Unlocking value through brand ecosystems – Part 1: The new standard
January 10, 2022 By BEAM
What has changed
Out of the top 7 most valuable companies in the world, 6 of them (Apple, Alibaba, Amazon, Alphabet, Facebook, and Microsoft) are companies that have built brand ecosystems. We identify brand ecosystems by their elimination of traditional brand approaches characterized by rules, slowness, reactions, layers, stasis, and top-down approaches. The traditional view is represented in the diagram below:
Brands that build ecosystems invert traditional brand ideas. They put the user of the brand as the central actor with the most agency. The “new normal” environment is characterized by flexibility, speed, omni-channel capabilities, transparency, dynamism, principles, and purpose. It looks something like the diagram below.
Understanding the nuanced needs of the user is foundational. The brand strategy requires a Single-Minded Idea, also known as a brand platform, for communications. The assets of the brand become artifacts that are used along the user journey. Experiences are designed to create moments of connection. Moments are created to illicit emotions that created deeper affinity and loyalty to the brand.
How did it happen
In addition to better fulfilling internal user needs, ecosystem brands win customers fast and at scale. The successful ecosystem is a design feat that needs infrastructure to support it. The World Economic Forum has identified four reasons that ecosystem brands (they refer to them as platform firms) scale quickly. Their analysis looks at the business model reasons that enable scale: shifting production outside, network effects, an increasing value proposition, and low marginal cost.
There is an intangible idea beyond the business model that has made ecosystem brands successful. Their success suggests a new normal has emerged – brand management at scale. Large ecosystems brands have unlocked value by locking their user proposition into the systems and technology that enable dramatic growth.
Brand management at scale has four foundational elements:
1. Brand Continuity: Strategy requires activation. Activation at scale requires guidelines that explain how to apply the brand to each moment. Ecosystem brands have invested in Brand Asset Management (BAM) technology to always keep the underlying artifacts intact. BAM enables a small team of brand managers to ensure consistency of execution at breakneck speeds and manifold applications.
2. Cost controls: Given the volume requirements of continuity, brand managers have created a partnership ecosystem of suppliers. These partners have specialized to deliver high quality solutions that are available on-demand. Many of these are technology partnerships that remove activities that have a negative value/cost ratio. For example, it was estimated that the true cost to produce an advertisement was only 22% of the actual price. Today, with effective brand management, that cost could be as low as .01% per ad.
3. Process efficiencies: As ecosystems proliferate to create moments that win customers, making those platforms work requires workflow rules and integrations. Scott Brinker of ChiefMarTec has estimated that over 8000 companies are now part of the MarTec Landscape. Getting those partners to work together has been a monumental achievement of software APIs and management coordination. A special attitude is required to ensure that the brand is protected as efficiencies are not always aligned to brand. For instance, does surge pricing for Uber during a fire create a positive moment for the brand? Does increasing pricing for an airline seat or hotel reservation treat users fairly because the stored data cache on their browser indicates that they are likely to buy soon?
4. Performance insights: Brand ecosystems have focused on the key analytics that let brand managers know what assets and content deliver the moments required. Facing market decisions each millisecond, successful brands operating in scale isolate what matters to the audience better than their competitors. Insights not only deliver brand strength but enable learning at the pace required. Learn more in this report from the Content Marketing Institute on content management.
What to do about it
We have observed that two decisions are necessary for a brand to manage at scale. One question is “are we willing?” Brand managers must get senior management to decide if they are ready to invert the business model. Getting to yes on this question generally occurs at brands that understand their customer journey in detail, where industry regulation is minimal, and the cost of failure is low.
The other question is “are we ready?” There are three major topics to explore to assess readiness:
- Tech stack audit: Do we have a DAM? Do we have an ecosystem of partners? What is our integration capability with multiple partners?
- Content practices: Do we understand our customer journey? Are our brand guidelines established? How well do we train on our guidelines? Do we have production enablement capabilities to match the journey?
- Brand ROI Model: Do we have a comprehensive view of our brand and market budget? Are there metrics or analytics in place to capture ROI? ROI of brand content?
In our experience, there is not a correct order for these questions. It’s an evolving process over time. As brand strategy expands, capabilities need to as well. As capabilities expand, the moments of a brand also expand. It’s a continuous evolution that allows brands to capture large groups of customers. It’s also why continuous brand management is required to manage brand at scale.
To learn more on how you can build a brand ecosystem, reach out to us – we’d love to connect with you!