Regular readers of my blog probably know well by now that I don’t think the digital medium is suited to brand-building. At least not in its current form. I have written a few pieces on the subject already. And many might be wondering why I would even be remotely interested in writing about digital brands, therefore.
Well, the digital economy certainly interests me, since more of the world is headed in that direction. And I happened to come across a post on LinkedIn by David Tiltman of WARC (World Advertising Research Centre) referring to a response by Byron Sharp to Tom Morton’s article in WARC on how digital brands grow. I read and commented on Byron Sharp’s article, but couldn’t read Tom Morton’s piece as WARC perhaps allows only one free article. Even in the days it was owned by WPP, WARC was subscription-based readership, and continues to be so. In my comment to the post, I wrote about the ways digital brands differ from regular brands, and that got me thinking more about digital brands; enough to make me write this piece.
First, I thought I ought to clarify the sense in which I am using the term digital brands. Even though it is early days in its evolution, a digital brand is a product or service delivered through the internet. Therefore, not every tech company or brand is a digital brand, unless it delivers its benefits over the internet. While products like Apple’s iPhone and Apple Watch, or Samsung Galaxy might not seem like digital brands, they become so, when their very performance and functioning depend on software updates and customer service too delivered as much as possible online. It is the internet that makes the smartphone so different from its predecessors. Soon, we will be saying that cars too are digital brands, as their performance too increasingly depends on digital technology, connectivity and online updates.
I started to think about how digital brands differ from their counterparts in the physical, offline world. And I was surprised by how different they indeed are, and in very fundamental ways. To just briefly encapsulate the main differences that have implications as brands and for brand communications, I have clubbed them under four broad headings:
- Digital brands work more like a service, while regular brands work more as physical products that have a finite life and are perishable or suffer wear and tear
- Digital brands are mostly in the areas of work and leisure, and to that extent offer a higher order of brand benefits than regular brands
- Digital brands engage with customers on a one-to-one, highly personalized and individualized level.
- Related to the previous point, therefore, is digital brands’ need to comply with even stricter guidelines under a regulatory framework.
Implications for building digital brands
If we consider the first area of difference which is all to do with the form the product takes, it is less physical and more like a service. This has important implications for not just the product’s features and benefits, but also for how those are delivered online. The functioning of the digital brand has to be uninterrupted, smooth and fully in line with customers’ preferences, 24×7. This demand of the digital brand presents its own challenges, in the sense that the service is so smooth and uninterrupted that the brand is self-effaced and the customer might not always be conscious of using the particular brand.
It also has implications for brand-building in that digital brands have to be treated as corporate brands, because it is the range of services provided by the company that keep it working to our satisfaction.
That digital brands mostly operate in work and leisure and therefore deliver a higher order of benefits to customers means that companies have to think harder about what kinds of products they design and what benefits they provide users. Work-related benefits usually are to do with being more effective, efficient, productive, creative, saving time and costs, etc. Brand benefits related to leisure will necessarily be about taking time out for oneself, relaxation, entertainment, sporty thrill, nourishing the mind, etc.
It appears, therefore, that digital brands are by their very nature more homogenous. And within these higher-order benefits of either fulfilling the needs of the mind and the soul, brands have to differentiate themselves. Did I say the needs of the mind and soul? What about Peloton, the internet-driven exercise bike wunderkind of the pandemic?
Linked to the fact that digital brands seem to offer higher order benefits and are more personalized, is the need, therefore, for digital brands to tap into more personal motivations and aspirations. For example, if I were to follow the Ogilvy International Blueprint for strategy, I would find that digital brands have higher performance and self-image risks than social image risks. This is because digital brands hinge on product/service efficacy as well as how it makes the customer think about himself or herself. There are few social image ramifications, since the digital brand is usually highly personalized and one-to-one. This sounds paradoxical, since many digital brands operate in the social realm, especially social media brands.
On the digital brand regulatory front, much more needs to be done to ensure global standards since the internet is global, as infrastructure and as a phenomenon. And more of economic activity in future is likely to be conducted using it. There is plenty to be done even in ensuring data privacy, user’s rights, and to prevent targeting without user’s permission, etc.
Products of the digital medium
Digital brands do not operate free of the environment, the way regular brands do. The internet and direct access to customers is their raison d’ètre, their very reason to exist. In most cases, the product or service is designed around technology and delivery through the internet. In that sense, digital brands are very much products of the medium itself.
One of the distinguishing features of the digital medium is its ability to connect one-to-one with users. That, as we have discussed earlier allows brands to build and strengthen relationships with consumers. This is the main reason why I have always thought that the digital medium can achieve its true potential as direct marketing 2.0. Provided certain rules of engagement are established and enough safeguards are built in to protect customers.
The digital medium is also known to amplify messages, especially through social media. While that might be a good thing for brands’ messages to go viral, etc., it also has its negative flipside. Customers’ discontent with brands and their messages too spread rapidly through the internet, and create problems for companies.
Digital brands, therefore, need to take even greater care that their product/service works effectively and as promised, and that they also manage conversations with customers well on the internet.
The future of digital brands
Today, the world of digital brands is dominated by information technology and consumer electronics companies and brands, besides social media and e-commerce. That, in itself, seems like quite a disruption from the world we knew at the turn of the millennium. Imagine the world of connected cars, shared mobility, home electronics systems, wearables, online education and edtech, digital healthcare, and the like.
Then, imagine or reimagine, entire industries. Transportation, manufacturing using 3D printing or additive manufacturing, predictive diagnostics for plant and machinery, clean technology, smart power grids, and more, all of which is already driven by the internet or will be, in the not-too-distant future. You can take a look at the digital maturity by industry of OECD countries in this 2019 OECD report; there is hardly an industry that is not represented here. However, I do not understand why OECD would combine advertising and market research, other scientific, professional and technical activities, and veterinary activities as an industry grouping in their chart! I suspect this might be Perfect Relations’ idiot bosses’ mischief along with their cronies in BBDO India to perhaps make me my younger sister, Bhavani Sundaram, who has worked with animal care NGOs in India. Also, if you select ICT specialists in total employment, it features data only for Australia and no other country.
Anyway, what this suggests is that digital brands have huge scope for growing the market for new products and services. What this also means is that companies and brands have to find ways to differentiate their digital brand from the rest. And since the fate of internet or digital brands depends on smooth delivery, companies have to ensure this at every transaction online.
There are many who think that when the world comes of internet or digital age, many products and services will be delivered at lower cost to customers, and that we will also enter the low-revenue era. At one level, this seems like the great democratization we always expect of technology. If we look at e-commerce and online sales, it certainly seems like companies save hugely on distribution costs thanks to large economies of scale possible in e-commerce. With e-commerce giants like Amazon and others themselves finding it tough to generate profits for decades. I think that is because e-commerce is still in a growth phase and low costs and low prices rule online sales. There is something illogical about the e-commerce world: if something saves me the trouble, the time and cost of visiting a store to shop, should I not be paying more for the sheer convenience of having it delivered home?
That day is yet to come. When online sales and e-commerce becomes more the norm rather than the exception, companies and brands will find ways to cater to different segments of customers at different price points in much the same way as they do today. The sheer need for brand differentiation will force companies to ensure that different customers are catered to, in different price segments.
The biggest concern I have about the digital economy, is further erosion of workers’ bargaining power and an acceleration perhaps of the gig economy. The more the world goes digital, the greater the level and pace of automation which means less dependence on people for most routine tasks. Along with AI, this threatens to kill and replace jobs, so companies and governments have to prepare to tackle this danger. In many industries, according to McKinsey’s Future of Work Report which I have shared a link to in an earlier piece on my blog, many jobs will be replaced and new kinds of jobs might emerge, including in new industries. This means that retraining and reskilling the workforce on an unprecedented scale is required, which is the responsibility of government and industry.
Digital or internet brands will grow much the same way that offline regular brands have. We need to be aware of the important and nuanced differences between the nature of digital brands and regular brands. And we need to ensure that differentiated brand benefits of a much higher order are continuously delivered to customers, in order to build and strengthen relationships with them. Finally, all this has to take place in a much more stringently regulated environment, since the internet medium itself is of an intrusive nature.