September 16, 2016 | Written by: Trevor Davis
Categorized: Consumer Experience
Brands occupy a lot of my thinking time so as I was reading the Wall Street Journal, this headline grabbed my attention yesterday:
If you’ve been keeping up with these posts you will know that I am a big fan of what Ms. Alba has done with the Honest Company. It has brand purpose, it is nimble and it sits astride that line between retail and manufacturer that blurs more each year. And now an established player has their eyes on an acquisition. Makes perfect sense as a way of bootstrapping Digital Transformation, and it also says a lot about the power of brands in the digital age.
You talking to me, brand?
In the last blog post we illustrated how marketing is being shaken at its core by Digital Transformation. I was out at dmexco this week in Cologne, Germany, and was almost overwhelmed by the evidence of how the media landscape is rapidly changing.. Especially how agencies and IT businesses are exploiting technological advancements to create new consumer journeys and ways of engaging consumers.
As brands are able to form more direct and intimate consumer relationships, consumers’ expectations of brands are equally rising. Luis Perez Ballestero, IBM’s Consumer Products Leader in Spain, Portugal, Greece and Israel, identifies a strong demand from consumers for the development of brands with a stronger purpose embodied in their underlying values and actions:
“For most consumer packaged-goods (CPG) companies, brand values are moving beyond traditional cost, quality or health values and claims to incorporate other social values, brand trust, sustainability, solidarity, etc. CPG brands are still learning how to manage new digital channels to enable one-to-one interactions with consumers to be able to communicate those values.”
The concept of one-to-one interaction and “engagement” is both old and being remade anew by means of digital technology. Digital is really proving that marketing is more than “just” messages. It is action and (social) interaction that creates the personality of a brand, and digital tools are giving marketers ever greater power to shape the narrative and personality of their brands (control is probably a stretch too far!)
Consumer psychologists like to compare brands to people. Axe (Lynx in the UK) has the whiff of testosterone and untidy teenage male bedrooms in its DNA. Ask yourself this question: what type of person do I associate with my favourite brand?
Digital technologies (such as IBM Personality Insights) enables brand strategists to analyze and identify brand personalities in ever greater detail. These digital tools allow them to do this in the context of the influencers and consumers that have an affinity to those brands. It is a dynamic, fluid world, prone to network effects and viral urges -“pFB” (postFacebook as I choose to call this period). It is indisputable that consumer behaviour towards brands, and the way they communicate with each other has changed dramatically. For example, having an established offline brand is disconnected to success online: of the 15 top offline players in the bath-and-shower, fragrances, ready-meals, pet-food, and skin-care categories, only 5 feature among the top sellers on Amazon.
How to digitally delight with your brands
However, to be truly successful, it is not enough for a brand to establish a similar personality to their target consumers. They need to use digital technologies to know their consumer’s wants, needs and expectations and how they can best serve them individually. Think how wonderful it would be if every brand could digitally delight each consumer on a personal level.
Let’s hear from Luis again:
“I believe the main success factor for the brand of the future is to engage with consumers when they want, providing access to the brand whenever they demand in their consumer journeys. Brands need to be relevant to consumers, communicating brand values consistently through all channels.”
You can see this in the data we collected for our Brand Enthusiasm Study. We were able to demonstrate in a number of product categories that there is a rising group of “Brand Enthusiasts” who engage proactively with brands and form a high emotional connection. 25% of respondents were brand enthusiasts, of which three-quarters were from growth markets and more than half were millennials aged 18-35. Your future in other words.
Choose me, choose me!
In the fast-moving goods industry, some believe that brand loyalty has become a dated concept as technology and new business models have empowered consumers to choose from a growing product selection at their convenience. As there are few switching costs involved, consumers are only loyal to, well, what they choose to be loyal too in this moment, on this device or that media channel.
So, in today’s landscape, how can brands keep fresh and ensure they will be chosen by consumers on a regular basis? How do you ensure that today’s brand rejectors are converted to enthusiasts tomorrow? As previously argued, establishing a strong relationship with the consumer is key, and this means using digital techniques wisely to match every consumers’ desired level of communication, willingness to provide input and comfort with sharing personal data.
Digital channels are allowing brands to reclaim consumer relationships that had leaked to other players in the value chain. For example, through mobile, brands are able to connect, interact and listen directly to consumers without the need to rely on retailers or agencies. It is now straightforward to nudge consumers to co-create content, and to become influencers among their friends and family.
The challenge of brands at scale
However, to be able to engage with individual consumers at a global level requires automation. Intelligent automation that can interact with human beings through natural language while learning about the individual and reasoning sound courses of action. In other words, brands will need to rely upon cognitive computing. North Face has a guided shopping bot powered by our Watson technology. Here consumers are engaged in a personalised dialogue around their equipment and clothing needs in the context of their intended outdoor activity or destination. Insight is gained from each consumer interaction, compiling a rich consumer profile which determines the brand’s future interaction with the individual. Magic.
Another great example is Knorr. Working with IBM, Knorr has embraced the latest cognitive technology for personal consumer interactions integrated into their global campaign aimed at millennials who recipes on social media and use an iPad as their cookbook (the campaign is called “Love at First Taste” and you can watch the gorgeous campaign film directed by Tatia Pilieva here).
The outcome of this partnership is an interactive online Flavour Profiler which allows consumers to learn more about themselves by discovering which of 12 flavour profiles they are. Ask yourself, are you a “Melty Indulger” a “Spicy Rebel” or a “Meaty Warrior”? The tool then makes tailored recipe recommendations based on the individual’s profile and in this learning context enables consumers to share their insights too.
Think about this as one to one engagement at scale. All the consumer interactions are powered by cognitive reasoning and machine learning. Knorr is engaging worldwide in real-time with a new generation of food-obsessives, who see social media as the place to talk about and exhibit their daily gastronomic endeavors. What do we mean by scale? #food has almost 200 million posts on Instagram alone; #foodporn almost a 100 million.
Keep on rethinking the consumer journey
There are still some challenges to work through for most brands. Luis again:
“I believe brands are struggling to get relevant to consumers, due to the fact that now consumers decide when they want to be reached. And with the digital revolution in media we are seeing and the proliferation of channels that consumers use in their daily lives, this has become much more difficult for many brands. Some brands are taking bold decisions to move large budgets of marketing spend to new digital channels but still don´t know how to measure success of digital marketing campaigns. The rules of engagement in these new channels are different and many brands have not mastered yet how to be successful in these new digital world.”
Consumer journeys are becoming more complex and extended. Social discovery is more important than ever. Mobile commerce is the norm in many categories already. As for media…well enough said. As product brands become product service systems which become brand experiences powered by new business models. Digital provides a multitude of ways that a brand can create relevant experiences and enthusiasm. Rapidly maturing technologies, such as augmented reality, virtual reality and the Internet of Things are already creating a new, richer and more enjoyable experiences across the consumer journey for brands such as the Indian start-up Boltt that is getting set to launch a new sneaker as part of an entire wearable ecosystem alongside a virtual AI coach who gives runners real-time feedback to improve their running and fitness. L’Oréal recently launched the Makeup Genius, which is a virtual makeup app that instantly applies makeup to the users image. Rimmel even have an app that allows you to steal a “London Look” from a friend.
What next for brands?
Luis shares Zara and Calidad Pascual as examples of brands that are pushing the boundaries of brand experience using digital:
“Starting this September, Zara has announced they plan to transform again the store experience for their consumers by enabling mobile payments in all their stores through an app (InWallet) that will enable consumers perform secure payment at the store. This simplifies and enriches the transactional part of the experience in ways that the shopper values. Another example, maybe less known outside of Spain, but also impactful, is how Calidad Pascual (a dairy / milk / beverages company in Spain) has changed the brand experience in the the last year using digital. Starting from almost no digital marketing activity, they now have a continuous interaction with hundreds of thousands of consumers, listening to them using social media analytics and personalizing communication and online features based on individual opinions and preferences. The company has launched new products (like Bifrutas – Zero) using only digital channels with high return on marketing investment compared to traditional new product launches. With the help of IBM, Calidad Pascual is creating genuine, individualized multi-channel campaigns with all of their 5 main brands and accumulating relevant consumer insights at the same time.”
Just imagine what is round the corner:
- AR and VR in mainstream media (don’t be lazy, just google it!)
- Embedded IoT technologies e.g. T-shirts with operating systems, and smart jewellery from companies such as Ringly
- More and more brands on more and more new media platforms such as SnapChat, telling more and more individualized brand stories
- Brands that coach us (e.g. Under Armour, and the application of Watson to lifestyle coaching)
- Subscription as the new norm in many categories (e.g. Dollar Shave Club, Birch box)
- Cars as the next consumer living space (more on this in a future post)
Bob Lord, recently appointed Chief Digital Officer at IBM, was interviewed at dmexco and said “The challenge for any large organization is to simplify the problem and to execute quickly.” Here the problem is how to best address the future of brands, and the changes that future will bring to marketing. Sounds overwhelming doesn’t it, but listen to what Nancy Kramer, Chief Evangelist of IBM iX, wrote after IBM acquired Resource Ammirati, her employer of 35 years:
“Frankly, I’m blown away by IBM. I’m blown away that this 105-year old, values-driven organization can transform itself time and time again, turning the business upside down so now less than 10% of revenue is derived from hardware. The company is in the middle of another transformation, as the corporate world is shedding its old personal computer ways, moving into the cognitive era and on the cusp of catching up with the hyper-connected, constantly-mobile digital world of consumers.”
Resource Ammirati talk about “bridging the disappearing gap between branding and commerce, online and offline”. If we can come to grips with our Digital Transformation and what it means for our IBM brand, then surely you can too for yours.
Thanks to Eva Heukaeufer for research and words of wisdom.
Thanks to Luis for taking time out to be interviewed about the exciting developments in the south of Europe (normally I would say the warmer part, but this year global warming seems to have balanced things out!)