Welcome to the bloggy home of Noah Brier. I'm the co-founder of Percolate and general internet tinkerer. This site is about media, culture, technology, and randomness. It's been around since 2004 (I'm pretty sure). Feel free to get in touch. Get in touch.

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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