One thing interesting #7: The diminishing power of the brand

There's a typical response whenever someone states "the brand is dead" that's both true and misses the point. The response being that people will always buy into compelling ideas and stories much more than features and easily quantifiable value. 

The response - whilst true at a fundamental human level - makes the assumption that brands today will continue to have all the same control and privilege of distribution that they've had in decades gone by.

However, we're in a phase where the rules of the game are changing dramatically. And it's technology companies that are swooping in to take as much ownership of the customer relationship as they see possible.

It might appear like a bit of change has happened but the rules are still pretty much the same ("just shift some of that ad budget from TV and print towards search and social.") but it's more significant than that. 

When Google and Facebook take 103% of share of the growth in digital advertising in 2016; it signals that this is not some kind of level playing field for brands (103% because all the other ad tech companies collectively declined by 3%). In fact, it's the brands that are in the weakest position. Its the aggregators such as Google and Facebook who have productised the channel, gained the most power and are demanding more and more of your brand's profit margin. 

So whilst the statement "the brand is dead" over exaggerates the situation, a more accurate assessment might be that brands are loosing ownership of the customer relationship. The mechanics of garnering attention are radically different than they used to be. 

The most provocative example at the moment is: if I ask the Amazon echo to order some more laundry detergent, who chooses the brand? Does Amazon decide or does it go to the highest brand bidder? How do I 'shop' if we start to shift to voice UI?

Yes, the Amazon Echo has a very small (but growing) user base. So did Facebook in the mid-2000s. And I imagine very few Newspapers looked at that 'toy' college kids were using and thought their business model was about to be flipped on its head.

In the following 17 minute conversation, L2's Maureen Mullen and Scott Galloway discuss these issues that brands face and share their predictions for technology and business in 2017. A big emphasis on shifts in retail and a surprising assessment of Unilever's acquisition of Dollar Shave Club. 

Neil Smith

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