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Brands in a World of Costless Interaction

So I’ve been working on this presentation I’m giving this week on brand vs. utility and have lots of random things I thought were worth sharing (until the whole thing is ready, at which point I hope to share that).

First off, in thinking about utility I came to realize that it’s actually nothing more than a measure of satisfaction (in other words it’s completely subjective). And satisfaction is nothing more than a measure of expectations/needs. If you buy that brands exist in people’s minds then it’s not a stretch to say that utility is actually a measure of brand.

Now why does this matter? Well in a non-digital world, interaction costs were high: You had to purchase products. In the digital world, they’re unbelievably low. Nothing is ever more than a click away online. In the offline world you had to get over high interaction costs by creating needs/expectations and you did that mostly with advertising/communications.

That’s not really necessary anymore, though. If a friend sends me a link I usually click on it. It’s easy, it’s cheap and worst case scenario, I can just close the tab if I don’t dig it. If a friend recommends a product, on the other hand, it requires a bit more thought and often a trip to the store (another major barrier to entry). In fact, it’s funny, thanks to Amazon.com books have moved to little-to-no interaction cost. If someone recommends a book online I usually just go and add it to my wish list and then purchase it next time I want something. They’ve cut down almost all the barriers: Wish list helps me remember everything, free shipping on orders over $25 means I’m more likely to order an extra book off the list and stored credit card/address means I don’t even need to enter any info other than password.

What does all this mean? Mostly that the role of brand is different online than it is off. Rather than creating needs it sets expectations. The way something is designed, the things you hear about it play a big role in the utility (aka satisfaction) you get from the site. Online you don’t need to create needs since it doesn’t cost anything to try something new.

As usual, Umair has beat me to the punch/helped me crystallize much of my thinking. In The Shrinking Advantage of Brands he writes (sorry for the long quote . . . )

Now, for the economics of an industrial era, branding made sense. Interaction was expensive — so information about the expected benefits of consumption had to be squeezed into slogans, characters, and logos, which were then compressed into thirty-second TV ads and radio spots. The complex promise of a Corvette, for example, was compressed into shots of cute girls, open roads, and lots of sunshine.

But cheap interaction turns the tables. The cheaper interaction gets, the more connected consumers can talk to each other — and the less time they have to spend listening to the often empty promises of firms.

In fact, when interaction is cheap, the very economic rationale for orthodox brands actually begins to implode: information about expected costs and benefits doesn’t have to be compressed into logos, slogans, ad-spots or column-inches — instead, consumers can debate and discuss expected costs and benefits in incredibly rich detail.

Anyway, I’m still thinking through a lot of this and would love feedback (especially before I give this presentation on Thursday). Thanks guys.

February 25, 2008

Comments

  • O.S says:

    It’s an interesting situation. But my fear is that on the other side of the balancing board is attention. With an RSS reader for example with around 100 feeds pumping daily, as well as friends using the “send link” or “tell a friend” it’s getting harder for anyone to get me to read. It’s just TOO much.

    So; communicating expected benefits is very very important for that matter. I think in a way the reasons will be new, but expected benefits are equally important to convey – be it an ad, headline, stand first, or whatever. Setting expectations, getting me to (for free) try it might be as friggin’ tricky as getting the Corvette promise into a 30 second ad. But in a new medium, with another context and new “rules”.

    I don’t know, frankly. I’m confused myself because there’s so much interesting stuff out there that I’m getting stressed out because I don’t have time. What I need is less stuff to tempt me, and more time :)

  • Andy says:

    Hey Noah,

    I see utility as being less stretchable a concept than you’re suggesting. Satisfaction can only be such by answering an existing need (or maintaining existing conditions). Utility however, can create usefulness where no need/expectation was apparent. I.e. Most innovation.

    If I was going to draw a diagram of these concepts, I think I’d put ‘Meaning’ at the top with utility and satisfaction underneath it. You can be satisfied without something being useful (entertainment/interest) and you can find something useful without expectation. The result of both is added meaning.

    I’m completely behind you on this point:

    “Rather than creating needs it sets expectations.”

    I actually wrote a short post (sorry! it is relevant though) on this recently:
    http://nowincolour.blogspot.com/2008/01/no-promises.html

    Hope that all makes sense. I too haven’t let these thoughts stew yet.

    A

  • Noah Brier says:

    O.S., that’s a good point. It may be that this medium is still young and that it will evolve into a space just like offline, where interaction costs are higher as a result of lack of attention. Need to think some more about that.

    Andy, sorry but I can’t completely agree with you. This may be a semantic issue, but utility is an economic measure of satisfaction. Something that has utility for you can have no utility for me. For all intents and purposes utility = satisfaction. As for innovation, if an expectation or need isn’t created it doesn’t matter because it won’t ever get anywhere: There are loads of “innovative” ideas that never change people’s lives because they don’t get traction. Innovative, I would argue, is actually quite a bit like utility in that it’s not an absolute measure.

  • ted says:

    N,

    it’s certainly interesting to think of utility as one, but not the sole, measure of a brand, especially because their value is subjective. But not sure how that leads you to “role of brand is different online than it is off.”

    I’d argue, maybe over simplistically, that role of brand is however the brand owner decides to use it. Why would the medium determine the message (to borrow a cliche)? Doesn’t it merely give you different abilities.

    And how can you argue that all offline brands sole job was to create needs (vs. set expectations). Tide doesn’t create the need to clean clothes but does try to set the expectation that its the best way to clean them.

    Im sure i’m thick and missing something but help me out with this one.

  • Toad says:

    Hey Noah. Sorry this is coming a day after your presentation. But… what you’re touching on here is what I’ve been calling “The Real Digital Revolutionâ„¢” – the notion that in pre-internet days, we relied on advertising or marketing to give us news about a product- we had no other way of learning about it. The internet allows us to learn about products in myriad other ways- from peers and from experts. As a result, advertising and marketing is reduces to an auxiliary function. It can try and convince you that a brand is cool and thus worthy of being in your consideration set. Or it can let you know about some specific promotion the brand is having. But its value as a news source is minimal. The more successful web sites, like the more successful bricks and mortar companies, have focused on experience (user or customer) over pure play marketing.

  • Noah Brier says:

    Toad, thanks for the comment. I think your last point nails it: “The more successful web sites, like the more successful bricks and mortar companies, have focused on experiences (user or customer) over pure play marketing.” The more things change, the more they stay the same …

  • Eric says:

    Hey Noah,

    On a related note, Mark Hurst has been talking about how the brand is the experience for a few years now.

    from: http://www.goodexperience.com/blog/archives/2005_09.php#000335

    “The brand is what you tell your friends about afterwards.

    Think about it. When you have a great (or bad) experience with a restaurant/airline/hospital/website, what do you tell your friends about? Do you echo the messaging from their advertising? Do you say, “Hey, try them, because they had the coolest logo”?

    Of course not: you tell your friends what was important to you – the details about your particular experience. And that’s the brand. Nothing more, and nothing less, than the sum total of all the customer experiences served up by that company.”

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