If in doubt, brand

The craze for branding only advertises corporate insecurity

For the second August running, Business Week has teamed up with Interbrand, a consulting firm that is also glossy and based in Manhattan, to perform an audit of the ‘brand value’ of the world’s top global products (1).

The 2002 special report has in turn been disputed in the pink pages of FT Creative Business (2). Altogether, debates about brands reveal much about today’s gloom economy and therapeutic polity.

You might think that today’s economic downturn, or at least the fear of a downturn, would dispose companies to be less concerned about keeping up frills and appearances. You might think that in a deflationary world, companies and consumers alike might give up their fixation with brands, and be more interested in price instead.

But you’d be wrong. ‘To weather an extended bout of distrust and instability’, pronounces Business Week, ‘strong brands are essential’. Brands are so important that firms will have to work ‘doubly hard’ to ‘keep them intact’.

Over at FT Creative Business, the feeling is that financial exercises in rating brands are not, by themselves, enough. Like Business Week, however, FT Creative Businessconcludes that ‘more work will have to be done’. The FT predicts that both finance and marketing departments will have to toil and toil again, by following the example set by Unilever. That company intends to make transparent, to all its audiences, the growth, sales and – sometimes – even the market share of each of its 400 core brands, worldwide.

For Unilever, that is an enormous project. For other companies to move in the same direction would amount to a massive shift of their resources away from research, development and operations, and towards the ephemeral world of brands and their worth. Yet the new bean-counting around brands goes further than this desire to subject companies’ brands, like their environmental impacts, to ethical auditing.

According to Tim Ambler, a senior fellow at the London Business School, every company will also be obliged to set up, over arcane categories like brand equity, brand awareness and brand preference, ‘a series of marketing metrics to establish the health and future prospects of its brand’ (3).

Nowadays brands, like people, need a massive support effort. And, continuing the therapeutic analogy with needy individuals, brands also need continuous monitoring for their health. But in fact it was obvious soon after 11 September that society’s absorption in brands was likely to increase.

Sir Martin Sorrell, chairman of the marketing services giant WPP Group (gross income in 2001: $8.17billion), was clear-eyed enough about this. While worldwide advertising expenditures were plunging to their current plateau, he hinted at the opportunity that 11 September would give to the marketing services sector, and particularly to branding. It would, he said, make people more aware of community, family and religion; there would be ‘more apple pie and motherhood’ (4).

Both Business Week and FT Creative Business have kind words for trustworthy, relationship-orientated brands. But there is no contradiction between this touchy-feely approach and the bean-counting demand for accurate, transparent figures. Either way, the call on both sides of the Atlantic for harder work around brands shows just how much of a priority business now gives them.

The post-11 September craze that business has for brands runs counter, thankfully, to GCSE Marxists who imagine that an economic downturn must lead to a brands downturn. Yet as crazes go, that craze for brands is a great pity. It leads Business Week to celebrate the fact that, over the past year:

• Smirnoff Ice helped Smirnoff gain more than $100million in ‘brand value’;
• Nivea products for men helped Beiersdorf add nearly $300million to its brand value;
• Ketchup in squeezable bottles, or flavoured Smokey Mesquite, helped Heinz put on $300million;
• Dell improved by $900million because of the advertising slogan: ‘Dude, you’re getting a Dell’ (5).

No doubt the ‘citrus-flavoured, single-serve drink’ that is Smirnoff Ice is, like a Dell laptop and indeed Vanilla Coke, a daring breakthrough. But what characterises branding and its bean-counters is not their commitment to innovation, but their fear of public distrust and of the risks that their brands run.

In March 2000, newly-branded dot.com companies struggled to convince Wall Street that their business plans were credible. In early 2002, Enron, WorldCom and Andersen became bankrupt brands, and one of the top CEO personifications of corporate brands, General Electric’s Jack Welch, had a dramatic fall from grace, after a co-branding dalliance with the editor in chief of the Harvard Business Review. When, in a rearguard action against Tesco, J Sainsbury opened the first of a series of down-market Sainsbury’s Savacentres, its ‘brand stretch’ was deemed ‘a risky strategy’ (6).

More recently, WPP’s two top rivals, branding specialists Interpublic (gross income in 2001: $7.98billion) and Omnicom ($7.4billion) have found their skills in communication the subject of ridicule, as Wall Street has deemed their figures suspect. Likewise, even Business Week admonishes that if the claims made in advertisements for a brand are not matched by performance, ‘the ads erode value’ (7).

The worry that branding can all too easily go wrong because of public distrust is, in fact, a longstanding one (8). But the fate of brands appears, after 11 September and a succession of business scandals, suffused by feelings of risk. The point is well illustrated by the bogus alchemy of ‘brand value’.

Brand boosters like Business Week hold that the power of brands lies in the intangibles that distinguish one firm’s offering from another. The ‘most lasting and sustainable’ meanings of a brand, according to Kellogg School of Management marketing guru Philip Kotler, are not its attributes (a Mercedes is well built), or even the benefits that follow from these (I am safe in the event of an accident). Firms must pay attention instead to the values that a brand suggests its owner holds (I own a Mercedes because I value high performance, safety and prestige), and to its personality (consumers might visualise a Mercedes as a middle-aged executive) (9).

Brand boosters take the values and character traits of Mercedes more seriously than the quality of its steel or its crashworthiness. For them, a brand is a matter of perceptions and associations.

Philosophically, this is a point of departure that is imbued with idealism. Next, however, comes a lurch from idealism towards the irrational. In a bizarre manoeuvre, the dreams, perceptions and associations of a brand are quantified economically. As Business Week had it in 2001, ‘While the concept of brand is intangible, brand equity is far from it’ (10).

Brand equity is generally taken to be that part of a firm’s stock market capitalisation that is accounted for purely by its brands. A brand’s intangibles are first of all held to account for the premium prices that consumers are prepared to pay for that brand. Then, in the Business Week survey, firms like Interbrand, Citigroup and JP Morgan Chase & Co count up the extra corporate earnings that these brand-based intangibles will generate in the future, separating them off from other intangibles – patents, customer databases – through Interbrand ‘market research and interviews with industry executives’ (11).

Finally, analysts arrive at an estimate of the net, present-day value of a company’s brands: its brand value. Significantly, they do this by discounting the extra revenues a brand is set to generate by risk: the risk of an erosion in brand strength – of a brand’s leadership, its stability, of the ease with which it crosses geographical and cultural borders.

Confused? You’re not alone. This is bean-counting, after all, that rates the brand value of Shell ($2.81billion) little higher than that of Smirnoff ($2.72billion) (12). But what is clear is that brands, an attempt to get around risk-laden market transactions through the semblance of durable and ‘cultural’ relationships, have themselves become so complicated an affair that they too are laden with risk.

In 1996, Berkeley University’s David Aaker, the world’s number one guru in branding, argued that brand managers, brand equity managers, range brand managers, global brand managers, brand champions, category managers, brand committees and communications coordinators were all in charge of the brand (13). By 2000, when he and strategic management consultant Erich Joachimsthaler had built a ‘brand relationship spectrum’ of 27 elements to help ‘brand architecture strategists’ employ, with insight and subtlety, ‘subbrands and endorsed brands’, they gave a good hint of what brand management has become: as unfathomable but rigidly hierarchical as the eastern Roman Empire that was Byzantium (AD395-1453) (14).

Firms are obsessed with brands because they panic about doing anything else – and especially about making much more serious investments than the relatively modest ones that brands still demand. Brands reflect not corporate economic power or the lure of market opportunities, as their anti-globalisation critics suggest, but a culture of fear.

The idea that brands need even more corporate energy expended upon them shows that the future of brands lies, to a large extent, in another counter-intuitive domain – inside the workplace more than the supermarket. Again Sorrell was early on the case. Of WPP, he wrote: ‘…the importance of strong internal communications has grown so steeply over the past few years. Well over 50 percent of what we do for our clients in advertising, media investment management, information and consultancy, public relations and public affairs, branding and identity, healthcare and specialist communications is now directed at internal audiences. Making sure that internal audiences are onside is critically important in ensuring strategic and structural messages are transmitted to customers, clients, suppliers, investors, journalists, analysts, governments and non-governmental organisations.’ (15)

‘Making sure internal audiences are onside’ is a vital new mission in branding. At Nestlé Rowntree, UK marketing director Andrew Harrison says that part of the brand value in Coke, champion of the Business Week charts, ‘is in the [Coke] people’ (16). And, in an America more than ever defined by customer services,Business Week itself contends that employees must be ‘motivated to reflect the core brand values’ of their organisation (17).

At a call centre, Interbrand director John Simmonds suggests that ‘an individual represents the brand with their own personality. Their voice is a personal expression of the brand’ (18). Like a Byzantine chant, an obscure collection of religious doctrines – brands – stands poised to take over employee larynxes and employee minds. No matter how many trendy shops now try to woo customers with coffee, the internet, special smells and idiosyncratic music, it is in the world of work, more than in the world of consumption, that the spiritual power of brands is at its greatest.

Of course, workers at firms like WorldCom no longer have confidence in their employer’s brand, and will not take kindly to the suggestion that they adopt a WorldCom accent or tone of voice. But for every nervous company chairman as for UK prime minister Tony Blair, the slightest hint of dissent from the lower orders is enough to force a Sorrellian charge into new internal communications, branding and change management.

Alongside its new bent toward bean-counting, branding has entered employer-employee relations. Together, the two trends mean more displacement activities for everyone at work and a more unstable management approach to every kind of job. Workers at Consignia can only lament the sums spent on reaching that name and now, typically enough, on hanging it back again. The fate of workers at Golden Wonder lies in similarly capricious hands: last year, Legal and General Ventures sold its stake in the company to the rival private-equity firm Bridgepoint Capital.

Even the demeanour of the US soldier in the Gulf may have been changed by re-branding on the part of his rather special employer, the US Department of Defence. After the Council on American-Islamic Relations complained that operation Infinite Justice was something only God could dispense, American warriors have had to satisfy themselves with executing operation Enduring Freedom.

In 1975, after Vietnam moods were over and Jimmy Carter was president, the US military’s guidelines for campaign names determined that they must not ‘express a degree of bellicosity inconsistent with traditional American ideals or current foreign policy’, or be ‘offensive to good taste or derogatory to a particular group, sect or creed’ (19). If today, fear of fighting under a politically incorrect brand has now turned out to be part of Uncle Sam’s general confusion about the War against Terror, that only shows what a long way branding has come.

But as the therapeutic authoritarianism of the Enduring Freedom brand shows, the long way that brands have come lies in one direction alone – backward.

Footnotes and references

(1) ‘The best global brands’, Gerry Kermouch, Business Week, 5 August 2002, p94-9; ‘The best global brands’, Gerry Kermouch, Business Week, 6 August 2001, p44-51

(2) ‘Choosing the winners in the brand value game’, Conor Dignam, FT Creative Business, 6 August 2002

(3) Quoted in Conor Dignam, ‘Choosing the winners in the brand value game’, FT Creative Business, 6 August 2002, p12-13

(4) Quoted in ‘A fragile planet’, Penny Wark, The Times 2, 26 October 2001, p3

(5) ‘The best global brands’, Gerry Kermouch, Business Week, 5 August 2002, p94; ‘The 100 top brands’, Business Week, 5 August 2002, p96,99

(6) ‘Stretching brands to breaking point’, Michael Skapinker, Financial Times, 31 May 2002, p19

(7) The figures quoted are from ‘Communications breakdown’, The Economist, 22 June 2002, p59; ‘The best global brands’, Gerry Kermouch, Business Week, 5 August 2002, p94

(8) ‘Extend profits, not product lines’, John Quelch and David Kenny, Harvard Business Review, September-October 1994

(9) Principles of Marketing, Philip Kotler and others, second European edition, Prentice Hall, 1999, p571-2

(10) ‘Editor’s memo: the best global brands’, Stephen B Shepard, Business Week, 6 August 2001, p1

(11) ‘The 100 top brands’, Business Week, 5 August 2002, pp95. and ‘The 100 top brands’, Business Week, 6 August 2001, p52

(12) ‘The 100 top brands’, Business Week, 5 August 2002, p99

(13) Building strong brands, David Aaker, Free Press, 1996, pp343-8

(14) Brand leadership, David Aaker and Erich Joachimsthaler, Free Press, 2000

(15) ‘Consumer is king as producers fight it out’, Martin Sorrell, The Times, 20 February 2002

(16) Quoted in ‘Choosing the winners in the brand value game’, Conor Dignam, FT Creative Business, 6 August 2002, p12-13

(17) ‘The best global brands’, Gerry Kermouch, Business Week, 5 August 2002, p94

(18) Quoted in ‘How to create a look and feel – and sound’, Edwin Colyer, Financial Times, 6 June 2002, p17

(19) ‘From Blue Spoon to a Just Cause’, Richard Tomkins, Financial Times, 14 February 2002, p13