This morning Felix Salmon tweeted James Surowiecki’s latest article about brands at me to see what I thought. Basically Surowiecki makes the case that brands are less meaningful in a world of information efficiency thanks to the web. His thesis, roughly:
It’s a truism of business-book thinking that a company’s brand is its “most important asset,” more valuable than technology or patents or manufacturing prowess. But brands have never been more fragile. The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos. “Absolute Value,” a new book by Itamar Simonson, a marketing professor at Stanford, and Emanuel Rosen, a former software executive, shows that, historically, the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand.
He then goes in to talk about cars and travel and a lot of other stuff that people spend a lot of time researching. In response I shot off four quick Tweets that I thought were worth sharing here:
1. Using a luxury brand (Lululemon) is fundamentally flawed. Luxury is all brand. You can fall as fast as you rise.
I understand calling Lululemon luxury is a bit of a stretch, but I think it’s pretty accurate. But the second part is really the point: However fast a company rises it can fall at the same speed. We’ve seen lots of businesses reach saturation and struggle and this isn’t necessarily what happened to Lululemon, but it could be a part of the picture. To solely say that it was based on consumer’s ability to do research seems odd. Seems like a classic story of a brand growing really quickly and then struggling to maintain it’s growth. Often those brands come back quickly and continue to grow, though, so the story is far from over.
2. Where is the evidence that suggests buying on non-research products has changed?
He touches on this a bit towards the end by writing, “This isn’t true across the board: brands retain value where the brand association is integral to the experience of a product (Coca-Cola, say), or where they confer status, as with luxury goods. But even here the information deluge is transformative; luxury travel, for instance, has been profoundly affected by sites like TripAdvisor.” But again, travel has always been a category that a lot of research goes in to. Anywhere people research, that research will move to the web. The fundamental truth of most products is they’re not research-driven. This is why CPG is always near the top of the largest ad spenders.
3. Research-heavy products (TVs, cars) have become much more price-efficient. Duh. Not sure there’s much to say here, but he specifically hits on how cars have been squeezed to be much more efficient. This is not rocket science and is a good thing for consumers. No debate here, just not a very interesting point.
4. Consumers have always been in control. There is more efficiency in the market now, but fundamentals are the same. This is the big piece. I’ve argued this often. Word of mouth always drove purchasing decisions. Certainly this is much more efficient, but I’m not sure I’d say it’s a sea change.
Meant to post this last week, but didn’t get to it. Felix Salmon wrote a great post on how wine is one of the few things in the world you can buy for happiness. I’m fascinated by stuff like this:
The more you spend on a wine, the more you like it. It really doesn’t matter what the wine is at all. But when you’re primed to taste a wine which you know a bit about, including the fact that you spent a significant amount of money on, then you’ll find things in that bottle which you love. You can call this Emperor’s New Clothes syndrome if you want, but I like to think that there’s something real going on. After all, what you see on the label, including what you see on the price tag, is important information which can tell you a lot about what you’re drinking. And the key to any kind of connoisseurship is informed appreciation of something beautiful.
This is the messy part of branding. All those factors play into how we feel about brands, products, and just about everything else.
Last week I sent myself an email with this quote from Felix Salmon’s blog post about the media’s response to the Boston mayhem:
There’s an art to working out where to find fast and reliable information, and to judging new information in light of old information, and to judging old information in light of new information. And there’s an art to synthesizing everything you know, from hundreds of different sources, into a single coherent narrative. It’s not easy, it’s not a skill that most people have, and it’s precisely where news organizations add value.
I have been thinking (and talking) a fair amount about media literacy lately and this quote seemed to sum up the challenge really nicely. Media literacy is a very hard thing to nail down because, unlike regular literacy, it’s pretty hard to test for. Ultimately I think it’s about making sure people understand the role of media (whatever that might mean) in the way they experience and interact with the world around them. That can mean simply being aware that the order of the Google results you’re seeing are most likely not the same as mine (even for the same query) to, as Felix says, “working out where to find fast and reliable information.” Media literacy, like regular literacy I guess, is a scale (one with an ever-moving endgame, but I guess the same could be said of language).
Anyway, when I read this quote from Felix I thought of a few different games I like to play with myself that, although I never really thought of them that way, were sort of mini media-literacy tests:
The Snopes Test: When you read something, especially an email from a distant family member, you can immediately sniff out whether you’re going to be able to find an entry for it on Snopes. Knowing whether it’s been proven true or false is good for bonus points.
The GoDaddy Test: This is a funny one, and definitely less useful than the Snopes test, but it’s interesting to predict whether a random domain name someone comes up with is already taken or not.
The Wikipedia Test: This one is actually important I think. If I gave you a random topic, say Snoop Dogg, could you predict whether or not Wikipedia would be the top result? (Bonus points if you predict the actual top result.)
Anyway, all these things help illustrate the challenge with media literacy, which is ultimately it’s an “I know it when I see it” skill. With that said, it’s one that will continue to have a larger and larger impact on culture as more people’s voices (and information) become a part of the news we all sift through on a daily basis.
Felix makes some interesting points on the value of a college education in response to a recent Newsweek piece. As more and more people question the value, I’ve been wondering about where they’re getting their math from on the fact that a degree is not worth it anymore. Felix responds:
But the math is complicated: the only thing which has been rising faster than college tuition costs is the wage premium that college graduates receive over those without a degree. A degree is becoming more important, not less, in our digital economy. And so while the cost of going to college is rising, the cost of not going to college is, arguably, rising even faster.
So apparently Jonah Lehrer plagiarize himself (or something like that). I’ve read a bit about it (not enough to have an opinion), but of course Felix Salmon has and takes the opportunity to dive into a comment from Josh Levin at Slate that Lehrer’s Frontal Cortex blog (one of my favorites) is to blame. The argument, essentially, is that if you’re “an idea man” like Lehrer a blog places too much stress on content creation.
Felix, as is frequently the case, disagrees: “Lehrer shouldn’t shut down Frontal Cortex; he should simply change it to become a real blog. And if he does that, he’s likely to find that blogs in fact are wonderful tools for generating ideas, rather than being places where your precious store of ideas gets used up in record-quick time.” What’s more, he dives in on a few suggestions for what to do with the blog and in turn makes some really interesting comments about blogging generally. I especially like his first point:
Firstly, think of it as reading, rather than writing. Lehrer is a wide-ranging polymath: he is sent, and stumbles across, all manner of interesting things every day. Right now, I suspect, he files those things away somewhere and wonders whether one day he might be able to use them for another Big Idea piece. Make the blog the place where you file them away. Those posts can be much shorter than the things Lehrer’s writing right now: basically, just an excited “hey look at this”, with maybe a short description of why it’s interesting. It’s OK if the meat of what you’re blogging is elsewhere, rather than on your own blog. In fact, that’s kind of the whole point.
I always thought of this blog as a thing I use to think out loud. It doesn’t overwhelm me because it helps me think through ideas (and in turn create new ones).