A Literacy of the Imagination

a deeper look at innovation through the lenses of media, technology, venture investment and hyperculture

Brand Economics

In preparation for a series of roundtable discussions I’ll be leading with Sasha Grujicic at the Banff World Media Festival in June, I’ve been giving considerable thought to the near-term future of brands, and the economics associated with them.

It’s certainly fair to say that brands have taken on a far more vulnerable position with consumers given the adoption of social technologies and forms of activism that put consumer groups more in control over their choices and purchases. It’s probably even more timely to concede that branding as a discipline is far less about marketing, and far more about actually building markets. Not only do leading brands own their media ecosystems, but they are building new products and services as extensions of their constituent businesses and business units.

As for the notion of what a brand really is nowadays, perhaps it's best to first contextualize a significant shift in how companies operate, how they build consumer relationships, and how value is co-created and monetized more altruistically. This shift is a direct result of how money is exchanged, how debt and credit are moved around or leveraged, and reflective of the unique ways those constructs are being disintermediated by alternative currencies, crowdfunding, virtual credits and the like.

Put another way, corporations have more cash on the books than banks and governments, when you consider that they have real assets along with their own credit systems. The shift they represent is one in which they can create the most change, and many of them are, as we'll see in a moment.

The business models of today and tomorrow will constantly change.

The agents who recognize this shift are of course poised to survive and thrive in a heavily commodified marketing industry, one still mostly reliant on bulk media buys and creative services that have a hard time justifying bottom line value within the current landscape. Saneel Radia has co-founded Finch15 to capitalize on the needs of brands who seek guidance and partnership with new, emergent business models. The folks at Invention.ist have boldly put a stake in the ground in prototyping product ideas rather than simply launching slick campaigns. Others like Kirshenbaum Bond Senecal + Partners and Rockfish have established venture arms that allow them to make key investments in emerging technologies. There are a host of other agencies, like Given, that are committed to changing the brand paradigm to one in which values are developed organically rather than through the superficial attempts found in a lot of the art and copy we see in the streets and on our screens.

These new models are far from perfect, but that is not the point. The point is to embrace experimentation, and to constantly adapt these models such that innovation can become a profit center in various ways.

Another point to consider is that products and services are far from perfect in their own right, and are naturally under intense scrutiny. This means that brands must evolve beyond open dialogues and actually change the function and substance of those products and services. To be more pedantic about it, if a soft drink can kill you or a clothing brand is killing its factory workers (intentionally or not), then we have a significant problem on our hands. Coke's escalating troubles with obesity are a classic example of how communications can't solve complex, real world issues.

Designing systems to take on complex problems.

I liken all of this to a single equivalent: We are moving away from a campaign optimization space, and straight towards one that has us building emergent systems.

Think of a system as one that has a bunch of interrelated and interchangeable parts. That system may contain traditional branding elements and ad campaigns and social media content and PR stunts and all that, but more importantly, it is comprised of tools and platforms and utilities that allow people and companies to connect, learn and transact more meaningfully. Further, these dynamics call for communications to be multi-dimensional, such that push messaging is being replaced by emerging disciplines like participatory storytelling, data journalism and other forms of ‘new media’ which break through the boundaries imposed by traditional media gatekeepers. Therefore, a system is much more than the sum of its parts -- it is at once a means to educate, inform, entertain, prospect and experiment in ‘perpetual beta’.

For those corporate stakeholders who are fearful, consider this: Systems are not only sustainable, but they are scalable. In other words, there’s real money at stake.

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Leading brands like Nike, for example, are capitalizing on social movements to better understand market behaviors and sources for new inventions, and are even accelerating business ideas that are extensible with utilities they’ve successfully built (like Fuelband). Nike still makes beautiful ads, but its real stocktaking has come in the way it builds products and services with its customers. Others, like Target, are using social platforms to crowdsource design. Others, like P&G, have created joint-venture funds to build up local economies through entrepreneurship. Even more interesting are the efforts of smaller brands like Dermalogica, that benefit from outsourcing infrastructure and by building up value in the supply chain itself. And where government or educational institutions are slow to task, new co-ops and special interest programs expedite development and allow more people and more entities to fail forward.

Creating value means making investments in people.

The combination of building 21st century skills inside and outside of corporations, and the ability to effectively generate policies to advance those efforts is critical, especially to a consumer marketplace that faces rising unemployment, economic volatility and unpredictable market variables compounded by technological and social acceleration. To boot, we are witnessing a similar stratification between rich and poor in first-world and third-world economies alike (Been to Detroit or Camden lately? What about Kolkata?).

All of these examples, most notably, point to the development of systems that can scale by virtue of what the market does, rather than how it is dictated or manipulated. If capitalism and industrialism are to persist on any level, we must reinvent what they mean to those who produce and those who consume. They are not mutually exclusive.

Additionally, all of this presents an interesting challenge for ‘brands on the fringe’ -- they can take incremental, more measurable risks to which the rewards can be magnificent, or, they can wait and watch others get into the mix, and by the time they are ready to make a move, they’ll most likely lose out on time and revenue.

As the saying goes: “If there’s money on the table, then it’s already too late.”

Brand economics are here and they are very real. It’s time for more companies, of all sizes and functions, to think about how they can create a consensual reality... transparently, authentically and emergently. It’s time to build markets of real value, like we did when advertising was directly representative of the products and services that were sold in town squares, train stations and on residential doorsteps.

It's time to create real change that benefits everyone. If they are willing to become more than marks and fancy taglines, brands can resoundingly be the conduits for that change.