Love it - the other black stuff

Escaping from Uniqlo down Regent Street I was surprised to see the new pop-up Marmite shop. I love it. Taking the product to the people in a retail brand experience. Marmite, Marmite crisps, Marmite clothes and Marmite memorabilia. Not sure why you need Marmite memorabilia, as it is a hard taste to forget, and readily available in every high street super-market. Nevertheless, there are Marmite mugs and Marmite fridge magnets. They are even opening a Marmite café upstairs, for a warming cup of tea and Marmite sandwich on a cold day.

Lost in the Black Stuff

Long long ago, when politicians always told the truth about the pounds in our pockets, I started spending my paper-round money in public houses. Guinness was my drink of choice. Sometimes with a dash of blackcurrant to sweeten it for my youthful taste, sometimes without. My mother didn’t approve of adolescent drinking, but she made some accommodation for the well-advertised fact that ‘Guinness is Good for You’.

I have been a big fan of Guinness advertising ever since. ‘Big Wave’, ‘Surfer’ and ‘Noitulove’ are classic film shorts in their own right. And as a short film, I love the new spot “bring it to life”. The photography is superb, and recognisably Guinness. http://www.campaignlive.co.uk/theWork/news/964790/Guinness-bring-life-AMV-BBDO/

However, I am worried that Guinness’ marketers, or their advertising advisers, are losing the plot. I am at a loss to understand the film’s relevance to the product or the company. Arthur Guinness didn’t create the world, plant forests or fields. Ireland was already pretty green when he created Guinness. And if it is suggesting the Guinness drinkers will magically acquire god-like powers then it is in much greater risk of over-promising than the 1970s Smirnoff adverts.

Top Marks for Brands

It is great to see that Marks & Spencer are going to stock top brands in their stores in addition to their own brand products. As a customer, it means that I should be able to satisfy my children’s demands for Heinz Ketchup and Nutella as well as my wife’s requests for M&S quality salads and staples. It overcomes my frustration that I can’t fulfil my shopping list with the products I want in one store if that store is M&S.

As a commentator on branding it reconfirms my belief that good strong brands create demand. Whilst it might have taken 125 years for the good managers of Marks to fully appreciate that people don’t just want washing-up liquid, they want Fairy liquid, it is good that they have at last. A good thing for M&S, a good thing for the brands they will stock, a good thing for the customers, and a good thing for branding.

Brand valuation comes of age

I just attended the Brand Finance Workshop at the lovely Arts Club on Dover Street. An odd juxtaposition of the latest hard-nosed financial analysis being presented in rooms decorated by and for creative artists of the past.

What was to me most interesting was the rather technical discussion of the new international standard for brand valuation, ISO 10668, which should come into force in the new year. It was interesting not so much in its detail, but because it took place. Brand valuation is no longer an esoteric tool, the validity of which is doubted by people who don’t understand it, but an accepted piece of analysis, with rules and definitions that have been argued and agreed by experts from around the world.

It was presented by David Haigh, the CEO of Brand Finance, who was the UK representative on the technical drafting group – so arguably the leading expert on brand valuation in the country. His presentation was very clear, but too comprehensive to go into here, so I would recommend to anyone interested that they contact him for more information or a brand valuation.

Starbucks Via Tallinn

“Its quite nice, and it does taste like Starbucks actually” said Bindal, who was next to me on the flight to Estonia, on her way to Ulan Bator in Mongolia via Tallin, St Petersburg and the Trans Siberian railway.

It was the first time that Paul, my Creative Director and I had tried the Starbucks instant coffee, and we had some trepidation. Why would Starbucks, with a brand built around a coffee-bar experience, the ‘third place’, put its name to an instant coffee which could be drunk in much less comfortable environments? Other brand commentators have suggested that this could be a mistake. They imagined lonely people drinking instant Starbucks in untidy bedsit kitchens, and felt that the negative associations would weaken the brand.

However, it has long been possible to get a take-away Starbucks, to be drunk in whatever environment one was rushing to. (If you weren’t in a rush, why wouldn’t you stop and relax over your coffee). So many untidy bedsits must already be littered with empty Starbucks cups: perhaps they are just reminders of the comfort that the coffee can bring.

Anyway, back to the plane to Tallinn. We tried both the regular Colombian and the stronger Italian blend of Starbucks Via and we were pleasantly surprised. Not only was it some of the best instant coffee we could recall, but it distinctly tasted like Starbucks. I don’t know why, but it did. This was not only a credit to the brand, but distinctly enhanced the EasyJet experience. To find that there can be everyday luxuries even in budget airtravel was an unexpected little pleasure. And my Starbucks brand loyalty is therefore, if anything, a little increased.

Believing in brands, not banks

The reports that Virgin is looking to follow Tesco into on-line retail banking ( www.brandrepublic.com today) should be no surprise, unless perhaps that it has taken so long. The main retail bank brands are currently weakened by their perceived parts in the credit crisis (see "Banking on brands" below. People need to have a bank, but probably see them as all being as to a greater or lesser degree guilty of having taken excess risks, which would account for switching not being higher. So now is the right time for these two of the most trusted brands in Britain to offer banking.

Of course, not all trusted brands are trusted in ways that would enable them to successfully offer retail banking services - Cadbury is trusted for its chocolate, and Head & Shoulders for haircare, but we don't typically judge our banks on sweetness nor lack of dandruff. However, there are levels of generic trust that really strong brands generate that do transcend categories, as Tesco has proved by moving across so many, even becoming the most trusted petrol retailer in the 2009 Readers Digest survey of Britain's most trusted brands, ahead of BP and Shell.

I remember being very sceptical (and very wrong) some 20 years ago about Virgin going into into Financial Services. Rowan Gormley was explaining to me over lunch how he had made the simple connection that the Virgin brand was a great asset because people trusted it - so it had real potential moving into markets where people didn't trust the existing brands, such as insurance. Virgin Direct was born, which became Virgin Money, and is still a success.

And people who trust brands generally believe that they are getting something good, even when they can't easily make comparisons. Virgin Mobile used to get considerably better customer ratings for its mobile network than T-Mobile did for its network. But they were both operating on the same network.

Sainsbury's Bank similarly used to benefit from a positive brand halo effect, in that it got significantly better customer satisfaction scores for its call centre service than Bank of Scotland did - for the same call centre. So we can expect customers to move to brands they trust, to expect to get better, more reliable services, and in the absence of information to the contrary, to believe that they are getting better service.

The owners of the leading brands generally understand brand risk, and the importance to all their businesses of not letting brand-loyal customers down. The FSA should recognise this, and issue them full banking licences as soon as possible, so that people can make real choices between truly different brands.

Banking on Brands

Brands drive behaviour. They don’t just exist in peoples minds as a combination of images and expectations of the brand, but take fruit in terms of the actions people take because of their perceptions of a brand. And as the scriptures say, it is best to judge a tree by its fruit.

When there is a positive brand image, we can judge it in terms of the proportion of people who go out and buy and use the products or services associated with the brand, and the premiums that they are prepared to pay for it.

When there is a neutral brand image, we can record the inaction of shoppers who don’t bother to pick up the product, or to enter the store, and positively choose to go elsewhere, to select other brands.

The riots today at RBS in London show just how much adverse behaviour can be driven when there is a strongly negative brand. Few if any of these demonstrators will be personally acquainted with Sir Fred Goodwin. None of them will have had savings with RBS frozen or potentially lost, as they might have had with some Icelandic bank. Yet they were all galvanised into action by an image of RBS that they felt extremely dissatisfied with. Not just a loss of trust, but a very negative empathy.

The challenge for banking brands like RBS will be to redeem themselves with the mass of their customers and get a second chance. They have transgressed. They have been trusted partners who have mortgaged the family home to secretly buy a Ferrari to impress their associates, then lost everything.

They have made such huge losses that their credibility as financial advisers and stores of value is fundamentally weakened. To rebuild their brands they will need to show, through some positive actions, that they have repented their sins and are going to act in different ways in future. For this to be credible they will have to avoid future failings or acting in ways which, however legal and normal in the industry, might further reduce the trust of their clients and stakeholders. A brand like trust, hard and slow to build, and even harder to rebuild. But if the bank brands don’t swing from negative to positive, the credit crisis - being a crisis of confidence - will only deepen.

Reputation Value at Risk

Recent surveys of the value of global brands, like the BusinessWeek/Interbrand survey published last month show that the amount of shareholder value attributable to companies’ brand reputations is enormous, often in the billions. For companies like Reuters or Burberry the value of their brand reputations can represent between 40-70% of the market cap. However, there is little data on how companies are managing the risks to their reputation - and a new survey shows that is perhaps because most companies are not managing their reputation risk.

This survey, designed and analysed by David Hensley & Garry Honey will be published in the forthcoming September edition of Strategic Risk magazine, shows that although 97% of the senior executives surveyed rated Reputation Risk an important or very great concern, the majority said they do not specifically monitor, measure or manage their reputational risk.

Given the value of intangibles, and reputation/goodwill in particular, this should be of concern to investors, including anyone with a pension fund investing in equities.

The fact that most people surveyed don’t explicitly manage reputation risk is clear. What is less clear is why. It seems to be a mixture of misunderstanding and myopia.

The misunderstanding comes from people putting this into the “too difficult” box. Although 10% of those surveyed say they already put a monetised value on their reputation, many other say the difficulty in quantifying the value at risk is one of the biggest challenges. Many of the risk managers surveyed say that better governance of reputation risk is required, including contingency planning, but overall responsibility for managing the corporate reputation is often unclear. One department manages brand communications, another corporate social responsibility, and another investor relations – all separately assessing and managing risks to the reputation.

The myopia comes from the senior executives. None of the Chief Executives or Chairmen in the survey thought that they had a governance issue. They all described reputation as an operational risk, and thought that a focus on good operational delivery was essentially all that is required – seemingly without thought to preparing for unexpected or external factors such as those that have recently affected the reputations of Cadbury and BP.

I am sure that it is not so simple, but what is clear, is that shareholder value is at risk.

BBC - Brand Blows Commercial

The BBC, one of Britian's best loved brands, may be about to move away from its secure core values into the maelstrom of the international media brands. Mark Thompson, the Director General has declared his ambition: “The BBC is the only European brand that could take on Google and AOL.”

The desire of the DG to build the institution of the BBC is understandable, and he clearly recognises that the BBC brand is its major asset. The paradox is that building the institution into a leading global media player in a commercial sense may damage the very brand that they want to build on.

It has also been announced that BBC's commercial arm is going to launch an advetising funed web-site, BBC.com. If this is successful, the 163m people who currently tune in to the BBC world service each week, and countless others who value the television, radio and internet services, may come to see the BBC in a new way, as another international commercial media/communication brand alongside Google, AOL, MSN, BT, Vodafone, Yahoo, Disney et al.

What the BBC has stood for, in the minds of many of its audiences, has been impartiality. This has given it its authority. Now that it buys much of its creative content in a competitive market, it cannot really claim that its uniqueness can come from its productions. So its impartiality, based on its public srvice remit, is its critical differentiator.

Once it become seen by its audiences as another commercially-minded, partly advertising-funded media conglomerate, the brand will have little more claim to impartiality than News Corporation.

It may be Britain's best hope of creating another huge international multi-media conglomerate, but is that what the public want and need? Success for this strategy might ultimately reduce the burden of the licence fee, but the loss of brand value that will be spent to build this new BBC may be a greater loss to the Corporation and the British people?

The future is four-play?

Convergence has been the buzz word of the communcations industry for some time, with industry pundits talking a barely intelligible jargon of 'triple play' and 'Quadruple play' (or 4-play). Now Vodafone, described by the FT as "the world's largest mobile phone company", has publically announced its new strategy, Mobile Plus, taking it towards direct competition with the giant internet and IT brands, AOL et al.

The move is perhaps inevitable, driven by Vodafone's failure to make substantial money from its old strategy of buying up other mobile phone businesses to plant the red Vodafone flag across the world (though the biggest overseas Vodafone investment, in Verizon Wireless, isn't branded Vodafone anyway!). Having had to write off billions of pounds of shareholders money from its acquisitions, a new direction was needed. Vodafone also faces a forecast decline in mobile phone spend with the expected growth of "free" internet based calls from Skype and similar brands (VoIP for those in the trade).

Vodafone's Mobile Plus strategy is interesting - perhaps the next step in a major strategic shift from being a "mobile phone company" to becoming a "personal communications company", once Vodafone adds video, games and other high value services onto whatever broadband access offering they develop, and provided Vodafone can cost effectively get access to content that consumers want to pay for.

From a consumer perspective of course, no-one wants "quadruple play". What people want is easier and cheaper ways to realise their communcation desires - which can be more easily described as talking, writing, reading, listening, watching, learning, sharing and playing.

Currently the Vodafone brand is a credible provider for talking (over the mobile phone) and writing (SMS texts). Success for the new strategy could require Vodafone to become the prefered, most trusted provider brand for reading and learning over Google and Microsoft/MSN; listening and watching over BBC and Disney; sharing and playing over MySpace, Playstation, Nintendo and PartyGaming. Otherwise it becomes relegated to becoming another anonymous infrastructure provider in a regulated and competitive market.

The opportunity for Vodafone to access a larger consumer market, and thus potentially a higher share of wallet is substantial. The big questions are surely (a) whether Vodafone can execute and offer these services better, faster/earlier or cheaper than the other regional and global players targeting these markets, and (b)inasumuch as consumers perceive choice between these convergent offerings, why they would choose the Vodafone brand for a set of services that Vodafone is not currently famous for?