Keeping Your Cool
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A look at the list of the world’s most valuable brands tells the story of how Google, Facebook, Amazon, Tencent and Alibaba built globally successful brands in a period of twenty years or less. Fortune’s list of the top 50 unicorns also shows that tech start-ups are here to stay. So how are these brands born and how have they grown from embryonic ideas to global powerhouses? We shared this presentation at a recent UK event which brought together some of the brightest minds in the industry to discuss the opportunities and challenges of becoming a start-up success story and the role of brand in driving business success.
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Keeping Your Cool
- 2. Agenda 2 01 What do we know about building strong brands? 02 Are the rules of brand building different for ‘Disruptive’ brands? 03 Panel discussion
- 4. 4
- 5. APRIL 2006 APRIL 2007 APRIL 2008 APRIL 2009 APRIL 2010 APRIL 2011 APRIL 2012 APRIL 2013 APRIL 2014 APRIL 2015 APRIL 2016 APRIL 2017 BrandZ™ Strong Brands Portfolio 124.9% S&P 500 82.1% MSCI World Index 34.9% 5 BrandZ™ Strong Brands Portfolio vs. S&P 500 vs. MSCI World Index (Apr 2006 - Apr 2017) Strong brands generate superior shareholders’ return – brand building is an investment in the future
- 6. 6BRANDZ™ Top 100 Most Valuable Global Brands: 86 common brands valued in both 2006 and 2017 WE KNOW THAT ‘MEANINGFUL’ BRANDS GROW AT A FASTER RATE 12 year value change 2006 – 2017 75% 145% Low Meaningful High Meaningful
- 7. 7BRANDZ™ Top 100 Most Valuable Global Brands: 86 common brands valued in both 2006 and 2017 WE ALSO KNOW THAT ‘DIFFERENCE’ PLAYS A CRUCIAL ROLE. ‘MEANINGFULLY DIFFERENT’ BRANDS ARE PRIMED TO GROW AT AN EVEN FASTER RATE 53% 213% Low Meaningful Difference High Meaningful Difference 12 year value change 2006 – 2017
- 8. IN PRACTICE WE SEE THAT DIFFERENCE IS TYPICALLY THE LEAD COMPONENT MEANING AND SALIENCE TEND TO FOLLOW… 8
- 9. Average Brand 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 99 Example 1 +42% GLOBAL BRAND VALUE 2009-2017 #89 152 DIFFERENT SALIENT MEANINGFUL 124 104
- 10. 1010 68 104 78 2012 Average brand 100 Meaningful Different Salient Example 2 GLOBAL BRAND VALUE 2017 NEW ENTRY #92 $12bn 123 128 86 2015
- 11. 2017201520142013201220112010200920082007 $16.8bn Average Brand 100 SALIENT MEANINGFUL DIFFERENT 1111 Example 3 GLOBAL BRAND VALUE 2017 (NEW ENTRY) #65 157 158 142
- 12. 12 Average Brand 100 2016201520142013201220112010200920082007 108 DIFFERENT SALIENT MEANINGFUL +2,250% Example 4 GLOBAL BRAND VALUE 2010-2017 #5 132 133 183
- 13. NOTE HOWEVER THAT DIFFERENCE CAN ALSO BE A LEAD INDICATOR OF EQUITY DECLINE… 13 Mobile phone handsets PRE IPHONE 2007 IPHONE LAUNCH 2008 POST IPHONE 2017 EXAMPLE 5 Average brand 100 100 167 249 76 103 270 122 181
- 14. 14 PRE IPHONE 2007 POST IPHONE 2017 EXAMPLE 5 MEANING SHOWED A MORE GRADUAL BUT NONETHELESS DRAMATIC DECLINE FOR BOTH BRANDS IN THE UK Average brand 100 163 87 99 69 130 Mobile phone handsets
- 15. 15
- 16. 16 A new, unique and motivating proposition to challenge the established order, meet an emerging consumer need, or both!’ A DEFINITION OF A DISRUPTIVE BRAND…
- 17. 1717 BRAND DISRUPTION DIFFERENCE 156 158 137 150 131 206 123 128 122 137 119 138 115 121 113 117 111 119 105 141 HOW ARE DISRUPTION AND DIFFERENCE RELATED? AREN’T THEY MEASURING THE SAME THING!? 2015-2017 Average brand 100
- 18. 90 100 110 120 130 140 150 65 85 105 125 145 165 185 205 225 245 DISRUPTION SHOWS A GOOD RELATIONSHIP WITH DIFFERENCE BUT DOESN’T COMPLETELY EXPLAIN IT R² = 0.56 18 DISRUPTION DIFFERENT 10,295 global brands measured between 2014 and 2016
- 19. 19 STRONG PERCEPTIONS OF DISRUPTION ADD BRAND VALUE 3 year global brand value % change -1 5 30 SHAKING THINGS UP Medium HighLow (same 67 brands 2015 to 2017)
- 20. 20 BUT critically it is those brands perceived to be Different AND Disruptive that grow at an even faster rate 3 year global brand value % change DIFFERENCE DISRUPTION +28% HighLow LowHigh +11% +5%-5% (same 67 brands 2015 to 2017)
- 21. THESE ‘DISRUPTIVE’ AND ‘DIFFERENT’ START-UPS ATTRACTED OVER $1BN OF INVESTMENT… DIFFERENT ENOUGH? SCALABLE RELEVANCE? 2121
- 22. Average brand 100 22 170 128 DISRUPTION/MEANINGFUL DIFFERENCE Launched 1920 Launched 2010 114 Disruption CLEAR PURPOSE AND TRULY DISRUPTIVE INNOVATION CAN BUILD MEANINGFUL DIFFERENCE RELATIVELY QUICKLY EXAMPLE 1
- 23. Launched 1995 IN FACT CLEAR PURPOSE AND TRULY DISRUPTIVE INNOVATION CAN BUILD MEANINGFUL DIFFERENCE VERY QUICKLY! 23 DISRUPTION/MEANINGFUL DIFFERENCE Launched 2007 Launched 2016 115 Disruption 144 132 117 EXAMPLE 2 Average brand 100
- 24. A NUMBER OF OTHERS IN THE UK AND US HAVE COMBINED STRONG DISRUPTION WITH CLEAR MEANINGFUL DIFFERENCE, IN A RELATIVELY SHORT TIMEFRAME – PRIMING THEM FOR FUTURE GROWTH BRAND COUNTRY DISRUPTION MEANINGFUL DIFFERENCE 144 137 143 161 127 118 123 139 24 DISRUPTION/MEANINGFUL DIFFERENCE 2017
- 25. 25 THE BATTLE FOR MEANING WITHIN ONLINE FOOD DELIVERY IN THE UK DISRUPTING THE DISRUPTOR BRAND MEANINGFUL DIFFERENT SALIENT 158 117 178 66 131 75 EXAMPLE 3 2017
- 26. Disruption only adds value in the short term for emerging brands and is impossible or irrelevant to maintain in the long term A FINAL THOUGHT 26
- 27. 27 WRONG!
- 28. 28 The ‘Fearsome Five’ remain INCREDIBLY MEANINGFULLY DIFFERENT in their respective categories… 180 174 163 159 145 2017 MEANINGFUL DIFFERENCE Average brand 100
- 29. 29Brands featuring in Global Top 100 2017 SHAKING THINGS UP ….AND YET THEY REMAIN SOME OF THE MOST DISRUPTIVE BRANDS IN THE WORLD. A FIRM COMMITMENT TO A DISRUPTIVE MINDSET CAN PAY DIVIDENDS 148 144 143 143 138 137 136 135 135 133 131 127 127 126 126 Average brand 100
- 30. What next for Amazon? 30 “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death… …And that is why it is always day 1.” Jeff Bezos
- 31. APRIL 2006 APRIL 2007 APRIL 2008 APRIL 2009 APRIL 2010 APRIL 2011 APRIL 2012 APRIL 2013 APRIL 2014 APRIL 2015 APRIL 2016 APRIL 2017 31 Finally - the true value of disruption - brands perceived to be the most dynamic grow at an even faster rate S&P 500 82.1% MSCI World Index 34.9% BrandZ™ Strong Brands Portfolio 124.9% BrandZ™ Innovative Brands Portfolio 171.8%
- 32. So what have we learned today? FIVE SIMPLE TAKEOUTS 32 #1 Shake things up #2 Think about Difference, not just Disruption #3 Question whether your USP has scalable relevance #4 Layer Meaning onto Difference sooner rather than later #5 Don’t stop being Disruptive
Editor's Notes
- Firstly a quick word on BrandZ, which we’ve used to provide many of the insights for today. BrandZ is run by Kantar Millward Brown on behalf of WPP and is the largest brand equity database in the world, containing data from over 3M consumers and 120k brands. Based on this wealth of data we are able to understand what makes a brand primed to grow and also demonstrate the power of disruption!
- So let’s begin with a review of the key factors we know are important for building strong brands generally…
- This is probably BrandZ’s most famous chart and proves definitively that building a strong brand is a way of maximising and protecting shareholder returns – MARKETING SHOULD BE VIEWED AS AN INVESTMENT, NOT A COST. This is demonstrated here by some of the largest and most successful brands in the world but today we’re focussing on newer ‘disruptive’ brands – as we’ll see later on though, some of the world’s most successfully established brands remain the most provocative!
- So what do we know about building strong brands? Well we know that ‘Meaningful’ brands grow at a faster rate - they combine an ability to meet consumer needs with a strong emotional connection. Colgate as a classic example…it wouldn’t have been able to build such a strong emotional connection with consumers if it didn’t ultimately clean your teeth!
- (Difference = literal difference and perceptions of leadership/trend setting) So perceptions of Difference play a vital role in amplifying a brand’s potential to grow The combination of Meaningful Difference is a very powerful one BUT which comes first – Meaning or Difference? Let’s look at some examples
- In fact our ‘Meaningfully Different’ model of brand equity proves that three elements are vital for brand growth – Meaning, Difference and Salience. Salience is the third key element – if a brand can effectively amplify a Meaningfully Different proposition then growth will very likely follow. Our analysis shows that Difference is often the leader of these three components. Let’s look at some examples…
- Aldi has been making inroads on the traditional Supermarkets in many countries, including the UK. Its GLOBAL brand value has increased impressively, featuring at #89 in this year’s Global top 100 with a brand value of $12.273B In the UK all three aspects have improved (mainly from 2013) but clearly a strong sense of Difference has led this growth in Meaning and Salience and ultimately value UK data Aldi founded in 1946
- A clear perceived point of Difference vs. other Digital TV providers has grown over time and led development of clear Meaning to users – they LOVE this brand! A QUARTER OF UK HOUSEHOLDS NOW SUBSCRIBE TO NETFLIX. Salience has built more slowly and there remains room to grow further – WATCH THIS SPACE! Note: 2017 data not available in time for this event (likely Q4) Broke into the Global Top 100 for the first time in 2017 @#92 worth $12.057B Context = Digital TV providers Netflix launched in the UK in 2012 – 5M household subscribers by the end of 2015 – projected to be 9M by 2020
- YouTube is also a brand on the rise globally after entering the BrandZ global Top 100 for the first time in 2017 @#65 valued at $16.785B In the UK the brand has always been defined by a very clear point of difference, though its meaning to users has recently overtaken Difference for the first time as the brand has become more well known and loved. A CONSISTENTLY DIFFERENTIATED POSITIONING HAS BEEN THE LAUNCHPAD FOR BUILDING THIS FUNCTIONAL AND EMOTIONAL CONNECTION WITH USERS Founded in the US in 2005
- Facebook is another example of MASSIVE growth being driven by the engine of perceived Difference. The brand’s IPO in May 2012 explains the large Salience spike at the time in the US. The IPO was the biggest in technology and one of the biggest in internet history, with a peak market capitalization of over $104 billion. Facebook is one of the fastest growth brands we have measured. Up 2,250 percent in 7 years (!) in GLOBAL brand value. US data – Facebook founded in 2004 Category defined as either Internet networks and services or Online Sharing and Networking Note - 2017 data not available in time for this event
- We’ve seen that Difference can act as a lead indicator of success….But this example shows that it can also be a lead indicator of a brand’s equity decline – particularly in the face of very disruptive competition. Both Nokia and Blackberry had their perceived Difference decimated by the entry of iPhone in the UK – a pattern mirrored around the world
- This example again suggestions that establishing a clear point of difference can be the Launchpad to establishing strong Meaning (and hence achieving clear ‘Meaningful Difference) to consumers.
- So we’ve established that establishing Meaningful Difference is critical for brand success + Difference as a lead component of equity growth and decline but so far we’ve mainly looked at pretty well established brands. What role does disruption have to play, how are the rules different for disruptive brands and can disruptive brands realistically achieve Meaningful Difference quickly?
- First let’s begin with a definition of a ‘Disruptive brand’ - note this definition will form the beginning of our panel debate later on so feel free to comment or offer your own definition then!
- A number of disruptive brands are also clearly defined by their point of difference though not yet their meaning or salience to consumers. So how are Difference and Disruption related – aren’t they the same thing? Snapchat founded 2011, Airbnb 2008, Asos 2000, Uber 2009, Amazon Instant Video 2011, AO.com 2000, Apple Pay 2014, Pingit 2012, GiffGaff 2009, Metrobank 2010, OVO Energy 2009, Deliveroo 2013 NOTE – THIS SHOWS THE LATEST YEAR OF DATA WE HAVE AVAILABLE FOR THESE BRANDS BUT THE FIRST YEAR WE HAVE SHOWS THE SAME PATTERN: Uber Indonesia 2016 – 64/105/48 ASOS UK 2013 – 79/131/82 Airbnb France 2015 – 65/192/87 M/D/S/Dis Airbnb – 70/206/103/131 Snapchat – 76/121/71/115 Amazon prime – 83/128/77/123 AO.com – 96/137/72/122 Apple Pay – 43/158/55/156 Pingit – 52/138/55/119 Giffgaff – 86/117/66/113 Metro bank – 79/119/67/111 Ovo Energy – 100/150/67/137 Asos – 79/141/89/105
- In fact yes, the two do show a good relationship but not a perfect one. Disruption is not completely explained by difference and vice versa – so does disruption alone add value? Difference = Leadership (Setting trends) + Uniqueness (Different to others) Disruption = Shaking things up
- Strong perceptions of disruption can add brand value – so should we just aim to be as disruptive as possible? H = 115+ (19 brands) M = 114 – 105 (21 brands) L = 104 and below (27 brands)
- In fact it’s where we see disruption and difference overlap that we see the most value created, not just disrupting for the sake of disruption… So this suggests that by disrupting with a clearly different proposition we’re on to a guaranteed winner?
- Well this collection of brands were certainly deemed to be disruptive and different enough by a large number of investors – attracting over $1Bn in investment between them…. Yet each of them failed and closed down this year for various reasons – why? They either identified a ‘need’ that didn’t really exist or were not different ENOUGH versus their existing competition [EXPLAIN EXAMPLES]. So yes difference is also a critical element but it must be difference combined with relevance of proposition… These brands did not achieve scalable relevance and ultimately Meaningful Difference But is it possible then for disruptive brands to achieve Meaningful Difference quickly? Juicero – US - (initially raised $120M from investors) – founded 2014 – closed 2017 Pre-packed fruit and veg + expensive juicing machines. Could actually be squeezed by hand as easily.. Sprig – US – 2013 – 2017 – online (healthy) food cookery and delivery – couldn’t be scaled profitably Yik Yak – US – 2014 – 2017 – social media smartphone app - create discussion threads within a 5 mile radius of location Quixey – US – 2009 – 2017 – ‘The search engine for apps’ – missed revenue targets and shutdown Beepi – US – 2013 – 2017 - online peer-to-peer marketplace for buying, selling and leasing used cars. Failed to raise further funds Jawbone – US – 2011 – 2017 (1999 as Aliph) – wearable technology and fitness – achieved less than 3% share and lost legal case vs. FitBit
- Yes! – example 1 Colgate has been the clear market leader in oral care in India for a very long time with no serious challengers. Patanjali was founded in 2006 and manufactures mineral and herbal products across a range of categories. Launched toothpaste in 2010 and based on strength of proposition and point of difference, the brand has quickly become a player in the toothpaste market. Baba Ramdev started as a yoga teacher before setting up a pharmacy selling herbal products. Popularity soared and Patanjali as a private company was born in 2006, which has since rolled out a range of products - in healthcare, hair care, dental care, toiletries, food and more - at breath-taking speed. Media attention and low pricing have certainly helped as well as the clear vision and delivery across numerous categories Colgate launched ‘Vedshakti’ as a direct competitor to Patanjali in 2016 – focuses on herbal content
- Yes! – example 2 150M subscribers in 8 months Everything free for first 6 months then a small subscription charge – Disrupted the entire category - India data now the cheapest in the world as a result. Vodafone likely to consolidate business and pull out of the market… The company commercially launched its services on 5 September 2016. Within the first month of commercial operations, Jio announced that it had acquired 16 million subscribers. This is the fastest ramp-up by any mobile network operator anywhere in the world. Jio crossed 50 million subscriber mark in 83 days since its launch. Subsequently crossing 100 million subscribers on 22 February 2017. Jio MDS 2017 = M 103, D 130, S 86
- Spotify – launched in Sweden in 2008, UK 2009, US 2011 – rumoured to IOP late 2017 or early 2018 – valued @$13B Pandora Radio – ‘a music streaming and automated music recommendation service’ – founded 2000 in the US – now only available in the US (previously ANZ also) – IPO in 2011 Brewdog – founded in Scotland in 2007 – valued at £1B – plan to IPO ‘in the next 4-5 years’
- The battle in the food delivery sector in the UK between Just Eat and Deliveroo is a great illustration of this. Having had a head start, Just Eat has already built Meaning to supplement its point of difference. Deliveroo has been able to disrupt and establish a greater point of difference by pre-empting a consumer desire for restaurant delivered food. It is also now tapping into breakfast and lunch occasions to maintain difference and drive growth. However, annual revenues are a quarter of those of Just Eat. If Deliveroo can build meaning by continuing to identify functional areas of difference and communicating those in a way that builds an emotional connection, it can create a meaningfully different brand that is primed for significant growth. A lot will be riding on its recently launched “memorable moments” campaign which represents its first national TV campaign. Just Eat founded 2001 – intermediary between take-aways and customers – 13 markets Deliveroo – Founded 2013 – focuses on restaurants and charges them and customers a fee – 12 markets
- So we’ve established that disruptive brands can establish Meaningful difference quickly with the right proposition…but does disruption have longer term power? Ask audience if anyone disagrees with this assumption before building the answer
- These brands are BrandZ’s globally most valuable brands and this value is ultimately anchored in their Meaningful Difference
- These brands also remain perceived to be very disruptive – they have successfully retained this power
- Whatever Amazon chooses to do next , we can be sure it will be ground-breaking and disruptive….
- Innovative brands based on the top performers on ‘Dynamic’ element of Difference – setting trends vs. follows others