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The Safety of Brands

An aside in the book I’m reading sparked a thought I figured might be worth sharing. First, the snippet:

From our e-mail providers to our mobile-phone carriers, most companies’ business models are too lucrative to risk by mishandling our personal information and angering the consumer. So it is safe to say that despite the many potential risks represented by the volumes of data available, our past is relatively well safeguarded.

Which reminded me a lot of economic definition of brand. Here’s The Economist’s dictionary of terms on the meaning of brand:

Many economists regard brands as a good thing, however. A brand provides a guarantee of reliability and quality. Consumer trust is the basis of all brand values. So companies that own the brands have an immense incentive to work to retain that trust. Brands have value only where consumers have choice. The arrival of foreign brands, and the emergence of domestic brands, in former communist and other poorer countries points to an increase in competition from which consumers gain. Because a strong brand often requires expensive advertising and good marketing, it can raise both price and barriers to entry. But not to insurperable levels: brands fade as tastes change; if quality is not maintained, neither is the brand.

A brand is a promise: The more valuable it is, the less a company can afford it to be broken.

I wonder, though, whether that’s as true now as it was in earlier times. The example I’ve heard most for thinking of brands in this is not killing your customers. You pay more for a Pepsi than some random house brand because you know it won’t be poisoned (you also know it will always taste the same). But something seems to be changing, especially with digital brands. Maybe it’s that there’s more of them or maybe we have far lower expectations, but I feel like large brands frequently have data breaches or other terrible things and we forgive them in a way that doesn’t really jibe with the two paragraphs above.

If we don’t hold our brands responsible, the very meaning of brand changes. Part of it is that it’s easier to show outrage than it ever was, so when people get up in arms about Facebook’s latest privacy change I suspect it’s not real. Part of it may be the insanity of the news cycle: TJ Maxx loses millions of credit cards and its only a big deal for a day. But none of it explains how a bunch of banks that nearly sunk the economy are able to bounce back (except, maybe, regular brand laws don’t apply to oligopolies).

No matter what, something is different and its important that we understand what it means.

May 31, 2012 // This post is about: ,


  • Ian says:

    One of your lines reminds me of a great David Ogilvy quote, paraphrasing: A brand is a promise you make to your customers. Your reputation is how you live up to that promise.

  • Michal Migurski says:

    Same damn thing as short-term profits over long-term profits. If you fuck up a brand, there’s always another executive position waiting for you someplace else.

  • Hugues says:

    I do agree that’s something is changing especially when you see smaller brands competing really quick with larger ones.

    Now, I think maybe there is a confusion here between brands and business models: banks are necessary (unfortunately?) therefore brands are irrelevant… their businees models is to make money not help people. If the promise of their brand is about helping people or making a better world, it is just a lie. I think people get that now. Regarding Facebook, their business model is to help people connect and expose their privacy as THEY want. A breach of data would not be only a brand’s problem for FB it is a business problem : they cannot do what they say they would…

    But, I agree, brands promises alone do not stand as strong now.

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