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The beleaguered brand in 2008

Brand strategists and marketers face major challenges in 2008: from the painful death of traditional advertising and the stratospheric rise of social networking to environmental consciousness and, in South Africa, a divided ANC. Idea Engineers’ Managing Partner, JANICE SPARK, looks at what we can expect on the brand front this year.

Janice SparkGlobally, 2008 will mark a decisive shift into the dynamic world of Web 2.0. For brand strategists and marketers, the painful death of traditional advertising will be accompanied by the stratospheric rise of social networking. Add a global boom in environmental consciousness and you have a complex matrix of competing variables to negotiate. Locally, a divided ANC offers a telling sign of the social challenges that will continue to underpin all commercial activity.

These are some of the key movements South Africans can expect on the brand front in the year ahead:




#1 – Social Networking (The Facebook Revolution)

While social networking has been prominent as an Internet trend for some years, the Facebook phenomenon has changed the way marketers think about the way people interact – within a single year. Few surely would question that 2007 was the year that social networking took over the Internet.

Reiterating the point are some figures from comScore’s Web 2.0 in Retail Today report. According to the report, social networking site traffic rose 33% to 81 million unique visitors in August 2007 versus August 2006. Blog traffic grew 23% to 28 million unique visitors, while online video site traffic increased 20% to 93 million. Web 2.0 users spent about $27 billion online in the United States in the second quarter of 2007.

Started in 2004 by soon-to-be drop-out Mark Zuckerberg at age 23, Facebook only opened its doors to the general public in December 2006 (previously you had to have a university or high school email address to participate). The result was 12 million new members by that Christmas, and 50 million in 2007.

Some companies and organisations have banned Facebook use at their offices due to its interference with productivity, while others, such as BP and General Electric, have embraced it. Such is the power of the medium that US presidential candidates simply must have a Facebook profile page.

The opening of Facebook to independent software developers was probably the smartest move Zuckerberg could have made, ensuring that users have a never-ending array of useful tools at their finger tips, while Facebook has first investment crack at the truly ‘killer apps’. If any proof was needed of the Facebook revolution, it was Microsoft’s purchase of 1.6% of the company for an astounding $240 million, effectively creating a market value for the 3 year old company of $15 billion.

Now that Facebook has linked to the Google search engine and has opened the door for advertisers to reach in and talk to specific Facebook individuals and communites, a whole new marketing era seems to have dawned, with advertisers licking their lips at the opportunity to enter into highly interactive and chatty communities.

It’s not only advertisers making commercial use out of Facebook. The opportunity the site (and others like it) presents to develop and articulate a personal brand has significant commercial resonance for many people – from writers to musicians and politicians. More and more prospective employers also use the site to gain a clear, personalised understanding of potential employees.

Facebook has arrived. Exactly what brand strategists do about the fact in 2008 will be fascinating to observe.

But…

The very popularity of Facebook could be its downfall. As the platform is blitzed by all directions by marketers, advertisers and search engines, its authenticity could well be shaken. Already, Facebook has proved to be an important consumer lobbying tool. HSBC’s decision to stop interest free loans to students as soon as they leave university was effectively reversed by a Facebook lobby group called ‘Stop the Great HSBC Graduate Rip Off.’ The big question is, will the time come when Facebook eats itself? When the network power that made it so great in the first place is turned inward?

Google offers a good example here. From being an Internet hero a few years ago, there is much talk about the Google evil empire at the moment, thanks to the platform’s desire to know a little too much about its users, and to sell what it knows to advertisers. Facebook could well face a similar dilemma as it seeks to generate hard revenue out of its meteoric rise.

#2 – Going Green

Green issues are huge, and getting bigger all the time. Underpinned by America’s disastrous foray into Iraq and heightened sensitivity around anything to do with oil, the energy debate is hotting up month on month across the world. New Australian Prime Minister Kevin Rudd featured a strong green focus in his election campaign, while Al Gore’s documentary, An Inconvenient Truth, has featured surprisingly prominently in global political debate, earning the man previously most famous for his loss to George Bush a Nobel Prize and an Oscar.

The up-shot of the re-energised environmental movement is a plethora of brands adopting ‘green’ positioning, as well as increasing numbers of celebrities getting stuck into green issues (for a variety of reasons, of course). Brad Pitt has launched his own drive to urge Americans to slash their energy use, while Leanardo Di Caprio is mimicking Al Gore with the release of his own environmental documentary, The 11th Hour.

Look out for more use of carbon credits by major brands across the world, especially airlines (for the uninitiated, it’s now possible to purchase carbon credits generated by tree planting third world residents to off-set the damage you’re doing with your industrial business, or simply by being a passenger on an airplane). Increasingly, travel brands are offering ‘value-add’ carbon credits to customers in an attempt to ease the environmental conscience.

But…

Clutter in the environmental space means that brands simply leveraging a green identity will probably experience minimal returns on their campaigns. Conversely, brands that demonstrate the intent of the recently deceased and increasingly iconic Anita Roddick will build significant public loyalty through their actions.

#3 – Comparison Rules

Comparative web sites are beginning to take serious root in global consumer culture. Strategists across all sectors need to be aware that online and offline activism are merging, creating a blizzard of options through which consumers can compare prices on a variety of services and products.

What’s more, social networking tools and attitudes mean that the comparison won’t necessarily be a passive glance between price listings. Consumers have a voice and they are learning how to use it to express how they feel about service, or to assess the strongest performers in certain areas. Never has word of (virtual) mouth been more important in shaping brand identities than right now.

Interestingly, comparative sites in Europe also offer the ability to assess a company’s green rating (see www.uswitch.co.uk for example). Customers can also track their personal environmental consumption through sites like www.earthlab.com.

In South Africa comparative shopping is still a relative novelty, but in 2007 new players have become active in the space. www.ratesdirect.co.za offers seekers of home loans the ability to make a single online application – and then sit back and let brokers and banks make the best offer. This creates a pretty dramatic paradigm shift from the cap-in-hand approach borrowers have had to hold to date. Similarly, www.hippo.co.za offers South Africans the ability to compare a range of insurance quote options. And jump.co.za offers comparative prices from a large database of stores and items.

The much-discussed demise of the broker could be arriving soon.

But…

There will surely always be room for advisors offering good common sense, especially when it comes to critical purchase decisions such as insurance and mortages. While the mechanisms of interaction between customer and advisor are changing radically, it would be naïve to assume that skilled intermediaries will disappear entirely. As always, in fact, a quality human touch will remain a key point of competitive advantage.

#4 – Losing Brand Control

As the Chinese toxic toys scandal has shown, outsourcing can have a serious effect on brand equity. Whether it’s the manufacture of toys, sneakers or clothing, or the outsourcing of call centre or other business process functionality, more and more brands are going to have to weigh up the pros and cons that come with outsourcing in the realm of consumer perceptions.

While offering many obvious benefits, outsourcing relationships need to be carefully considered. Without quality guarantees built into the process, a lack of responsibility can seriously damage brand equity in the consumer’s mind’s eye. In 2008, consumers will be demanding guarantees in terms of quality, safety and service, along with ethical business practices across the supply chain.

But…

The outsourcing phenomenon is hardly likely to go anywhere. Indeed, traditional outsourcing power houses such as India are now embracing Knowledge Process Outsourcing (KPO) as well as Business Process Outsourcing. KPO involves the outsourcing of highly specialised business functions such as legal and medical analysis services, or animations. The reality is that major brands aren’t likely to challenge the outsourcing business case, which is often irrefutable, any time soon. Rather, expect a more in-depth analysis of strengths and weaknesses of outsourcing partners from the big guys.

#5 – Healthy Living

The Healthy Living paradox continues unabated. On the one hand, consumers are demanding healthy alternatives to practically everything, from fast food to coffee. On the other, Western society continues to face a global obesity pandemic, driven by fundamentally unhealthy lifestyles.

So, expect more and more brands to follow the MacDonald’s example. MacDonald’s’ recent strong performance has been ascribed to the brand’s ability to react positively to consumer demands for healthy menu options. Ironically, however, brands like MacDonald’s should look out for increasing levels of consumer activism and more uncomfortable questions (is the MacDonald’s salad as healthy as it sounds?).

Brands able to marry their marketing promises with authentically healthy and environmentally positive products will reap serious rewards in 2008.

But…

Health is not only a business issue – expect increased regulatory pressure in South Africa and abroad on brands targeting children. With the likes of Jamie Oliver forcing an examination of the health of children’s school menu items in the UK, locally we can also expect a renewed focus on the details of how brands attempt to sell to kids. Celebrity voice-overs punting sugar laden products could be a thing of the past, along with many other methods of doing business brands have got very used to.

#6 – Politically Correct Rules

From Swedish newspaper Svenska Dagbladet‘s Islamic cartoon furor to South Africa’s Sunday Times battle with the government over the freedom of speech in the Manto Tshabalala-Msimang / Mondli Makhanya saga, to Bollywood superstar Shah Rukh Khan’s endorsement of skin-whitening creams, we are living in politically charged and highly sensitive times. Brands of all shapes and sizes will need to pay particular attention to how they select their ambassadors, and how they present themselves in the global market place. One slip, and all equity can crumble…

But…

The flip side of this coin is a niche appetite amongst the general global public for savage irreverence. Witness the runaway success of Australia’s The Chasers’ War On Everything, or Borat. Satire is far from being a dominant global sensibility, but when the likes of Borat and The Chasers hit, they hit very hard indeed.

#7 – A step to the left?

The major divisions in the ANC that became so evident it their Polokwane conference at the end of last year will leave many local brands re-examining their overall strategies and their approach to doing business in the country. Regardless of who eventually becomes president of South Africa, there is no doubt that the last decade of conservative, centrist policy development by government is in for a shake up.

Local business has got quite used to an accommodating government. Now it may now need to embrace a political paradigm where workers’ interests dominate, in theory at least. As a result, expect a racketing up of nation-positive rhetoric and brand positioning from all the major brands in the country.

But…

It’s early days yet. Just how far the ANC will actually move to the left is open to debate, and there is no doubt that business will influence government as much as government will influence business in the years ahead.

The bottom line is that in 2008, local brands will need, first and foremost, to position themselves according to the real needs of real people. Get that right, and the rest will follow naturally, regardless of who is in power.

Brand 2010 Under Fire

Readiness for 2010 continues to be a hot issue in South Africa. On the one hand, the rugby world cup success did a lot to unify the country (even the Xhosa royal house invited the Springboks for a traditional celebration, including the slaughtering of an ox, to mark their Rugby World Cup victory). Even though the victory was tainted (as usual) by political squabbles of many sorts, it did a lot to lift the general mood in the country in the run up to 2010.

Internationally, however, crime headlines continue to make waves and South Africa will need to be prepared for a harsh spotlight on the country’s crime situation for the next two and half years.

Blogging bitesCertain corporates got their fingers burnt by venturing into the highly fluid blogosphere, and the bulk look likely to tread warily into the unknown from now on. But, while corporates may think twice about generating their own blogs, there is no doubt that more and more media professionals and agencies will be spending a great deal of time monitoring life in the blogosphere. It’s here where trends, ideas, opinions and fads manifest first. Ignore it at your peril.

Looking forward, the paradigm of user generated content that so typifies the blog continues to take hold. From TV Shows to newspapers to reality competitions, the user is a primary point of focus and interest for most brands, and will surely continue to be so.

Conclusion

The key to 2008 for brand strategists and marketers will be awareness. Our reality is that we are living in a highly interactive world – one where politics, environment, entertainment, business and socialising often overlap.

This means that instead of adopting ‘hard and fast’ strategies, brands will have to be as fluid as the context in which they are operating. The ability to adapt to socio-political changes and market trends at quick speed will be crucial. Brands that cast their strategy in stone could be in for a long year!

* Janice Spark is managing partner at Idea Engineers, a brand and communications strategy consultancy.


One Comment, Comment or Ping

  1. I see the new media as a fantastic opportunity for companies to make their products synonymous with their brand. In the digital world people search for products/services and domain names have the ability to connect a product with a brand.

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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