The rise and fall of parasite brands

This piece first appeared in Contagious.

There are two ways brands can be created – by giving or taking.

Most people imagine the giving kind; where the business wants to offer something new to the world, or make something better. They see a need that isn’t being met, and serve it, leaving the world richer for their presence. Without them, something would be lacking.

This might be the stereotype, but it is by no means the norm. Far more common are businesses built through the taking paradigm. In this model, the founders observe an emerging trend or growing category, and decide to grab a piece of the pie. Cider consumption is growing? Then we’ll make a cider too. People love gourmet burgers? Let’s add that to our portfolio. This parasitic approach works by diluting the market that giving brands created, sucking it dry before moving onto the next thing.

Superficially you might look at those two models and assume that, whilst it’s more difficult, the giving approach is more effective. However, you’d be wrong. Being a parasite works. All the world’s most powerful groups, from Unilever to InBev to P&G, use this as their primary new product development strategy. They wait until there’s momentum in a particular space, and then step in using their huge marketing budgets and superior retailer clout to blow the original innovators out of the water. Sometimes the big brand groups may just buy up the smaller giving brands, but this can be even worse, as the groups then lock the pioneers into particular commercial roles that shift their focus away from consumers and innovation.

Either way, the moneyed parasites suppress creativity and slow the development of markets, leaving the wider world poorer for it.

But things might be changing.

A study last year uncovered something rather surprising. Of the 100 biggest advertisers in FMCG in the United States, 90% of them lost market share in 2015. The same was true for four of the five biggest advertisers in automotive. Assuming this trend more or less held across all categories, we are faced with the intriguing paradox that advertising spend appears to lose market share.

How can this be?

We can rule out the idea that advertising is damaging in and of itself. If you can afford it, go for it. The more people who know about you the better. We need to look one layer deeper than that, at the type of brand that leans on advertising as a marketing strategy, and thus occupies those big-spending spaces.

What we find there are parasitic brands; brands offering generic products that face huge amounts of competition, and thus have to strain for raw brand awareness just to keep their heads above water. The approach that papered over the flaws of their substandard businesses for the last 50-years is beginning to crack.

The reason, as ever, is the internet. The sheer volume of sources through which we learn about brands has exploded since advertising’s heyday, and this means that controlling the paid-media airwaves buys you a much smaller share of voice than ever before. This has allowed more niche, creative, giving brands to gain traction without big budgets. That’s where the market share is going – not to a major competitor the way it might have in the past; instead it’s dissolving across dozens of micro-competitors, with each catering to specific pockets of consumers in interesting ways.

So how can we use these trends to our advantage, even big brands?

The crucial skill is controlling the content of independent media. Think about it: every day brands are discussed, but in the vast majority of cases the brand in question is not a participant. So you have to ask whether these discussions are serving a marketing purpose. When a random bloke on the street mentions your brand to his mate, is he communicating your message? If the answer is ‘yes’, you start to wriggle out of the bondage of advertising spend.

The secret is simple. Your business must be its own ad. All the ingredients that make a great campaign, implant them into your business.

First, you need a clear message. Something as pure as Red Bull’s ‘Wings’, or Patagonia’s ‘cause no unnecessary harm’, or Airbnb’s ‘Belong Anywhere’. Most brands don’t have this, instead, flitting from one thing to another with each budget cycle.

Then you need a piece of creative to deliver it. But the canvas for that creative must be the fabric of the company, not a piece of media. Think about the free lifetime repairs of Patagonia, or the diverse techniques Airbnb uses to help people get under the skin of a place. Build these things with clarity, creativity and utility, and your message will shine perpetually.

It’s more or less impossible to talk about these brands reinforcing their messages, because they’re so intertwined with the company. For traditional brands – Coke, Tesco, Ford, et al – the same thing isn’t true because they only apply this thinking to their ads, leaving their most important marketing asset – the business itself – muddled and generic.

The marketing battlefield of the future isn’t media, it’s business operations. Do this well, and you can’t help but be giving.

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