Tuesday, September 2, 2008

Social Media and Brand Control: A Historical Perspective

Are those of us in Social Media talking too much about a "loss of control" in the Social Media world? And is there an unintended side effect of doing so? Andrew Frank, vice president of research at Gartner, thinks so. In an interview on eMarketer, he notes:
Marketers also need to lose the idea that they have to give up control of brands on the Internet because social media users will do whatever they want with it. It's true that you have less control. But this mantra about giving up control is highly misleading and can actually result in something unintentional... They can end up doing nothing and assuming that it's all good.
Frank may be right, but rather than denying or minimizing the power of the consumer in the era of Social Media, why not recognize that consumers have had this power all along? Smart marketers have always known they share control of the brand with consumers.

Brands do not exist except in the minds of consumers, so in many respects it may be consumers that have more claim to the brand than do the legal brand owners. For example, several years ago, Wal-Mart announced its "boldest effort yet to target upscale shoppers," but a year later a report from their ad agency was leaked criticizing "Wal-Mart's so-far unsuccessful attempt to climb out of the bargain basement;" among the reasons cited for the failure of the upscale strategy was "customers not thinking of (Wal-Mart) for things like fashion." Today, partially in response to their failure to change consumer perception and partly because of the economy, "Wal-Mart has abandoned its 2002-04 strategy of moving upscale and committed to every day prices for bargain conscious consumers."

So, who owned the Wal-Mart brand? The $230 billion company that employs a million people and spends half a billion dollars annually on marketing? Or the tens of millions of consumers who comprise Wal-Mart's customer base? Even before the advent of Social Media, marketers had to work within limits to their brand authority; they couldn't simply make change but instead strove to influence change in consumer perception.

Ten years before the Internet went public and two decades before the term "Social Media" became common, one of the world's largest corporations was brought to its knees by the voice of the consumer. In 1985, Coca-Cola was losing market share to Pepsi and was alarmed by taste tests that revealed consumers preferred Pepsi, so the company went in search of a better product. They believed they found their answer in New Coke.

What follows is one of the great stories of consumer rebellion in marketing history. After some initial acceptance, consumers mutinied. Many in the south--Coca-Cola's historic stronghold--felt that abandoning the traditional recipe was another step toward losing their culture. The company received 400,000 calls and letters; ads for New Coke were booed in sports venues; talk show hosts mocked the new product; a black market in in overseas "old" Coke thrived; public demonstrations featured bottles being emptied into the streets; sales flattened; and bottlers eventually demanded Coca-Cola reverse its decision and reintroduce the traditional Coke recipe.

Coca-Cola didn't stumble blindly into introducing the new product to the marketplace; they actually conducted extensive consumer testing in a secret effort named "Project Kansas." Their tests were conclusive: consumers preferred the taste of New Coke to both Pepsi and Coke. What Coca-Cola--and the rest of the marketing world--learned is that product features are important, but consumers' brand perceptions are even more important. They also learned that it was consumers who really owned brands while marketers are merely trustees responsible for brands' care and management.

The point of revisiting the Wal-Mart and Coca-Cola stories is two-fold: First, brands aren't losing control in new ways. The idea that consumers own a share of the brand isn't unprecedented; nor is the fact that consumers can band together and exert influence on companies. What is new in 2008 is the scale of consumer interaction. Social Media is putting the tools and reach of mass media into the hands of individuals.

Secondly, both stories demonstrate the need for brands to be responsive to consumer wants and wishes. Wal-Mart and Coca-Cola didn't dig in their heels and assume that their legal title to the brand gave them carte blanche to change it any way they wished. Instead, these two companies retained their market positions by recognizing consumer preferences, admitting failure, and responding in a way that acquiesced to their customers' claims on brand ownership.

Brands that fail to respond to shifts in consumer wants and habits will find themselves falling behind brands that listen to and meet those demands. This obvious and unassailable fact is what makes Frank's comment about Social Media inaction so funny and worrisome. He believes the "loss of control" mantra could become so frightening to marketers that they "end up doing nothing and assuming that it's all good."

Neither fear nor ignorance will stop Social Media from impacting consumers and brands. Attempting to deny these changes or grasping at justifications for inaction is like closing your eyes and plugging your ears while standing on a railroad track with a train bearing down. Those actions might briefly give one comfort, but they only make the situation worse.

In the end, if executives find all the talk of "sharing control in Social Media" frightening, they may wish to consider the alternative: "losing control in Social Media." If you care to see what can happen when a company denies and delays the need to change, look at the classic example of book sellers at the birth of the commercial Internet. In July 1995, an upstart company started selling books online, but giant Barnes and Noble didn't see the same value in the Internet, so it took almost two years to follow suit. In May 1997 BN.com launched and since that date, B&N's stock price is up 24% while Amazon's is up 4573%.

The cure for Social Media anxiety isn't to have early adopters and consultants tone down the importance, threats, or opportunities. The best cure is to embrace the coming changes and make them work for you rather than against you, because delays and inaction can be very costly.


Anonymous said...

The question is: What should be the ramifications for people/companies who start and foster such damaging rumors? Imagine if Coca-Cola lost 20% of their sales for a few days/weeks because of some rumor? Shouldn't there be some ramifications on those that perpetrate this? If not, then it may become fashionable for marketing types to perpetrate these sorts of things against the competition. Refuting the rumors is one thing, but thousands of people still believe in old rumors that can easily be checked on Snopes.com (devil worship on Colgate-Palmolive packaging anyone?).

Augie Ray said...

Rumors are notoriously difficult to track down and even more difficult to prosecute. Even assuming you can find who started a false rumor, they'd need to have enough assets to make a lawsuit worthwhile. Then you'd need to invest in a lawsuit, and defamation is a tough argument (which is why you see so little of these types of suits.) All a consumer needs to do is state something as an opinion or report it as a rumor, and its likely they'd deflect a legal judgment.

On top of all that, a lawsuit happens after the damage is done AND increases the risk of reminding people of the rumor (which is counterproductive).

I don't disagree legal recourse is an option, but an ounce of prevention is worth a pound of cure here. Better to manage your brand perception and build goodwill with consumers, which is always the best defense against false rumors.

One last point: The Coca-Cola incident wasn't cause by rumors or false statements; it was caused by consumers wanting their old product back. In this case, there is no one to sue because there is no legal defamation or damage.

Thanks for the thoughts!

Anonymous said...

But do you think there are new avenues now for marketers to competitvely position their products against another by starting rumors? Given the ability to spread information in a much faster way, this would seem to be a valuable (and possibly very unethical) method of combating a competitor....but if you can't find or prosecute the source, what is to lose? And, what can the competitor do to provide that "ounce of prevention"? If nothing else, they will have to spend time, money, and energy on refuting rumors created by nae'r-do-wells.

"Rat droppings were found in hamburgers from 3 different McDonalds."

"Exxon has started adding 5% water to its gasoline products."

"Dial soap was recently tested to contain dangerous levels of formaldihyde."

Augie Ray said...

Great comments! I am thinking of a more significant response in the form of a blog post. Watch for additional thoughts on rumors and Social Media in the next few days, and thanks for the thoughtful comments!