For decades, brand was everything in the world of consumer goods. To tempt you into buying their products, companies would invest hundreds of millions in advertising campaigns to make their brands recognizable, distinctive and desirable.
But the world is changing fast. In the last few years, consumers have been moving toward the Internet of Things and connected services that make their lives easier. If you need more washing powder, the thinking goes, you won’t need to go to a store to buy some. Neither will you need to make a choice between the many colorful brands vying for your attention on the shelf. Instead, a sensor in your home will recognize when you are running low and automatically send a replacement package — along with a bundle of other required items, as specified in advance to the service operator — to your address.
This is happening as once-closed networks start talking to each other and as a growing number of “things” become digitized. And the more it happens, the more the traditional company brand will become invisible in our lives. Simply, you won’t look for the detergent logo you trust because the service you signed up to will choose the product for you, based on your preferences and budget.
So traditional branding will lose its saliency in the public imagination. And, as that happens — and as consumer goods companies change their approach to suit the new world — you can expect to see a new wave of connected services coming on stream. We call these services “living services” because they respond intelligently depending on where you are and what you are doing.
Nespresso Prodigio is a good example of a living service. It tells you when you are running out of coffee pods and when it’s time to descale the machine. But then it goes one step further and allows you to instruct your machine to start brewing a cup of coffee when you are nearby. Then, there is Google Maps, which knows where you are and can give you relevant information about where you are going and what you can do when you get there.
To some extent, big brands will develop new living services because they don’t have any other way to reach you. Traditional big brand advertising just doesn’t have the same reach anymore. Not only are brands less visible to consumers day to day — as outlined above — but people are more easily distracted from traditional forms of broadcast and print media.
Take smartphones. It’s extremely difficult to claim the attention of an audience with a 30-second TV commercial when they are constantly glancing away to check their Instagram and Snapchat. This is why many companies are ramping up their investment in mobile advertising — latest forecasts expect mobile to become the second-largest ad channel after TV by 2018 — but will it be enough to ensure relevance?
If they want to really engage with their consumers, brands will have to work harder, and one way to do so will be to create services that make a positive contribution to people’s lives. In practice, brands need to be prepared to “atomize” themselves by becoming just one small part of a bundle of services that consumers bring together on their phone. It’s a massive change from the big-brand campaign approach of the past.
It's worth noting that consumers are ready for this. Research suggests that younger adults – Millennials – are more open to digital technology influencing their lives than are Generation X and Baby Boomers. If an app knows where they are and provides advice, based on personal data, then Millennials tend to find this cool rather than creepy. Familiarity with Spotify recommending what to listen to, and Uber using GPS to send the nearest cab, makes younger people much more receptive to advanced connected services.
There are also clear signs that consumer goods companies are ready for living services, too. At the recent Consumer Goods Forum in Cape Town, senior executives talked about the future of services. Another indicator is companies’ growing focus on selling their products directly to the consumer online, rather than through retailers. Recent data suggests many brands now make 10% of sales direct to consumer, and are gathering the data they need to develop services as a result.
Could you expect to walk through Times Square or Piccadilly Circus in the near future and see empty, logo-free billboards? It’s unlikely. Global business marketing strategies, not to mention consumer behavior, won’t change overnight. But, we are seeing a fundamental and irreversible shift in how companies are managing their brands — away from campaign thinking and toward meaningful, long-term engagement — and digital technology is the driving force behind this.