Monday, February 11, 2013

How Wearable Tech and Social Media Will Destroy (or Build) Brands in Five Years

We human beings are notoriously awful at foreseeing how technology advancements will change our lives and our brands. The problem is that we have the tendency to only consider how new technology will apply to today's behaviors rather than create new ones.

This is happening today. A sea change is about to occur in our world within the next five to ten years--one that will rock the relationship between brands and consumers--but few marketers are prepared for it, much less see it coming.

Source: PewInternet.org
First, let's explore the phenomenon of how consumers and marketers are constantly surprised by change and how our nearsightedness is costly. Take the advent of the Web--in 2000, five years after the web went public, consumers welcomed the empowering new tool into their homes, but few expected it to change their lives. Even as we soared past the 50% adoption milestone in the US, consumers thought they would retain their tried and true ways to bank, shop, work and listen to music; the reality is that online banking has skyrocketed (Bank of America saw a 300% increase in just one year), consumers now spend 5% of retail dollars online, one in five global workers telecommute and more music is purchased via download than as physical media.

Business leaders were equally unprepared for these changes. They struggled to shift marketing dollars and strategies online and allowed smaller and more nimble competitors to reframe products in a digital world. Google, YouTube, Amazon, Apple, eBay, Napster, Netflix and Paypal rose from obscurity to become household names, while Blockbuster, Borders, Yellow Pages, Tower Records, Kodak and virtually every newspaper and magazine went the other way.

The changes sparked by the Internet are nowhere near complete as the web continues to alter every aspect of business--analysts estimate that one in ten malls will fail in the next decade as retail continues to shift online, and banks that spent billions increasing the number of bank branches 20 percent from 2000 to 2009 are now reversing course and rapidly shuttering costly locations and laying off employees.

The problem is that as we humans experience new technology, we see it only in the context of today's problems and habits rather than foreseeing how it will change us tomorrow. Many consumers saw the Internet displacing encyclopedias, typewriters and postal mail, not replacing banks, retail stores, books, CDs, photo albums, newspapers and magazines. And many business leaders saw the Internet as a new marketing channel and not as a new channel for products and services.

Our inability to see new technology and not foresee how it will change us and the world has costs. The cost to individuals of being unable to see the future is that many failed to retool their own skills to stay relevant and employed in a digital world. The price paid by many businesses was even higher--the inability of corporate leaders to see how web technology was changing fundamental consumer behavior caused massive business failures, dislocated millions from their jobs and vaporized the value of brands once thought of as bulletproof. In the past decade, the Interband brand value of brands such as Citibank and Gap have been sliced in half, and Compaq and Kodak--two brands that were in the top 30 most valuable brands in 2001 with a combined value of more than $20 billion--have disappeared from Interbrand's top 100 list.

It is happening again. New technology is coming. We've all seen it and many are dismissing it as creepy, unnecessary or unimportant, just as many once mistook PCs, the Web, smartphones and social networking as creepy, unnecessary or unimportant  We are once again failing to see how new technology will be adopted and change us. Marketers should not fall into this trap again--now is the time to prepare for the changes of the next decade.

Wearable technology is the "next big thing," and the most visible of the upcoming products is Google Glass, an augmented reality head-mounted display due to hit the market next year. When people first see this (and if they do not immediately discount it), they think of how it would work with today's sorts of applications: They may envision loading a Kindle book, checking Facebook or launching Yelp to find a nearby business. These are all good use cases for Google Glass, but they are shortsighted, applying new technology to old problems rather than considering how it will affect new behaviors.

Wearable technology combined with social media will not just make software easier to use and hardware less intrusive--it will change the world. How? Instead of envisioning how Google Glass will react to your requests in the same way your smartphone does today, consider instead how this will work when you are passive and it is proactive.

Here is an example: For years, you have purchased the same brand of OTC drug. You are brand loyal--the product works, you trust it, you purchase it on autopilot, and you do not even notice the attempts of competitive brands to get your attention with advertising, new packaging and PR. You are the perfect brand consumer--until the day you enter the aisles of your drugstore wearing your new pair of Google Glasses.

You reach for your favorite product, your new wearable tech notes what you have taken from the shelf and it compares this product to the preferences, beliefs and priorities expressed through your actions and in social media. Suddenly, an alert pops up! You are a fan of the ASPCA, you have liked many of your friends' pictures of cats and dogs and you visit the local Humane Society to volunteer. Your Google Glass knows all of this, and it also knows there is a disconnect with the product you just selected--the company tests its products on animals.

Is it possible you will ignore the alert and purchase the product anyway? Perhaps, but chances are your years of brand loyalty have just been severed in the blink of an eye. No amount of existing affinity, catchy slogans, sizable ad budgets or snappy packaging will stop you from putting that product back and grabbing the one next to it. Cognitive dissonance, enhanced by a new wave of wearable technology and social media, instantaneously and permanently alter your brand affinity and purchase behavior.



Of course, this does not just work with people who are animal lovers. Maybe you care about keeping jobs in the US and the product you just selected on the store shelf is laying off thousands of Americans to shift production overseas. Maybe you care deeply about protecting the environment, and your favorite brand's packaging contributes to the destruction of the rain forest. Maybe you stand behind marriage equality and the brand you just selected does not extend benefits to same-sex partners. Or maybe you care about traditional family values, and the brand in your hand sponsors LGBT events. Whatever your beliefs, they can now become instantaneous and proactive information that impacts your purchase behavior far more than any TV ad or Facebook fan page ever could.

For decades, there has been a disconnect between consumer attitudes and purchase behavior, in part because it is impossible to know the corporate practices of every brand on store shelves. No more--thanks to wearable tech that knows our actions, is aware of our social media activities, and connects us to real-time information, the very nature of shopping changes.

We all recognize that today's social media has brought more transparency to corporate practices. Anyone who watches social media even minimally knows that companies such as Nestle, Mattel and Bank of America have had unwanted transparency thrust upon them and were forced to change corporate plans and standards. But today's transparency is child's' play compared to the radical transparency that will come once our virtual and physical worlds are merged by wearable tech powered by our social media data.

What can marketers do to prepare for the changes in the next five to ten years? It is not too early to lay the groundwork:

  • Turn inward: Shift your attention not just to external communications but to internal practices. Help your peers to understand what consumers care about and how corporate practices must align to brand attributes. Your brand is increasingly expressed not in colors, copy and images but in your company's actions.
      
  • Make tough choices: Many marketers think they know where their brand stands. This is easy when it comes to things like the saving the environment, supporting veterans or contributing to disaster relief, because every consumer supports these efforts. But what about traditional family values versus same-sex equality? Last year Oreo took a stand on Facebook and faced some backlash, but in the end the brand benefited with an eightfold increase in Facebook fans and a doubling of positive sentiment. Meanwhile, Chick-Fil-A was drawn into the same sensitive topic but from the opposite side of the issue, and it also found the social media storm caused no business issues, with usage, market share and ad awareness all rising following the controversy. I am not suggesting your brand start purposely wading into sensitive topics, but to the extent your HR and corporate policies are increasingly becoming brand drivers, it is helpful for marketers to define what they stand for, what they don't and how the brand's values align with customers'.
     
  • Build brand advocacy: A Facebook "like" is not advocacy; consumers engaging with a sweepstakes is not advocacy; consumers "liking" a brand's post about National Hot Dog day is not advocacy. Advocacy in the social era is expressed differently than in the past but is still defined in the same way--engaged consumers who are informed about the brand, care about it, and are willing to talk on the brand's behalf. If your social media activities build engagement but do not create advocacy, a change in strategy is required.
      
  • Get the word out: The key in our increasingly transparent world is not to have the most clever marketing messaging or the largest media budget; what will separate the winners from the losers is a willingness to build authentic engagement about real brand activities and beliefs. Content strategies cannot save a brand whose practices are disconnected from consumer attitudes, but if the two are aligned, it is imperative you create and encourage content that spreads the word.
      
  • Educate employees:  Your employees are brand ambassadors, whether they want to be or not. Brands cannot dictate that employee beliefs and behaviors align with the brand's mission and consumer beliefs, but marketers can ensure employees are educated on what is expected in social media and how to protect themselves and the brand.
      
  • Become more transparent now:  Do not be outed by an environmental, labor, animal or other advocacy group. Out yourself--engage consumers in a dialog about your brand practices and tell them why you do what you do and how it benefits them. Listen to consumers, change what can be changed and do not hesitate to defend what cannot. We cannot please all of the people all of the time, but we can prepare them to hear and disregard damaging brand information. Take, for example, the scenario I shared above about the OTC brand that tests on animals. Perhaps there is no alternative to testing on animals in order to protect human lives; if this is the case, the time to engage consumers in that discussion is not once they have been interrupted in store aisles with surprising and concerning information; by then, it is too late. It is your job to arm consumers with the knowledge they need to expect, interpret and ignore information that would otherwise create cognitive dissonance and decrease brand loyalty. 

The future need not be scary if we simply acknowledge and prepare for the changes. The brands that have succeeded in the past fifteen years are the ones that embraced and invested in change, while the brands that were ground into irrelevance wasted away clinging to old business models and practices.

We can see the future coming. Will your brand cling to old ways or begin to invest in the changes ahead?

13 comments:

Tom Snyder said...

"Business leaders were equally unprepared for these changes." I know you and I both have seen that as a recurring theme since the late nineties. Unfortunately, it's actually "Business leaders chose to ignore..." It's so sad to see so much missed opportunity, but it does provide a greater market potential for those who have eyes to see and ears to hear.

Augie Ray said...

Thanks, Tom. I agree, business leaders did choose to ignore the signs. It can be difficult to invest in the changes coming in the next five or ten years while meeting the demands of today's investors for quarterly results. Nonetheless, the best leaders are the ones that can prioritize what is right for the long-term and not just what is right this quarter.

Thanks for the dialog!

Neil Glassman said...

I think the scenarios you describe are likely. On the other hand, decades of predictions of the effects of technology have proven wrong. The actions you suggest will enable brands to face the coming shifts, even if we can't quite be sure what they are going to be. Nicely done!

And if your scenarios turn out to be spot on, the first round of 2018 is on me…

Augie Ray said...

I agree, Neil right or wrong, the general shifts in transparency and brand relationships will still happen. That said, I'm still right. :)

Ken Hittel said...

Back in '98, Larry Downes and Chunka Mui wisely warned companies to "Cannabalize your Business" or others (such as those you listed) will do it for you. I think your injunction today to companies to "Out Yourself" is equally impressive and necessary. Great piece, Augie.

Augie Ray said...

Thanks, Ken.

There are times I can understand how difficult it is to "Cannibalize your own business." Then there are other times I can see clearly every business has to "Cannibalize its own business" before someone else does!

Thanks for the comment!

Marjorie Dufek said...

Great post, Augie. It reminds me that a "social" strategy must extend beyond the marketing team and become the way a company does business both outside and inside.

Augie Ray said...

Marjorie,

Thanks of the comment. It is so true that social strategy has to be inclusive of the entire firm and not just marketing. I've seen companies that get it, but many seem not to, paralyzed over questions of ROI even as the world changes around them. Come to think of it, that's a pretty description of what happened at Borders, Kodak and the other companies I mentioned in the blog post!

Thanks for sharing the thought. I hope all is well for you. (I won't run into you at sxsw this year--I won't be there this year.)

Michael Batton Kaput said...

Augie, thanks for the insightful post. It supercharged my day.

I'd love to hear your thoughts, and everyone else's, on how you personally identify and act on these game-changing trends (i.e. Google Glass, as you mentioned).

It seems to me that noise is a huge problem: We've all seen the latest articles that ask "Will [new technology] Change the Way You Live?"

How does everyone here cut through the noise? Any publications that seem particularly useful in getting real insights, instead of quick headlines? Any habits you cultivate that help you "see the future better," so to speak?

Just curious, as it's a huge problem I've dealt with recently. Thanks!

Augie Ray said...

Great question, Michael. I hope others will answer, and in fact, Neil and I were just discussing this topic last night.

I think the key isn't to focus on the latest and newest behaviors (Checking in! Liking a brand! Posting to Tumblr!) but to keep in mind core, never-changing human needs and goals. No one ever said "I want to post information to a social network" or "I want to wear a geeky pair of heads-up display glasses." Instead, what they say is, "I want to make better decisions," "I want to communicate better," "I want to be closer to my family and and friends" and "I want to be more productive."

If you keep the core behaviors in mind and can stop from being distracted by the latest hot trend (Pinterest! Groupon! Who cares?!), I think it is easy to see what tech trends will be adopted and what not.

As a small example, I was never very optimistic about Second Life, even as Time magazine and others were putting it on the cover. I just thought about core human needs and wants, and I didn't see that building an avatar and walking through a virtual world was something most people needed, wanted or would do. On the other hand, as people were putting down Twitter and Facebook in the early days of social media, it seemed clear to me that building influence, sharing thoughts, communicating more widely and being closer to family and friends were all things people wanted to do and would be facilitated by these new tools.

So, what do you do to cut through the noise?

Michael Batton Kaput said...

Augie,

What great points! Thank you kindly for taking the time out to answer my question.

Joseph Solo said...

Great read! Regarding wearable technology a few changes come to my mind.
1. The ability and endless need for people to share will exponentially expand. The first thing people now do is pull out their phone and post to social media sites when something happens and sharing of experiences and product discussion will increase.
2. While I love Google I am concerned about one companies ability to influence perception of a variety of products. A scan of what a brand view of a product is might at some point be contaminated by the story teller. I have counter points to this in my own mind but nevertheless.
3. Advertising on on-eye devices like this. We talk about how the phone is with us everywhere we go now...well this opportunity for marketers could really create an intrusive experience.
4. The adoption of these technologies into not just GG but other devices across the consumer space that would radically change how we interact with brands and our environment. Pollen trackers (something used heavily in my family), weather/traffic reports, crime statistics etc.. all could have some interesting impacts on society.

Joseph

Augie Ray said...

Thanks, Joseph. All great points.

I particular like your point about one company--Google--influencing perception. I think, perhaps, that is where social comes into the picture, though. I don't think anyone wants ONLY Google's OS with Google apps and Google data showing Google ads. Just as we've turned away from AOL and CNN to embrace the way information comes to us through social channels, I see the same thing happening on Google Glass and other wearable tech.

In the end, if Google controls the interface too much and doesn't allow access to the trusted friend data that comes via Twitter, Facebook, etc., then consumers will turn to a competitive product that is more open. (Ironically, in some respects this is what is happening on mobile OSs--some folks prefer the openness of Google Android to Apple's relatively closed platform.)

Thanks for the input, Joseph!