency a character that can reveal its personality through Engagement activities. Dialogue & embrace Co-creation
Interaction is good, a two-way Dialog is even better. Brands need to talk way beyond their products, they need to share how they make them, what they plan to do, ask consumers to contribute. Brands need to accept complete and naked transparency that if not triggered by them, will be by consumers, potentially violently if
Brands do not conform to conventional wisdom. They can even go as far as giving-up control of some of the five P’s, letting people try things for themselves to re-invent the Brand and the next generation of products. Face their responsibilities
Brands need to show they are Socially and Environmentally responsible, expressed through their product development cycle, will to commit to a sustainable development of their activities. They also ne ed to show uncompromised customer service, with pro-active and humble communications in case of failure, and recalling millions of products if needed. Create & do things
Engagement can not be passive. It requires ongoing creativity to (re)invent new ways of engaging people. The worst thing a Brand can do is stick to what it does well, not take any risk, never “delight and surprise” its customers. Creativity is now expected at all levels, from disruptive products to breakthrough Brand experiences. Connect Digitally
To Engage with their audience, the need to leverage Digital channels, reaching optimal Engagement levels through deep an repeated Engagement tactics combined with relevant channels usage. They need to connect with Consumers across many Digital channels, platforms and devices. Today, everything is Digital, and what still isn’t will become, making those channels the ultimate vehicle for successful Brand Engagement. But reaching critical-mass c ritical-mass is key to emerge from the Digital over-fragmented clutter, therefore is there a crucial time factor in implementing successfully Digital strategies, at least for large Global Brands. At some point, it might be too late for followers.
b) Impact on Brand Organizations
Digital Engagement potential comes at a price. Few companies and Brand organizations are ready to embrace it, as it requires the following crucial points. Integration of Digital within the organization
Bridging over the functional silos: Product development, Marketing, Retail Sales, Customer Service. In mature companies (on a Digital standpoint), Digital capabilities can be integrated in each of those crucial Brand functions with an overall coordination ensured by a Digital team that has P&L responsibility for the direct Digital business (like eCommerce) as well as its influence over Offline sales. But in most companies, the only way to currently “crack it” is to have a single team dealing with a key Digital tasks to ensure a good level of integration. Empowerment of employees
The Brand organization needs to entice them to participate to the two-way dialog (like Dell, Intel and Toyota do). It can range from dedicated teams to institutionalized time-share during the day to respond to consumers by email and on Social platforms, or to internal Social policy to encourage employees e mployees to interact with the external world in a structured manner. Technology leadership
Even if Digital technology is becoming commoditized, it still the backbone of successful Engagement models. The company needs a level of internal expertise to organize its Web presence across multiple platforms. This is normally owned by the IT department, de partment, but business users need to be at a t the heart of the functional specification spec ification and usability to avoid IT centric developments that often favor the technology excellence rather than the user experience. New Marketing Model
It is now less about the capabilities capab ilities to create impactful campaigns a few times a year, rather a bout the ongoing creation of content and management of the discussion. The Brand team needs to segment and synchronize the content flow across the Digital channels to make the best use of each channel. Engagement Marketing needs to be at the heart of every single Marketing initiative. Listen, react and measure performance
The organization needs a level a flexibility to be able to react swiftly to consumer demand and opportunities. That means shortening planning processes, and keeping some resources available to deal with the real time nature of Digital interaction. Finally, thorough performance assessment is needed, through analytics, but also larger Brand Equity research to analyse the contribution of the Digital Engagement efforts to Brand Knowledge (Awareness and Image/Consideration) and Brand Equity. Many companies still fall short in providing relevant analysis to maintain or trigger buy-in of top executives. . c) Limitations of pure Digital Engagement: the Post-Digital Age
In 2009, no Brands have h ave been more present in consumers’ lives than the ones in the Digital sphere. But there are actually some limitations of single Digital Engagement. There is evidenc e that Engagement needs to extend outside of Digital frontiers for a seamless Brand experience, leveraging all the human senses to create bonding emotions. A recent Google research revealed that consumers receive around 1000 commercial message a day. This degree of interruption generates increased levels of stress and frustration, exacerbated Online, leading to a Digital clutter that consumer might want (or need) to escape once in a while. Indeed, in the rush to become Digital, some Brands have overemphasized these channels at the expense of real human interaction. The digitization and automation of the relationship has not replaced the real human contact that is crucial for for the Social animals we are. Engagement is in the end a capability to provide a human contact and quality service through any channel, be it Digital or Retail. That’s why some Digital Pure-players are now investing to improve their customer services by providing access in one click to well trained humans for a live discussion. Some of them are even seeking to implement a Retail presence to complement their Digital experience (like Microsoft for instance). For Analogue Brands, it simply means re-establishing more human and meaningful co nnections, if possible beyond the Digital channels. By nature, the Digital world is restrictive to only two senses: sight and sound. This is why many Consumer Brands have understood the importance of Controlled Retail and now heavily invest in that channel. Nike Town, Louis Vuitton flagships or Nespresso stores are good examples of holistic 5 senses experiences, where Digital is seen as complementary to the Retail and a nd heavily pushing customers to walk into a store to benefit from the full Brand experience. More and more consumers will react against aga inst the blizzard of Digital distractions by seeking those real world experiences. What InterBrand called the “Experience “Exp erience Revolution”, where senses lead to feelings, and feelings to emotions that further build Brand Equity. After having built Brands over a seamless Digital world, the next phase is certainly about building the next generation of successful Brands over a seamless world that bridges the “Digital with Real” without interruption, to create sustainable Brand Equity and Value. Apple is certainly the leader of the next generation, showing the way for many other Brands.
Appendices and references 1 – Entertainment and Media usage evolution, Microsoft Research, “European Internet Trends of Today and Tomorrow”, April 2009
2 – eCommerce penetration evolution, Goldman Sachs, “dotCommerce”, May 2010
3 – Social Media usage evolution, Morgan Stanley, Internet Trends, June 2010
4 – Mobile Internet usage evolution, Morgan Stanley, Internet Trends, June 2010
5 – The Digital Media consumption / investment gap, Morgan Stanley, Internet Trends, June 2010
6 – The relative Media Channels performance, Morgan Stanley, Internet Trends, June 2010
7 – he shift of Marketing investments, Forreste Research, US Interactive Marke ing Forecast, July 200
8 - Funnel Tra sformation – Classic vs. New (co sidering Digital impact) – Forres er Researc , 2007
9-
elative On ine / Offline Media Channels per ormance – 1:4 perfor ance ratio vs. Print
10 – Online Influence on Offline Sales, eMarketer, Feb 2008
11 – eCommerce profitability vs. Retail, Goldman Sachs, “dotCommerce”, May 2010
12 – AIDA Model
13 – Customer-based Brand Equity Model, Keller / Kevin Lane, 2001
14 – Syncapse, Value of a FaceBook Fan, 2010
15 – InterBrand Valuation Methodology and 2009 Ranking
16 - Engagement Scores and Analysis for the World’s Top 100 Brands
