Three Alternative Arguments to How Brands Grow
A few weeks ago I was asked to put together a counter argument to Byron Sharp's How Brands Grow. There are easier things to critique than a book heralded as one of the most important works in marketing, and guaranteed to be on every CMOs book shelf.
What Sharp says, and how that's interpreted, aren't necessarily the same thing however. We tend to get a Chinese whisper effect through the marketing world where the original message is slightly warped to back-up different arguments and over time these can become misleading and even contradictory.
First let's just remind ourselves of what Sharp actually says. His seven principles for brand growth are:
Continuously reach all buyers of the category (communication + distribution) don’t ever be silent.
Ensure the brand is easy to buy (communicate how it fits with the user’s life)
Get noticed (grab attention & focus on brand salience to prime the user’s mind)
Refresh & rebuild memory structures (respect existing associations that make the brand easy to notice and easy to buy)
Create & use distinctive brand assets (sensory cues that get noticed & stay top of mind)
Be consistent (avoid unnecessary changes, whilst keeping brand fresh & interesting)
Stay competitive (keep the brand easy to buy & avoid giving excuses not to buy)
I've been in plenty of meetings recently where these points are repurposed into a lump-sum argument which prioritises a mass targeting, blanket awareness media approach as the only way to achieve significant penetration and with it brand growth.
Acting as an intentional contrarian, I have three counter questions to this view.
Should we always be prioritising penetration over loyalty?
Is a broad base media approach always more efficient than being targeted?
Is the Sharp school of thinking as relevant in a digital age?
Should we always be prioritising penetration over loyalty?
One of Sharp's (and Ehrenberg's) most famous theories is the double jeopardy rule. Essentially that consumers feel loyal to the brands they buy and use continually, which means bigger brands with higher penetration are also the most popular and regularly bought. Smaller brands with lower penetration are punished twice.
As consumers and marketers it's easy to recognise this effect. You're unlikely to look past the brand you've been buying for twenty years but that strong emotional connection almost certainly wasn't there at the first purchase.
New research however, from a study of over 100 brands in Germany, has shown that the causal relationship Sharp outlines isn’t always that simple. In fact not only does the study show that lots of brands have high market share and low loyalty, but actually investing in ‘relationship equity’ grows brands faster than those that focus on penetration alone.
A 2015 GFK study into 100 German brands found that companies investing in 'relationship equity' achieved a 55% YoY growth vs 45% for those that prioritise penetration
We need to understand that there is a difference between attitudinal loyalty and behavioural loyalty. It's possible to feel very little emotion towards a brand and still buy it regularly - this is behavioural loyalty. For example I'm not emotionally connected to the toothpaste I buy, but I will probably still buy the same brand. My decision is based on price, convenience and recognition. If those change, so probably will my decision. Attitudinal loyalty is when you emotionally connect with a brand and this doesn't necessarily depend on how much you buy it.
The above analysis from Millward Brown shows how powerful attitudinal loyalty is in accelerating brand growth. If a company is just targeting penetration and behavioural loyalty they might be missing growth opportunities. We need to balance penetration driving strategies with those that grow relationships with brands. Forgetting about the latter is risky. Assuming that loyalty will come with penetration is not guaranteed.
This is something Nigel Hollis – EVP/Chief Global Analyst at Millward Brown
agrees with. "Behavioural loyalty does not automatically deliver attitudinal loyalty. They [brands] focus too much on driving volume sales and not enough on building the positive brand attitudes that support those sales; they tend to assume that attitudes follow behaviour, and that a big brand is also a strong brand."
When we look at our own purchasing habits we know this is true. For example, I'm a huge mountaineering enthusiast. There are only two brands I will buy from. Salomon because I have been buying their products for ten years. Patagonia because I believe in their brand and am attitudinally attracted to them. One of those brands had to work a lot harder than the other to gain my loyalty.
This isn't just valid for high-involvement purchases but can be seen in the FMCG sector too. The Honest Company - the non-toxic household goods brand - grew into a $1bn company by not only acknowledging the safety concerns of parents for the wellbeing of their families, but also by creating a community around their products where consumers can share and consume advice, information and reviews with others.
In Japan, I LOHAS: Coca-Cola's water brand that took top spot in its category through local sourcing, eco-friendly packaging and encouraging people to twist and crush the bottle to save landfill space.
These examples go to show there are more ways to grow a brand than just penetration; that attitudinal loyalty and behavioural loyalty are not the same, and that attitudinal loyalty is effective at accelerating brand growth.
Summary - Should we always prioritise penetration over loyalty?
Loyalty and depth of emotional experience are important for brands to grow
The relationship between loyalty and penetration is not as simple as sometimes portrayed
Penetration does not necessarily lead to attitudinal loyalty
A better emotional connection will allow brands to grow faster and take a bigger market share.
Ignoring loyalty and emotional engagement in the hunt for awareness and penetration may not help us grow any faster, and there is evidence it may hinder us
Q2 Is continually reaching ‘all buyers’ more effective than precise targeting and segmentation?
I have to admit that segmentation for the sake of segmentation is one of my personal bug bears. Last month I was in a meeting where an agency was proudly showing off their new persona modelling. At the end of the presentation one of the clients pointed out that the target audience had now shifted and was no longer what it was when the work was commissioned. Unphased the agency replied that the work would require little changed it covered 80% of the demographic anyway. Which leads to the question what was the point of the original segmentation anyway?
Theoretically the point of segmentation is greater relevance which leads to higher attention and better quality of awareness. Ehrenberg was amongst the first sceptics of the importance of attention in awareness quality. Whilst I sympathise with this argument and with the broader argument around our subconscious and the power of low-attention processing (Heath, 2012), evidence from digital media suggests far greater efficiency and behaviour change from targeting.
As Marie Oldham pointed out in her own (slightly more credible) challenge of Byron Sharp - 19 of 39 winning entries in the 2016 IPA effectiveness awards used hyper targeting and detailed segmentation to achieve brand growth. Whether you're a glass half full type person or not will determine how you interpret that fact, but it's compelling proof that brands are succeeding with hyper targeting.
Contrary to some fears I believe targeting allows greater room for creativity. The below campaign from The Economist is testament to this. The Economist noticed a decrease in young subscribers, with many people now getting news from ‘snackable’, free sources that only tell part of a story. The publisher embarked on a contextual display campaign, targeting audiences and acknowledging the sites they use for news and the context of the article, serving creative that directed traffic to a related article on The Economist, providing additional depth around a story whilst also giving people a reason to subscribe.
Summary - is continually reaching ‘all buyers’ more effective than precise targeting and segmentation?
The short answer is again not always. For big established brands with high 'conditional priming' it may prove very successful to flash logos or brand colours in fleeting impressions. There is plenty of evidence that this can impact buying behaviour. But for smaller brands trying to grow, they would be much better advised to focus on creating the right content and context to drive higher attention. We should be looking to incorporate new metrics like retention and engagement to measure the quality of that awareness not just impressions and views.
Is the Sharp school of thinking as relevant in a digital age?
The final question to answer is whether Byron Sharp's analysis is as relevant today for the digital world we find ourselves in. After all Sharp's work was built on Ehrenberg's school of thinking before that.
This is a subject that has received quite a lot of thought, particularly since the APG essay prize subject two years ago was around growing brands in a digital age. For example the great Martin Weigel notes in his essay:
“Sharp, has rightly underscored the importance of physical availability: There was a time of course when physical shelf space and availability was the crucial factor in the quest to make brands easy to buy. Today [...] we are seeing brands responding to and anticipating people's need or interest. We are seeing brands connect directly with customers, rather than via third parties. We are seeing brands exploiting the interconnectedness of all things digital to create shelf space and make it easy for people to buy. We are seeing an explosion in the ways in which brands can create memory and meaning. Creativity is now properly unbounded, no longer constrained by media formats.”
This view is supported by Charlie Ebdy in his prize-winning essay The Hare and The Tortoise. Ebdy describes a new way of building brands, adopted by some of the fastest growing digital businesses and now household names. This route to success relies on aggressive and targeted recruitment, focusing on specific sectors and learning quickly before finally supporting with mainstream media. When you look at success stories like Uber and Airbnb the thing that connects all of them is that they built household fame without any broadcast media and by adopting a more growth hacking approach.
Growth Hacking contradicts the traditional advertising persuasion model in almost every way. It prioritises high segmentation over mass targeting, efficiency over broadcast and retaining loyal customers not just accepting inevitable high churn. Despite this blatant flouting of traditional marketing laws, this approach has been used to grow some of the most iconic brands of this decade.
This is something Binet and Field have also recently admitted they don’t know enough about. Brands that launch entirely through digital are changing the traditional models of brand-building and we need more data on it to understand the potential impact.
Conclusion
The brand-building principles heralded over the last 40 years are far from wrong. How Sharp and Ehrenberg have challenged the persuasion model of advertising and shown new ways of thinking has been invaluable to the industry.
It also can't be denied however that some of the fastest growing brands in recent years have used a very different approach.
What this means is that we now have more options than ever to help us drive growth.
If you find yourself in a meeting where someone is arguing that the only way to achieve brand growth is through mass awareness and penetration, and they're using Byron Sharp to validate it, then perhaps you could ask them how much Tesla spend per car on advertising. The answer is $6.
