Here’s what they found: Wall Street has been bidding up the value of brands to such an extent that “brands account for approximately 30% of the market capitalization of the S&P 500” and “have doubled in their contribution to shareholder value over the last 30 years.” The problem, as the authors explain, is that while Wall Street has been bidding brands up, consumers have been bidding them down. The public’s faith in most brands has been eroded by decades of over-the-top ad claims and the fact that the shelves are overcrowded with undifferentiated products. Kudos to Gerzema and Lebar for also making the link between the accelerating decline in brand credibility and the mass adoption of the Internet, which, in effect, open sourced people’s ability to research brands and communicate about them.
Among the loads of evidence The Brand Bubble presents to substantiate consumers’ lack of interest is data from Forrester Research Inc. revealing that the percentage of people who say they “buy products because of their ads” fell from 29 percent to 13 percent in the four-year period between 2002 and 2006, and the percentage of those who agreed with the phrase “companies generally tell the truth in ads” declined from 13 percent to 6 percent at the same time — and those figures came after decades of slower erosion in the power of brands.
It wasn’t only the authors’ command of the facts that struck me when reading The Brand Bubble. It was a gut reaction that Gerzema and Lebar, having examined all the many facts at their disposal, have articulated something profound about the sorry state of brand equity. Decades ago, as they put it, “simple awareness was enough to create product differentiation, especially when brands were small and regional.” Now, “barring meaningful distinction, brands enter into a transactional relationship with consumers, letting price dictate the purchase decision.” As brand equity erodes, the specter of commoditization rises.
Just as insightful is their discussion of why certain brands continue to resonate with consumers. What is it about Apple, Nike, Virgin, Whole Foods, and Google? They’ve all achieved “energized differentiation,” according to the authors. These brands don’t rest on their laurels, they are continually looking forward and staying in motion:
We used to think of positioning as a hole in the ground in which to plant a brand. Water it with repetitive messages and GRPs [gross rating points] until it bears the fruit of brand equity. But the marketplace is in constant motion. Competitors, consumers and culture are constantly reordering brand meaning…. It’s no longer effective to stake a claim to a perpetual territory and defend it through repetition. Instead, the best way for a brand to own a position is to be constantly dynamic with it.
Eureka! The power of Apple’s iPod isn’t in the core invention, but in how the brand is constantly evolving. And the decades-old skin-care brand Dove is still relevant because it “elevated itself from a memorable product attribute focus (‘one-quarter cleansing cream’) to engaging in a cultural conversation with consumers (reframing social perceptions of beauty).”
Fortunately, the book spends much more time on how to capture energized differentiation — starting with an energy audit to assess a brand’s current position — than it does on explaining why the brand bubble exists in the first place. Although much of it is too detailed to describe here, the book’s advice for reenergizing moribund brands is as well reasoned as its big ideas. (Also see Gerzema and Lebar’s “The Trouble with Brands,” s+b, Summer 2009.)
Finally, in a move that Chris Anderson would applaud, the authors invite marketers to go to www.thebrandbubble.com as a starting point for conducting their own energy audits. Even though the process does require registrants to give up “basic information” to receive a password, the authors promise they won’t follow up. (But if you want to get in touch “for a personal discussion of your brand,” they won’t object.)