Advertisement: The Brand is Dead, Long Live the Brand

Back to Contents of Issue: April 2004


With so much of what we buy now made in the same developing countries by workers on the same wages, do brands really matter anymore?

by Gavin Blair

At an automotive conference in Tokyo last year, Rolf Eckrodt, president and CEO of Mitsubishi Motors said, "Excuse my language, but I think there's too much talk about brand bullsh-t these days."

On the other side of the world, some of the most high-profile purveyors of brand largesse in the US hip-hop community are reportedly eschewing their logo-emblazoned sporting duds for pinstripe suits, as they become successful 30-something entrepreneurs. Meanwhile there has been a backlash in consumer sentiment against companies who have relocated their factories to developing countries where they pay low-end wages -- yet still charge high-end prices for the finished luxury goods.

Has the importance of branding and advertising reached its peak?

Less than a year after the Tokyo conference Mitsubishi Motors has announced nearly a billion dollars in annual loses, and Mr. Eckrodt, despite his reputation as a skillful and seasoned corporate turnaround specialist, may well be on his way out.

Can Mitsubishi be viewed as a case study in the consequences of a company's paying insufficient attention to the value of its brand? There is no doubt that Mitsubishi compares poorly with other major companies in brand value, failing to make the Top 100 in a number of surveys that measure such things.

The sheer size and diversity of the group (which would be the world's largest corporation were it still a single conglomerate) is surely an impediment to building a strong and definitive brand.

When a consumer sees the red three-diamond symbol that is recognized worldwide, what is their initial thought? Home-entertainment systems? Heavy industry? Color pencils? A few different banks? Or Heartbeat Motors? It's hard to imagine that this disadvantage, combined with an apparent indifference at the top to the importance of brand, has not contributed to Mitsubishi Motors losing ground to Nissan, Toyota and its other global rivals.

What of the hip-hop stars apparently giving up their XXLL-size jerseys with equally jumbo-sized brand logos for a buttoned down Wall Street look? Is it to be the end of the frequent product placements for Cristal, Hennessy and Bentley in their lyrics, as they blend into the mainstream business world in generic black suits?

Of course not. These MTV icons whose styles influence hundreds of millions of young people worldwide are donning strictly designer suits, and some of the street-wear companies have already launched new apparel lines to meet rising demand. While they may be looking to project a different image as they reach their mid-30s, the appetite for luxury brands goes on unabated.

In spite of concern about the practices of certain companies and even the globalization of culture through the increasing homogeneity of products, brands continue to grow in importance for both corporations and their customers. As the business world wakes to the correlation between brand value and bottom-line profits, an army of professionals is on hand to help companies understand the increasingly complex relationship between consumer behavior and brands.

A quick trawl through the pages of job websites such as Daijob.com will often turn up positions for "brand manager," a title virtually unheard of a decade ago but now commanding high salaries and attracting top professionals. In addition to in-house personnel, firms may also choose from an array of specialist agencies to achieve the maximum leverage from their brands in a fast evolving marketplace.

The idea of a consumer society moving through stages of development is echoed by David McCaughan, EVP, director of strategic planning at McCann-Erickson Japan: "Brand building essentially is in line with the development of a stable middle class society. What we notice consistently is that as a marketplace becomes more settled into an expectation that a middle class life is attainable and more normal, then brands tend to move through stages, from being about 'showing off I can have that,' to a security stage where the brand offers 'an assurance of better quality,' to a more complicated attitude of 'expecting more from it all the time.' In other words, in more advanced economies with settled middle class aspirations, people are less in awe of a brand as a signifier that they can now afford quality, and are more likely to be judgmental in considering between brands for extra values, both functional and emotional."

McCann-Erickson has a unique history, starting life in Japan as part of the first US-Japan joint venture advertising agency, with domestic giant Hakuhodo, before going it alone in 1994. This allows the firm to combine a deep understanding of the Japanese market with an international perspective, backed by the global resources of the McCann Worldgroup. Within Japan, the agency consists of seven integrated groups: McCann-Erickson Japan for advertising; MRM Partners Worldwide, the relationship and online marketing company; Momentum M.I.K. for event marketing and sales promotion; FutureBrand, the corporate branding and design firm; Weber Shandwick Worldwide for public relations; Torre Lazur for health care communications; and Universal McCann, in charge of the media planning and buying for all disciplines.

The McCann Demand Chain is one of the central principles behind the entire operation of the agency, as it "ensures that the business vision is aligned with future demand. Brand strategy is central to all company activities, marketing resources are optimized and marketing programs have clear goals. It thus leverages the expertise, ideas and creativity of all marketing disciplines across the entire chain," explains McCann's McCaughan.

The abundance of consumer choice in Japan also presents its own challenge: "Brands in markets where choice is always normal are constantly striving to find new reasons to convince consumers that they need them. Instead of a brand being able to focus on providing surety and a safer purchase proposition (the brand as a stamp of ensured quality), the brand must now focus on demand creation. So we talk about good branding being about the elimination of choice. In a crowded marketplace like Japan, success comes to brands that have created such a demand that people feel they have no choice but to try, consume and repeat the purchase."

Beacon Communications, a multinational agency established through the merger of Leo Burnett and D'arcy Japan (with a business unit from Dentsu, in 2001), sees the lengthy recession and the relative depression in the national advertising industry as an enormous opportunity. Prolonged economic pain has forced domestic companies to grapple more seriously with the concept of brand-building -- a specialty of Beacon's since its inception three years ago, when it was able to create what it calls a 'brand house.' Community and the people are the focus of Beacon's creative energies, and the company's unique infrastructure puts the emphasis on developing and cultivating fresh ideas. One simply needs to walk through the Family, Men's or Woman's floor to see and feel the physical and psychological uniqueness.

Beacon's focus on the community and people has inspired unique way of building brands based on its large variety of local and global business experiences as well as deep consumer understanding. This ability can be highlighted by its own methodology of branding: identifying the 'kizuna' or core of the brand and developing it with 360 degree marketing perspectives. Beacon also offers in-depth consumer analysis for women (Bshe), men (Bmen) and senior citizens (Bmasters) that have full of useful insights of each consumer segment. Said Fumie Tanaka, Beacon's Group Strategy Director, "Marketers are eagerly looking for new ways and tools that can clarify people's motivations, aspiration, behavior patterns and triggers for purchasing. Consumers' points-of-view are absolutely prerequisite before anything else."

Although some believed the burst of the dotcom bubble heralded the death of major online advertising budgets, revenues are again increasing as companies come to utilize the various forms of targeted marketing that the Internet affords. One of the specialist companies at the forefront of these innovations is Claria, founded in 1998 in California. Claria is the leading online behavioral marketing company in the world, with over 1000 advertising clients and more than 45 million end-users worldwide.

Claria's General Manager for the Asia-Pacific region, Paul Anders Schwamm, sees the future of brand-building being online: "The use of online media is booming all over the world -- which is wonderful for Claria, because our core business is selling our unique online advertising service. Online media already surpassed radio in Korea last year, and this is a trend around the world. According to Dentsu's 2002 Advertising Expenditures in Japan report, gross ad expenditures on the four major [traditional] media decreased 7.6 percent, while online advertising increased 15 percent. Advertisers now realize that they need to connect with consumers individually, through behavioral marketing, at the point of sale -- be it online or offline."

Schwamm also sees online advertising as more advanced in being able to measure return on investment in branding budgets.

"Many of the companies that are savvy enough to leverage the marketing efficiency of the Internet are also savvy enough to take advantage of the technological tools available for measuring ROI of their online marketing expenditures. It is extremely difficult to accurately calculate ROI for traditional media. Yet, for online media, it is quite easy to accurately measure costs for every metric, including the cost of every sale, and the cost of an incremental point of brand awareness."

At TBWA\Japan, which took over a long standing agency in 1998, CEO Bob Kerwin sees the issue as going beyond ROI: "The issue of ROI is how clients use the tools, not the tools themselves. We embrace performance-based remuneration that is measured against criteria that positively impact a client's business." In a highly competitive market, TBWA differentiates itself through its inventive approach and campaigns: "We are among the few who focus on creativity and business-building ideas. Adidas's sky soccer provides a good demonstration of what we are all about." TBWA emphasizes the importance of distinct brand images, even within the same company, an area Kerwin believes has been traditionally overlooked in Japan. "There is a well-documented focus in Japan on corporate or parent brands, rather than on individual brands within a company or corporation."

Hakuhodo Inc. is one of the powerhouses of Japanese advertising with a history stretching back to the 19th century. Mariko Fujimoto, corporate public relations division represen-tative, sets out the company's strategy for the early 21st century: "Hakuhodo's corporate philosophy is to think from the point of view of seikatsu-sha and to see business from the view of partnership with each client. Seeking the seikatsu-sha insight was established in 1981, and this means understanding the seikatsu-sha, or 'living consumers,' better than anyone else. In 2002, we announced a new philosophy called 'powerbranding.' This is one of Hakuhodo's missions and it means to work with clients in order to build powerbrands -- brands that have instant recognition, gravity and suitability in the marketplace. For us, powerbranding is not just a word, but we have already actually been contributing to the brand-building of our clients."

AdVentures is the name of the groundbreaking new Web site produced by the Japan.com team, focused on advertising/branding in Japan and Asia as a whole. Its goal is to create a platform where advertising/ branding agencies can communicate amongst themselves. The site will appeal to industry professionals as it will contain exclusive, industry-focused content, including news and opinions compiled and created by David Kilburn, a 20-year veteran advertising/ branding industry journalist. The site will also attract potential end-users through access to exciting facets of the industry including campaigns, as well as a range of other special features. AdVentures has already gained tremendous support from within the advertising/ branding industry and beyond. The site will open on March 25 at www.Japan.com, with related promotions and events soon to follow. @

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