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Killer Brands

As the world becomes smaller and smaller from digitization and globalization, many brands are becoming bigger and bigger. There was a time when being too big was a disadvantage because of the layers of bureaucracy and the lack of agility, innovation, and entrepreneurship. Digital technology has changed all of that. The bigger, the better. In the book Big Is Beautiful authors Robert Atkinson and Michael Lind conclude that large companies are more productive, innovative, and diverse than small ones. The number of mergers and acquisitions have doubled since 1997 to 48,825 in 2016 with a total value of $3.62 trillion. Last November on “Single Day”, giant online Chinese retailer, Alibaba racked up more than $38 billion in sales in 24-hours. To put this into perspective, this is more than the yearly GDP of countries like Paraguay and Iceland. Killer brands are also collecting more consumer information and data than ever before. In 2017, DOMO estimated that 2.5 exabytes (add 18 zeros) of online data are generated worldwide every day. To put this in prospective, one exabyte is one quintillion, take 2.5 quintillion pennies and you can cover the entire surface of the earth five times! Market intelligence company IDC predicts the world’s digital data will grow to 175 zettabytes (add 21 zeros) by 2025. With this much data power are killer brands monopolizing and manipulating markets and consumers, forcing consumers to pay more, destroying competition and innovation? Are domineering brands killing free enterprise?

Brand Nations

Some killer brands are stronger and wealthier than many nations. McKinsey Global Institute says that 10 percent of the world’s listed firms generate 80 percent of all global profits. The top 20 global brands control over 42 percent of the world’s economy. If you dig deeper, you will see that some brands clearly dominate in several industry categories. Interestingly, the Technology sector, worth over $5.7 trillion, has the greatest concentration with over 50 percent controlled by four brands: Alphabet (Google), Microsoft, Apple, and Facebook. Similarly, the Consumer Services category, worth $2.6 trillion (about the size of France’s GDP), is controlled by two brands: Amazon and Alibaba. With so much control and money, can we trust that these brands have the our best interest at heart? In essence, these are brand-nations with a huge responsibility to society. These dominant brands are accountable only to shareholders; shareholders are only interested in profits and ensuring the brands continual expansion. Currently, there is a major debate on whether dominant killer brands are healthy for economic growth in free enterprise world commerce.

2019 Top 100 Best-performing companies based on market value, according to CEOWORLD magazine. This chart accounts for $21 trillion in market value.

Death Row for Past Killer Brands

Go back one hundred years and the dominant brands were very different with US Steel, American Sugar Refining Company and Standard Oil in the forefront.

Standard Oil was founded in the late 1870s under John D. Rockerfeller. The story goes that Mr. Rockfeller expanded the brand by bullying suppliers for preferred rates and buying out many small competitors. At one point, Standard controlled nearly 90 percent of US oil production. In 1890, the US Congress passed the Sherman Antitrust Act which outlawed monopolistic business practices. After several legal manoeuvres, the world’s most powerful company, Standard Oil, was finally ordered by the US Supreme Court to break up into 34 independent companies. It is believed that Standard Oil came under heavy public criticism and outrage after investigative journalist Ida Tarbell published a 19-part series of articles damning Mr. Rockfeller and Standard Oil as ruthless and immoral. Today, these companies are now some of the world’s largest Oil & Gas brands like ExxonMobil, Chevron, and ConocoPhillips.

In 1969, the US government took a run at IBM who at the time had nearly 70 percent of the business computing industry, but the case never amounted to any significant action. While the case dragged on for over 13 unlucky years, the distracted IBM company missed out on personal computer innovations. This was a death sentence for the company.

The next big shake-up wasn’t until 1983 when the Bell System monopoly was broken-up. Bell Systems started as a monopoly back in 1876 with the help of patents that did not expire until 1915. This lone brand built a massive telecommunications infrastructure network across the USA. Today, the many Baby Bells contains well-known brands such as: Verizon, AT&T, CenturyLink, and US West, to name a few.

In the 1990’s Microsoft tried to force the computer industry to bundle their web browser with the operating system to control the market. This destroyed the top competitor Netscape and caused the US Department of Justice to file antitrust charges against Microsoft. While Microsoft wasn’t broken up during the appeal process, the distraction allowed for companies like Google to gain an edge. Senator Elizabeth Warren says the antitrust case “helped clear a path for Internet companies like Google and Facebook to emerge.”

Today’s Killer App Brands

We know the big six killer brands. We interact with them daily and sometimes hourly: Alphabet (Google), Microsoft, Apple, Facebook, Amazon, and Alibaba. They are all technology, digital application driven and American, except for Alibaba. American brands account for a disproportionate percentage of the world’s largest brands. Elvis Picardo, Portfolio Manager, attributes this phenomenon to a strong US equity market, a strong US currency, and premium valuations (mega-caps).

Collectively, these companies have defined the world’s culture and drove the information and digital revolution. They have changed our lives: how we work, play, and think. They have contributed to political upheaval; misinformation; economic, social, and technological trends; and other changes beyond our imagination. Together, their total market value is over $4 trillion, equitant to Germany’s GDP (4th largest in the world). Freelance writer Daniel Baylis says, “The benefit of being one of the biggest brands of the world is that you often get to define the rules of the game.”

This statement is very true. Apple redefined the music industry. They destroyed the recording industry and record labels. Today, Microsoft’s windows system has only 80 percent of the desktop operating system market share. Back in 2013, it had over 90 percent of the market share. Amazon redefined the book industry forever and is in the process of destroying the bricks and mortar retail industry. Without Google we would never find anything on the internet. Try navigating over 1.5 billion websites without Google. Facebook has played a major role in overthrowing governments and making political movements a reality both positively and negatively. They have also driven the human psych to crave more “likes” by the minute. Alibaba is still behind Amazon in e-commerce revenue, but it continues to defy expectations with constant growth of over 50 percent every quarter. It doesn’t hurt that they have 1.4 billion potential consumers.

Collectively, Google and Facebook control over 60 percent of the global online advertising market (excluding China). This year, the duopoly is forecast to pull in $174 billion in ad revenues. Together, they’re redefining the advertising industry.

All of these numbers are mind blowing, but this is the world these brands live in. It’s not hard to believe that in the world of trillions and billions, the average consumers can get lost between the commas. The interesting fact is that these companies are making billions because they know us better than we know ourselves. What is good for the brand might not be good for you or me. Ram Shivakumar, economic professor at The University Chicago Booth School of Business says these brands have given us enormous benefits to our quality of life. But he cautions that “the value of these contributions shouldn’t blind us to the dangers posed by the power modern superstars have accumulated.”

To keep their dominate power, these brands either buy out potential start-ups or drive them out by pricing or other predatory activities. This killer instinct is better known in the venture capitalist world as the “Kill Zone”, where start-up don’t have a chance of competing.

Killer Instincts

Facebook

Facebook has become a brand we love to hate but not enough to logout forever. The fear of missing out is too great for most people. While our commitment to Facebook doesn’t have a financial impact (because its free for users), we do pay dearly, giving up our privacy as they collect personal data that they have sold and misused. Facebook estimate that more than 2.1 billion people use Facebook, Instagram, WhatsApp, or Messenger every day and around 2.7 billion people use at least one of their services each month. Facebook’s on track to bring in over $60 billion in total revenue in 2019.

Its through their active database that they can tell if a competitor app is getting too hot for comfort. The “Kill Zone” around Facebook is big. They either buy them out (like Instagram and WhatsApp) or mimic their popular features like Stories and Bonfire to neutralize Snapchat and Houseparty apps. Linette Lopez, a political journalist, said Facebook used user-data against smaller rivals such as Vine. In essence, they destroyed the Vine app by blocking its friend finding feature.  

Before the acquisition, Instagram had only 30 million user and 13 employees. Today, they have over 1 billion monthly active users and LinkedIn indicates they have over 9,000 employees. Facebook has the power to make or break any start-up. Wikipedia says Facebook has acquired 82 companies so far.

Free or not, Facebook has had its fair share of negative press and global regulatory attention due to mishandling of private personal data, disseminating fake news (especially for the Russian military-intelligence agency), and severe data leaks.

Anna Johansson, marketing and PR consultant, says, “Facebook is obviously operating in some contentious and ambiguous ethical territory, and some of the decisions it has made in the past decade are somewhere on the spectrum between short-sighted and dumb.” Andrew Burt, Chief Legal Officer at Immuta, is less polite and states that the privacy and online security risk is too great for consumers. He believes governments must “diminish the vast power of companies like Facebook by limiting their ability to hoard the data they collect and to aggregate the services they provide, contracting their ‘attack surface,’ so to speak, to a level that is manageable.”

Alphabet (Google)

If Google used its dominance to gouge us on prices, we would all be up in arms or become a fan of Yahoo. The problem is we don’t see their revenue model. Why would we be upset with  services (such as search, Gmail, Google Docs, Translation & Maps) that are free and some of the best services. Google controls over 88 percent of the internet search market share. Statista states that there are about 4.5 billion active internet users or 58 percent of the global population. That would mean that Google touches around 4 billion people or 52 percent of the world’s population. Should we be worried?

Google has more data on us than any other internet service. They know our wants, needs, and desires – priceless for the marketer. Getting a marketer’s message to the right audience, at the right time, is the ultimate goal. In 2018, Google made $116 billion in advertising. With a war chest of billions of dollars, they are free to buy-out potential competitors that get in their “Killer Zone” and pick up new innovations before they are hot. To date, they have acquired over 120 such companies.

In their data harvester information, Google listed 10 principals that are important to making “money without doing evil.” There are many companies that are extremely frustrated with Google’s behaviour, but the average consumer remains blissfully ignorant. The Federal Trade Commission investigated Google and concluded that they used their dominance to make competitors harder to find on its search engine. A simple ranking algorithm mishap or change can destroy a competitive brand. Who is watching Google to ensure their definition of “evil” is the same as ours? To date, they have been fined $2.7 billion for violating antitrust regulations in Europe.

Amazon

Amazon has been accused of hurting suppliers, competitors, and even their own employees, but their growing online customer base is addicted to their competitive prices, convenience, huge selection, and fast delivery system. While they destroyed the original bookstore market, they made books more sustainable and environment friendly as long as you have their e-reader. The company commands 50 percent of all book sales in the United States and 75 percent of all e-book sales. There has been a number of reports of Amazon using its dominance to pressure publishers into more desirable agreements.

Their goal is to have e-books be the gateway to the store of everything. So far, about 197 million people visit their online store each month. Over half of American households are Amazon Prime subscribers. In 2018, Amazon’s share of the US ecommerce market was 49 percent and still growing.

The tactics they use to keep growing is the concern. Brad Stone recounts in his book The Everything Store how Amazon wanted to get into the diapers business and reached out to Quidsi who owned diapers.com. They weren’t interested in selling. This led Amazon to set up the Amazon Mom Promotion, where they discounted baby products including diapers and free delivery basically forcing Quidsi to call “uncle” and sell to Amazon. Amazon then quickly retired Diapers.com. This is a perfect example of how the “Kill Zone” works. To date, Amazon has acquired 101 companies and has a stake in another 22 companies.

Amazon’s ultimate power is its transactional data. They can see what is trending and what is hot. They aren’t just happy with being the biggest online marketplace for other vendors but want to get into the action directly through their own product brands such as Amazon Basics and Amazon Essentials. This is not dissimilar to supermarket house brands, but they don’t stop there. They have many other brands that aren’t associated with Amazon as Goodsport, Lark & Ro, North Eleven, and Society New York. TJI Research Inc. recently reported that Amazon has more than 450 brands sold exclusively on Amazon. The third-party brands don’t have the complete picture like Amazon who has all the consumer data and expertise to react to analytics. Is this a conflict of interest?

Apple

There is always one bad apple, but Apple is hard to dislike. They made music accessible to everyone through iPods and other Apple devices. They took everything big and made it small and portable. Their closed ecosystem business model is brilliant. Every transaction that goes through their iOS has a positive financial benefit for Apple. Some call it the Apple 30 percent vendor tax. Jonathan Prince says “…Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn’t share any of that with the music industry. They want to have their cake and eat everyone else’s too.” As of June 2017 (the most current statistic), 180 billion apps have been downloaded from Apple App Store.

Apple has always been seen as an exclusive luxury brand with profit margins (32 percent) similar to Hermès (35 percent) and Ferrari (29 percent). Think about it. They can sell a phone at $999 and sell 29 million of them in less than two months. That’s what happen in 2017.

Apple has also acquired its fair share of potential competitors. Wikipedia reports about 100 competitors, but they state Apple doesn’t regularly release financial details on mergers and acquisitions. In May 2019, CEO Tim Cook told CNBC that Apple acquired a company every two to three weeks on average, having acquired 20 to 25 companies in less than six months. Sounds like the “Kill Zone” is alive and well at Apple.

Apple has had its fair share of antitrust lawsuits for anti-competitive practices, price-fixing accusations, tax avoidance schemes, and deplorable working conditions in Asian electronic sweatshops. Their aggressive business tactics only negatively affects vendors, app developers, and competition – not customers. Keeping their customer happy is priority number one.

Microsoft

Amazingly Microsoft has been around for over 44 years and has been a dominate player in the personal computer operating system market since the mid-1980s. Its founder, Bill Gates, is one of the largest philanthropists in the world, reportedly donating over $45 billion in the last 25 years. Today, Microsoft understands how to protect its market without raising the concerns of the antitrust police. Since its conception, Microsoft has acquired over 225 companies and has investments in over 60 other companies.

Alibaba 

Alibaba is Amazon’s nemesis. Established five years later than Amazon, it continues to grow exponentially in it’s region. These two killer brands have many things in common except that Alibaba has over one billion potential customers in China compared to Amazon’s half billion in North America and Europe. Ming Zeng a long-time executive at Alibaba and currently the Chief Strategy Officers says Alibaba is more than another online commerce company and “does what Amazon, eBay, PayPal, Google, FedEx, wholesalers, and a good portion of manufacturers do in the United States, with a healthy helping of financial services for garnish.” Their goal isn’t just to conquer China, but Southeast Asia, India, Africa, Europe, and, hopefully, the US.  I’m not going to get into any China rhetoric, but this brand could be the biggest killer brand the world has every seen.

Since it’s inception, Alibaba has only acquired 29 organizations, a small number for a killer brand. The large problem with Alibaba is that we don’t have full transparency on this company as it resides in secretive China.

Serial Killers on the Loose

Killer brands have enjoyed a world unhindered by rules and regulations as they define the future. Consumers have embraced these new toys and innovations, regardless of the consequences. These killer brands have empowered consumers and enlarged their brands. Consumers are addicted to this new digital world and the ability to be in control, but without guidelines and clear values, this empowerment can lead to chaos and bad decisions both by consumers and companies. Unencumbered by laws and regulations, killer brands have been able to prosper and make shareholders, employees, and governments very wealthy. The trillions and billions of dollars I have quoted are unimaginable and impossible to comprehend, but they are real. To date, we have relied on these brands’ corporate governance to do good and not evil. Many consumers are oblivious to the risks and dangers; they are addicted to the digital candy and satisfaction what these brands give them.

Our antiquated legal systems, laws, and regulatory framework haven’t been able to keep up with the digital revolution. The US is still protecting consumers from monopolistic business practises defined by the Sherman Antitrust Act passed by the US Congress in 1890. The world and business practises specifically have changed a lot in 130 years! In the last decade, the killer six have made over 657 acquisitions with little to no challenge from antitrust authorities. In some cases, these acquisitions propelled these brands to new heights, but many were just killed or silently integrated to reduce competition.

The problem today is that the authorities don’t have the tools, the understanding, or the laws to protect humanity in this new digital world. The scary part is that technology isn’t waiting for the authorities to catch-up. Technology is advancing at warp speed. Governments can only protect us if they know how, which means they need to be smarter than the killer brands. A scary thought indeed!

The German consumer isn’t as trusting as North Americans. Their history has trained them to be fearful of mass data collection and unchecked powerful forces. They are one of the few countries that haven’t embraced credit cards and debit cards for fear of leaving a digital path. Not surprisingly, they are at the forefront of data privacy and protection. They are currently trying to stop Facebook from aggregating consumer data between their various platforms (Facebook, Instagram and WhatsApp) and other third-party site data collection.  

Throughout history we have seen that extremely concentrated wealth and power that hasn’t benefited humanity. Toby Walsh, professor of artificial intelligence cautions that immense wealth comes with immense impact and responsibility. He says, “We’ve always had to regulate markets; unfettered capitalism tends to go to excess. Regulation is needed to ensure that companies act in line with the public good and not just the stock options of their CEOs.”

The winner-take-all approach comes with many risks. History tells us that governments take actions only when consumers aren’t happy. Today, the killer six are focused on keeping consumers happy, but what happens when they aren’t? With all the data monitoring killer brands have they will know this answer before we do.

As these killer brands race towards the internet-of-things with further digitization and data harvesting who will protect the consumer? The world has never seen such massive, powerful brands with their ability to invade consumer privacy, monopolize new markets and quietly destroy competition on their quest to dominate. Will this quest eventually translate into political power and the demise of free enterprise? Only time will tell.

The article illustration was done by David Parkins, a prolific illustrator and cartoonist. It first appeared Jan. 18th, 2018 on the cover story of  The Economist titled How to tame the tech titans.

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Why Retail Store Brands are Doomed

I just finished shopping in a typical large urban shopping mall. With over 360 stores, I was sure I could find a simple pair of black active-wear shoes, your basic laced up runners. I was on a mission.

The first store I saw was the very popular and trendy Steve Madden with a large “50% OFF” sign in the window. They had a couple pairs of runners that were close to what I was looking for, but they all had a white rubber band at the bottom. If it was black like the rest of the shoe, it would have been perfect. A salesperson asked if I needed help, but I politely declined the help as this was the first store I had tried. So, I left Steve Madden and I continued on.

Next was B2 Shoes, another trend setting store. I quickly found two styles that could work. I approached the checkout counter to find my size 11. The friendly young lady replied that they didn’t have an 11 in either of the styles, but she had 10.5. When I said 10.5 wouldn’t work, she suggested that I go online where they had a greater selection. I thanked her and went on my way.

I proceeded to Little Burgundy, Skechers, and then Hudson’s Bay with no luck. I was starting to believe this wasn’t going to be as easy as I had thought. But I was persistent. I found the mall directory and scouted out 29 other footwear locations, then planned my attack.

My first stop was Browns who also had “SALE” signs everywhere. I found a perfect match, and, for safety, I choose another as backup and took them both to the cash register and waited for someone to help me. Patiently I waited as someone else was being helped. I stood there waiting and waiting. Finally, someone ask if I needed help. I forced a smile on my face and asked if they had these shoes in size 11. The lady went to the computer terminal. “We only have the one pair in 10.5” she announced as if she saved the day. Again, I replied that that size wouldn’t work. A shoe that was a half a size too small wasn’t helpful unless they thought I could curly my toes to fit. As I left, she suggested that I go online where there would be more sizes available.

Dejected, I went onto ALDO shoes who had a “Two for One” sale. I didn’t want two pairs of shoes; I just wanted a simple pair of black runners. They had a fancier black leather shoe. I was becoming desperate. Once again, I stood in line to see if they had my size. As I stood there waiting for someone to help me, I started to understand why retailer store brands are doomed. “Can I help you sir,” asked the young girl with bright colored hair. Startled, I asked her if they had these in size 11.  No size 11 but they had a 10.5. Really! She too suggested that I go online.

I was beginning to think that size 11 was a rarity. I now understood how Shaquille O’Neal must feel with size 22 feet. The American Academy of Orthopedic Surgeons reports that the worldwide average shoe size for men is between 9 and 12. According to Shoes.com, the average Canadian male shoe size is 10.5. Do retail stores only carry the average size?

I continued on my quest checking Champs, Lacoste, Journeys, and SportsChek with no luck. Finally, I gave-up. I had spent over an hour with nothing to show for it. I moved on to other items on my shopping list.

As I was heading out of the mall feeling defeated, I saw the Foot Locker. “Last chance,” I said to myself. On display was a black Converse. I took it off the shelf and walked to the counter to once again see if they had my size. The girl tapped onto the screen and advised me that they did. I almost jumped up for joy, but I just stood there feeling sad that the retail business was dying a painful death and they were totally oblivious as to why. A young guy in a referee outfit came over with a box and opened it to show me that the runners were the same as the ones I took from the shelf. He put down the box as I started to take off my shoes to try them on. Unceremoniously, he left, and I am there to fend for myself. I thread the laces and put them on. Satisfied that they fit, I go to the counter to pay. I explain to the lady that I will wear them out and will not need the box. She replies that without the box I can’t return them. I agreed to this condition and paid with my debit card. She hands me a bag to put my old shoes in it, like I’m at a discount store.

I know all retail transactions aren’t like the one I just descripted, but this isn’t the first time I have been disappointed and totally frustrated with the line ups, lack of service, or no service at all, and limited selection and sizes. There are a number of reasons why retail store brands are doomed. Unconsciously, they are driving us to online shopping, if not telling us directly. Next time, I will start the retail journey on my laptop in the comfort of my own home.

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The Christmas Brand

The most wonderful time for brands

‘Tis the season for corporate/retail brands to perpetuate the Christmas brand. No other holiday is embraced more by brands than Christmas. According to Pew Research, consumers’ least favorite part of Christmas is commercialism and materialism. Yet, every major retail brand tries to capture the hearts of consumers with the spirit of Christmas and end with a profitable year.  In the UK, Christmas adverts are like the Super Bowl in the US. Every year, John Lewis, Sainsbury, Marks & Spence, Boots, Tesco, Heathrow, and others compete for the honor of the best holiday advert – every year the stakes seem to get higher. Christmas is no longer seen as just a religious holiday but as a joyous time to spend with family and friends. In fact, 80% of non-Christians will celebrate the holiday season. The Christmas brand has a lot to do with this fact.

Evolution of Christmas

In the fourth century, the Christian church declared a winter holiday to celebrate the birth of Jesus Christ. The holiday was combined with other already established solstice celebrations. It wasn’t until the 1800’s that Christmas transformed into a family and children-centric ritual with the introduction of jolly-old St. Nicholas. In the 1840’s, the first Christmas-tree appeared in North America. Alongside this tradition was the Jewish Hanukkah celebration which evolved into the festival of lights. As the religious connotations of these holidays fade, the celebrations have become more secular and inclusive with core values of the Christmas brand based on peace, goodwill to others, charity, and a hope that goodness will prevail.

Today, the festivities and values are significantly emphasized through commercialization and sensory overload, driven by the many corporate/retail brands eager to morph the Christmas brand to theirs. Iconic Christmas songs like All I Want for Christmas Is You by Mariah Carey and classic movies like It’s a Wonderful Life are all geared to keep the Christmas spirit alive against the harsh distractions of Black Friday, Cyber Monday, and Boxing Day. The silver-lining is that all the shopping is tied with the notion of gift-giving. It is a practice of sharing your good fortunes, expressing your love and friendship.

The Spirit of Christmas

The 30th President of the United States, Calvin Coolidge once said that “Christmas is not a time nor a season, but a state of mind.” The Christmas brand is a feeling of happiness, wonderment, togetherness, festivities, joy and love; brought out by merriment (eating and drinking), holiday decor, lights, gifts, ritual traditions, music, and storytelling. The ultimate goal is rekindling the nostalgic holiday magic we cherished as children.

Hallmark is a master of capturing the holiday spirit through stories of reunited loved ones, kindness of strangers, family-values, and holiday love stories. Last year, Hallmark made over $600 million in advertising associated with their 37 holiday-themed movies. Last year, Christmas movies recorded 85 million viewers.

Economics of Christmas

Today, brands use the concepts of Christmas by emotionally connecting with their customers through unique holiday commercials. They hope to transfer the Christmas brand of joy and happiness into holiday sales. A whopping $731 billion in holiday sales is predicated by the National Retail Federation.

The fact that emotional branding is the strongest way for brands to influence consumers is means that companies spent almost $4 billion on holiday advertising last year.

Deloitte predicts retailers can expect a jolly holiday shopping season. While some economic headwinds are forming, the average US household is planning to spend nearly $1,500 during the holidays.

The Recipe for a Great Holiday Commercial

I don’t think there are any revolutionary secrets on what makes a memorable holiday commercial but here are some key take-aways that I have gleamed from previous successful Christmas commercials.

A Great Christmas Story

A great story should quickly establish the protagonist in a situation with an obstacle or crisis that they need to overcome. At the climax of the story, the protagonist makes a discovery that changes his/her life.  The ending should be both inevitable and unexpected. The audience should be left with hope and a sense that the crazy world is still a good place. This simple formula starts with a touch of sadness, a dash of surprise and delight and finishes with hope, happiness, and joy.  

In 2015, Edeka, a German supermarket company, introduced Heimkommen (Homecoming) one of the best holiday commercials in history. Since it was launched, it has received over 65 million views. Make sure you have a tissue handy if you plan to watch it.

Awesome Soundtrack

The audio can quickly make or break the mood. All of the great commercials have memorable music. According to the Interpretative Phenomenological Analysis (IPA), musical commercials are 27 percent more likely to report large business effects compared to non-music campaigns. That translates into increased sales!

A number of research studies have found that music can amplify emotional responses to the story and increase ad memorability. Radiocentre has found that music can boost brand recognition.  Brainsights says that lyrics/message that support the ad storyline are best.

John Lewis, a UK department store, is notorious for their Christmas adverts. The Bear and The Hare, produced in 2013, is still garnering view. Recently, the UK Metro media declared it the top John Lewis Christmas advert ever in a readers’ poll. This commercial feature a bear and hare who are best friends. The wintery weather forces the bear into hibernation leaving the hare to face Christmas alone. The hare solves the problem by purchasing an alarm clock so that the bear wakes up in time for the festivities. This beautifully illustrated animation is enhanced by Somewhere Only We Know sung by British pop singer Lily Allen.

Simple, Authentic, and Symbiotic

Being real to the brand’s persona is vital. There is a great desire to solve the world’s problems and be a hero but most people are only looking for hope. No brand will be the hero but they can bring hope by emphasizing their brand’s values that correlate with Christmas. This year’s Walmart Canada’s “Piggy Bank commercial is a great example of promoting their brand promise with the message of spending small and give big for the holiday season.

Another classic commercial is Hershey’s Kisses’We Wish You Merry Christmas.” It only takes 15 seconds to effectively get its message across. The story goes that John Dunn, Hershey’s Chocolate brand manager in 1989, came up with the concept on a business trip. Ogilvy Mather produced the commercial with the latest stop-motion animation and CG photography available at the time.

Children, Animals and People

It’s true! Add a cute baby or animal and your commercial’s appeal will increase. Super Bowl commercials with animals, babies, or children tend to score much better than those with without. In fact, ads with animals performed 21 percent better than ads with celebrities and 14 percent better than the average non-animal Super Bowl ads.

The underlining premise of the holiday season is about bringing people (family, friends, and strangers) together to see Christmas as a child would: joyful and wonderous. Connecting your brand to people in the holiday spirit is a recipe for success.

The Folger’s Coffee 1986 “Peter Comes Home for Christmas” commercial fits the bill. The only thing missing is a golden retriever running to meet Peter at the door.

Inclusiveness – Peace on Earth

Keep your message and sentiment universal and true to the phase “Peace on Earth”. The holiday is a time of the year when the world stands together, quite literally in the famous Coca-Cola‘s 1971 “Hilltop” campaign with the very memorable “I’d like to buy the world a Coke” song. The ad was later re-worked to show a very diverse group of people at night, holding white candles and ended with the tagline “Seasons Greetings.” It’s not a time to air a highly polarizing messages that only appeals to one demographic segment or worse offends another.

This timeless Pampers commercial “Peace on Earth” shows different babies sleeping peacefully as the song Silent Night is sung by a mother’s voice. This simplistic but captivating ad communicates vulnerability, beauty, and peace.

Memorable, Unique and Relevant

Alongside the engaging soundtrack, the commercial must be visually stimulating with dramatic lighting and brilliant colours. Ultimately, the commercial must be share worthy.  If the commercial captures the hearts of your audience, it will quickly be shared around the world. It will become an iconic holiday memory that supports the brand of Christmas. Attaching your brand to the idea of helping, sharing, and giving during the holiday season makes good business sense. It also builds the Christmas brand that everyone wants to embrace.

The Apple commercial appropriately titled Frankie’s Holiday is beautifully shot with rich details and colours like the framed image of Mary Shelley, the author of Frankenstein, on the wall of Frankie’s home. He records a music box version of “There’s No Place Like Home for the Holidays” on his iPhone then plays the track in the town square as he nervously sings the song. The commercial concludes with the message: Open your heart to everyone.

The Christmas Brand

There are many reasons why Christmas isn’t the most wonderful time of the year. It’s become too commercialized and is not environmentally friendly (all the plastics and packaging, food waste, energy consumption). Bringing family together can be stressful at the best of times. There is the pressure of shopping, the financial woes, and high expectations. Holiday depression is very real. Are the billions of dollars of consumerism worth it? Should we all become like Scrooge or the Grinch?

Once every year we pull-out the holiday decorations, put on the ugly Christmas sweaters, consume too much, get frustrated in busy malls, parking lots, roads and airports, navigate rude and obnoxious friends and family, but there is always that one moment that makes it all worth it.  We strive to capture these moments in our commercials.

The trick is to recognize that one moment of time when you see a child’s face light up in wonder, when a stranger stands there opening a door just for you, when someone thanks you for helping them with the simplest things, when you try something different and like it, when you invite someone new to share your holiday traditions. Not unlike the image portrayed in Christmas commercials, there are real moments that remind us of the true spirit of Christmas.

May your heart and home be filled will all of the happiness, joy, and peace during the holiday season. May you experience that Christmas moment of joy even if it is sparked by a Christmas commercial.

Merry Brand Christmas!

Check out the latest 2019 Christmas commercial lineup.

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Cool Brands – The Cool Factors

Do you remember the cool kids in school? They always made witty comments with perfect timing. They always had the right clothes and the right look. They seemed years ahead of us! We envied them and tried to be like them. We were either in or out of fashion. Likewise, some brands have it and some don’t. What is the cool factor? How does a brand get an “OMG that’s soooo cool!!!” reaction?

While coolness is an intangible and elusive concept, being a cool brand is lucrative. It means huge economic profits based on premium pricing, insatiable demand, and image enhancement beyond your control. It can also be a major barrier for any competitors. Researcher and blogger Harsh Verma says “Cool is a scarce resource capable of bringing about value transformation.” Stephen Cheliotis, chairman of the Cool Brands Council, says that innovation, originality, authenticity, and desirability makes a brand cool.

Other experts say that cool brands only matter to people who tie their identity directly to that product. To make this relationship happen, a community aspect of interact with the brand is required. It’s easy to understand how high tech (Tesla, Apple, Google, Samsung, Sony) and luxury brands (Gucci, Rolex, Prada, Tiffany) become cool but how do everyday products like deodorant, underwear, shoes, food, or other mundane products become cool?

What is Cool?

Wikipedia defines cool as a word often used to express admiration or approval. The word became popular in the late 1940s by Black American jazz musicians, who were real cool cats.

Things or practices have been called cool to mean superlative, excellent, exclusive, special, original, unique, rare, exciting, and desirable. Like all things we want to know we put questions like this through a vigorous scientific evaluation. But what exactly is cool?

Alan Tapp and Sara Bird in their research paper (2008) defined cool as “the best [word] to describe that elusive, exclusive quality that makes behaviours, objects so hip, desirable and symbolic of ‘being in the know’.”

Clive Nancarrow and Julie Page defined cool in the Journal of Consumer Behaviour as a laid back, narcissistic, and hedonistic attitude and as a form of insider knowledge. In true cult-fashion, everyone wants a piece of your brand until it becomes uncool. Cool isn’t for the masses; it needs to have a distinctiveness and restricted access to keep its cool factor.

According to a Datamonitor (2005) report, the perceptions of cool vary by age. While young consumers often mimic celebrities who are to be perceived as cool, most teenagers and adults view cool as a means to express their individualism. Older customers were found to view cool as synonymous with quality.

Numerous researches and marketers have tried to formulate a concrete description of ‘coolness’. The closest any researcher has come to such a definition has been Sandra Loureiro and Rui Lopes (2011) in their study Characteristics of Cool Brands: The Development of a Scale and a study done by Caleb Warren, Rajeev Batra, Sandra Loueiro and Richard Bagozzi (2019) titled Brand Coolness.

The two studies identified ten major cool characteristics. I took the liberty of mashing the insights together and created some symmetry in their outcomes to develop a coolness brand wheel. Hit all ten characteristics and your brand will be so cool that Oprah Winfrey would need to put it on her “Favorite Things List.”

Cool Brand Wheel

In essence, the Cool Brand Wheel perfectly explains the coolness factors as behavioral, state of mind, aesthetic, social distinction and appropriately autonomous. Coolness can turn a ‘want’ into a ‘need.’

 

Here are the ten cool factors:

Autonomy

Branding legends Jack Trout and Al Ries said that consumers shop primarily by categories. People can only remember a few brands per category. The goals is to be at the top of that list. Once the category list is full–it’s full. A company can only break that full list if they develop a new, unique category.

Cool brands are either at the top of the list or in a category on their own. They are perceived as the creator of their category. For example, there is a numerous automobile brands, but the most successful ones have built their brand on a unique category (i.e., safety, luxury, speed, quality, etc.). Tesla has recently marketed itself as the electric car company; they created a brand new category.  While other well-known automobile companies have electric cars, they don’t own the new category, Tesla does. Being the first in a category helps the brand be unique, distinctive, and autonomous making them cool.

Caleb Warren and Margaret C. Campbell published a paper in the Journal of Consumer Research on how autonomy influences coolness. They concluded that “coolness was a subjective, socially constructed positive trait attributed to cultural objects (like brands) perceived to be appropriately autonomous”. Note the word ‘appropriately’.  What they found was that the degree of autonomy was important. They needed to create a sufficient divergence from the norm.

Apple was initially highly autonomous due to its obscurity and association with the graphic design community.  They allied themselves with strong graphic software like PageMaker, Photoshop, Illustrator, QuarkXPress, and Adobe. According to Columnist Charles Pillar, the famous 1984 ad help portray Apple as a symbol of counterculture: rebellious, free-thinking and creative. They became synonymous with desktop publishing, photography, creativity, and design industries.

Over time, Apple continued to redefine itself and its marketplace. While Apple didn’t invent the MP3 player, the smartphone, the smart watch or the tablet, they made the best products.  They also made them cool. Apple designer Jonathan Ive said, “Our goals are very simple—to design and make better products. If we can’t make something that is better, we won’t do it.”

Apple has clearly positioned itself as a brand that thinks differently and stands out. To emphasize being autonomous, Apple has purposely associated itself with autonomous rebels and artists such as Picasso, Einstein, Nelson Mandela, and Mark Twain.

It is hugely important that brands be authentically autonomous, otherwise they can be perceptive as conceited. This is a problem that Tesla owner Elon Musk has faced. To be authentic, a brand needs to have a unique story and reason behind their brand. The brand needs to be true to its heritage. The brand promise must be clear and delivered at every customer touch point. The brand must live the talk. To be cool, a brand needs to follow its own path, regardless of the norms, beliefs, or expectations of others.

Memorable

In a world where we have a hard time concentrating, brand memorability is a challenge. Havas (2018) found that brand campaigns have a direct impact on consumer behavior only after 60 days have passed. What they discovered was that memorable campaigns had a greater chance of recall after 60 days. Nigel Hughes, managing director of Havas said “There is a significant gap between being aware of a campaign and remembering it. With so many channels broadcasting, respondents are initially aware of many campaigns, but they don’t remember the messages…” The stickiness of the message is just as important as the awareness.

There are a number of ways to make your brand memorable or sticky. If humor fits your brand personality, it can be very useful. Old Spice understood the importance of entertaining their customers. They took an old brand and “Swaggerized Their Brand” into one of the top brands in its category.  Landor, a leading brand consult and design company said “Old Spice’s business has grown by double digits every year since the new positioning went to market.” For more on using humor check out this blog post.

Pulling consumers heartstrings can also attract massive views and social engagement. Every holiday season airline companies, department stores, and tech companies try to bring out the holiday spirit, hoping to transfer the warmth onto their brand. But, be careful, too much love isn’t cool.

Being offbeat and edgy can also get a brand noticed. This generally includes being rebellious, risky, and controversial. Taking this direction can quickly fortify a stronger bond between a brand and consumers but can also repel a portion of consumers. Nike’s support of Colin Kaepernick’s racial injustice cause is a case in point. As their ad said “Believe in something. Even if it means sacrificing everything. Just do it.”

Preciousness

People have always been attracted to beautiful aesthetics and expensive things. Highly exclusive and extremely expensive brands are historically cool. Diamonds have continuously been cool. Just ask my wife.

In contrast to today’s crazy world, simple, sleek, modern designs seem to elevate the consumer’s senses. These design elements are seen in functional, sound, touch, and visual manifestations. Apple has perfected a clean and minimalistic design in of all of its products including packaging and advertising. As Dan Frommer said, “Apple products are cool because you don’t have to figure out how they work—they are natural and human.”

In their book Rethinking Prestige Branding: Secrets of the Ueber-Brands, Wolfgang Schaefer and JP Kuehlwein coined the phrase Ueber-Brands. For Ueber-Brands, prestige is less about high prices and more about provoking pride and aspiration through mythical storytelling.  

Paying a hefty price of entry shouldn’t create buyer’s remorse but a belonging that should continue to keep giving.  Extra attention to the details and the little things makes a brand stay cool.

Social Awareness

Brands that do good is not a new concept. But its popularity has increased among Millennials. Millennials have become socially conscious; they buy brands that demonstrate their commitment to changing the world. The extreme weather conditions and devastating consequences of climate change have created a highly-sensitive consumer base that appreciates corporate social engagement. Caring for our planet and humanity are becoming an integral part of a brand’s business strategy, as they activity engage in communities and social and environmental causes.

For example, TOMS started out as a shoe company with a one-for-one promise:  for every pair of shoes purchased, a pair was donated to needy children. Today, they have expanded into one-for-one spectacles that provide ophthalmic treatment to the needy, one-for-one coffee where each cup sold provides clean water to the poor, and one-for-one bags that help save lives of birthing mothers and their newborns in developing countries. Very cool!

Patagonia scores big in this area as an environmentally and socially responsible company. Their mission statement clearly states, “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

Tribe

According to the Ueber-Brands concept, there is a precarious balance between longing and belonging. While the goal is to acquire as many customers as possible to maximize profits, you must be careful to balance inclusiveness with exclusivity. To be cool you always need the admirer, desirer, and dreamers to be part of your tribe. Brands that build strong communities help the brand to evolve and also fulfill peoples’ needs.

Remember the day when it was cool to wear white iPod earphones. Now, it’s the white earbuds. I’m not sure if this qualifies as being cool today. But Apple has sold over 2 billion iPhones & iPads since 2007. They continue to introduce a new model every couple of years to create exclusivity and to keep their loyal tribe happy and wanting more. And they have a very big tribe.

There is something special about being part of an exclusive club. Harley-Davidson motorcycles understood the idea of building a community by setting up the Harley Owners Group H.O.G. across North America. Chapters popped up everywhere and the company started sponsoring rallies, showcase new motorcycles. It was a win-win and the cult-like Harley Nation was created with over half a million participants. “I’m very into the Harley myth,” says Alvin LaSalle, a 63 electrical contractor from California. To prove it, he proudly displays the Harley’s trademark wings tattooed on his arm. The brand has always been associated with the Hell’s Angels, who supposedly uses the Harley owners’ manual as a bible at wedding ceremonies. Their challenge today is to make the HOG cooler for Millennials whose parents are still driving them.

Authentic

Reflecting on the past and reinventing oneself in a familiar, but unconventional way accentuates coolness. Many of the world’s luxury brands like Louis Vuitton, Chanel, Hermes, Gucci, Cartier, and Tiffany perpetuate themselves by highlighting their history, and craftsmanship. It’s never bad to remind your customers what you stand for.

History legitimizes the core brand values and how they became who they are today. This doesn’t mean that the brand fails to change, but that they continue to evolve while maintaining their ultimate goal of surpassing customers’ expectations.

Classically cool individuals stay away from trends and so do trendy brands. It can be important to stay true to your roots and stay the course. Timeless brands are consistent in look and style. Coca-Cola is a great sample of a brand true to its roots with decades of steadfast positioning and looks. However, the brand isn’t entirely unchanging. The brand should be tweaked constantly overtime in a natural fashion without fanfare. Being discrete and real is also cool.

Original 

In connection with being authentic, cool brands must also be contemporary. This means reinventing itself in a progressive, natural fashion that strongly ties back to the brand’s purpose and vision. This is how Apple was able to morph from iMac to iPod, iPad, iPhone, and Apple Watch. What’s next? The autonomous iCar?

Old Spice is an interesting case in point. It had been around for over 70 years and was starting to become an old man’s product. It wasn’t on my shopping list, but it was on my dad’s. In 2010 that all changed when they launched one of the most successful rebrands with the “Old Spice Guy”.

They spiced up the product line and attracted a new customer-base; now their product is very cool. There is a fine line between timeless and contemporary, but Old Spice navigated the waters with skill.

Back in the 1970’s their slogan was “Mark of a Man” and targeted dads and grandfathers. Today, their focus is on young men with the slogan “The original. If your grandfather hadn’t worn it, you wouldn’t exist.” The nautical theme is still present, but the colonial sailing ship is now a racing sail boat. The packaging has also evolved over time. Initially, the bottle was made of clay (something you would find on a sailing ship in the 1930s), then it became a cream-colored glass bottle that mimicked pottery design, finally it evolved onto a plastic bottle.

The fundamentals of the Old Spice brand still remain the same: nautical theme, cream color bottle, and red top. What’s different is its coolness.

Unconventional

Cool brands march to their own drum.

Recognize these names: “Cherry Garica, Chucky Monkey, Phish Food, The Tonight Dough, and Americone Dream?”

These are Ben & Jerry’s ice cream flavors. Two Vermont boys, Ben Cohen and Jerry Greenfield ignored conventional wisdom and built an ice cream business worth $326 million (Price sold to Unilever in 2000). Here are some of the unconventional ways they built the brand:

  • Instead of using venture capital to expand their business, they sold shares door-to-door shares ($126 each). They raised $750,000 for their first expansion efforts.
  • When Pillsbury (owners of Haagen-Dazs) was discouraging vendors from selling Ben & Jerry’s ice cream, they retaliated with an ad campaign “What’s the Doughboy Afraid Of?”
  • Back in 1988, their business was ahead of the times based on three missions:
    • make fantastic ice cream
    • build sustainable growth by respecting the Earth & Environment
    • make the world a better place.

As the franchise development manager for Ben & Jerry’s, Eric Thomas said, “You really can change the world through ice cream.” One cool scoop at a time.

Emotional Connected

Harvard Business School professor Gerald Zaltman says that 95 percent of our purchase making decisions take place in the subconscious mind, a place where emotions are king. Activating an emotional connection can be very beneficial, but you will not connect with everyone. You must clearly understand your customers’ needs and wants to connect at this level. If you connect, the risk will be well worth the effort. If you don’t, you’ll have egg on your face.

Pepsi’s Kendall Jenner protest commercial was a great example. Somehow, the public couldn’t buy the concept that Jenner could stop hatred and tension with a can of carbonated sugar.

For more on this topic check out my blog article called A Brand with Feelings.

Energetic

A cool brand has energy and excitement. I don’t mean loud and always on. More like smart and with-it. These are brands that are current. They don’t just follow current events but make things happen. They are rebels with a cause. They think and act as if the world is their oyster.

Energetic cool brands also speak to youth. They speak their language and engage in the conversations on their terms. Participation is key to building a mutual relationship. Over the last six years, Moosylvania has surveyed Millennials to track their brand preference. Unsurprisingly, top brands always includes Apple, Amazon, Nike, Samsung, Target, Wal-Mart, Sony, Microsoft, Google, and Coca Cola. If you look deeper into the list, you will see brands that make them look, feel good, and keep them entertained.

As the iconic David Ogilvy said, “You can’t bore people into buying you product, you can only interest them into buying it.” There needs to be a level of fun and fascination to keep customers engaged with the brand.

Can you think of a cool brand that isn’t fun in one way or another? I can’t.

 

Another Cool Factor – Sexy

‘Sexy’ doesn’t fit easily onto the Cool Brand Wheel, but it can be a powerful branding tool. Sexy is a primal instinct. A sensual attraction, excitement, or even ecstasy. ‘Sexy’ branding can be a risky business.

Bad-boy brands like AXE, Calvin Klein, Abercrombie & Fitch, and Playboy built a tribe based on selling sex, and all of them were super cool at one point. Sexy people are notorious for making brands cool like Kim Kardashian, Paris Hilton, Marky Mark Wahlberg, Jenna Jameson, Justin Bieber, and a number of Victoria Secret models.

While sex and sexy can attract attention and help create coolness, they aren’t a sustainable factor. Other factors of the Cool Brand Wheel must be present. Overtime sexy can also have a negative effect on a brands when people only remember the attractive bodies and not the brand.

Stay Cool

The cool brand wheel is a great way to move a brand from functionality to coolness.  A product is built on attributes. A brand is built on a narrative that people want to embrace and buy. A cool brand is built on mythology, faith, and desire. Cool brands give meaning to our lives. They make us feel happy and good. They make us proud. They make us cool.

Coolness must seem effortless not forced or manipulated. It isn’t just a clever or sexy advertising campaign. Many cool brands’ origins are associated with being non-mainstream, controversial or sub-cultural, almost cult-like. Growing into a massive brand or becoming part of a multinational enterprise can easily affect the coolness factor.

Cultural shifts and demographics shifts can have significant impact on what defines coolness. There was a day that cigarettes, especially Marlboro, were sexy and cool. Remember the Hummer vehicle? Now known as the gas guzzler. Then there was Krispy Kreme, the cult-like doughnuts. As one customer said, “Fresh Krispy Kreme is the food of the gods.” What happen to the once cool brands of Gap, MTV, Nokia, Dr. Martens, and Playboy? They failed to stay cool.

Cool brands aren’t built, they are cultivated. Customers determine if a brand is cool. A brand can continue to emulate coolness if they carefully balance the ten cool factors and stay in the lead by turning customer’s wants into needs. The benefits of being a cool brand are enormous: fame and fortunes beyond your control. Be cool.