Interview by: Debbie Hepton
John Gerzema is Chief Insights Officer at Young & Rubicam Group.
One of the earliest founders of account planning in American advertising agencies, John has guided brand strategies for blue chip clients, winning International strategic and creative recognition.
Previously, John ran Fallon's international network and has worked all over the world, starting agencies and managing brands in places like Tokyo, Singapore, Hong Kong, Shanghai and Sao Paulo. He holds a master’s degree in integrated marketing from the Medill School of Journalism at Northwestern University and a B.S. in marketing from The Ohio State University.
The Brand Bubble is published by Jossey-Bass, a Wiley Imprint and named #3 by Amazon as “Best Business Books of 2008.” More details at www.thebrandbubble.com.
DH: Hello, and welcome!
John Gerzema:
Thanks Debbie.
You are the co-writer of the recently published The Brand Bubble. What was the inspiration behind this book?
John Gerzema:
We found a pattern of decline in the levels of awareness, trust, esteem and loyalty in thousands of brands that the markets assumed were growing. We were curious because this erosion was occurring at the same time as the rise of social media, fragmentation and digital-enabled consumerism. We wondered if this was a coincidence, or a canary in the coalmine? Cue the singing bird…
DH: Can you explain exactly what you mean by “the brand bubble”?
John Gerzema:
The brand bubble represents the growing disparity in the value that business and consumers apportion to brands. The markets think brands are worth more than the consumers who buy them.
Brand value is now 30 per cent of the operating value of companies in the S&P 500. This figure has grown by 80 per cent in less than a generation. The 250 most valuable global brands are worth $2.197 trillion dollars, which collectively exceeds the GDP of France. So if you think of brands like a sector, they’re both powerful and in trouble.
DH: In the book you talk about Energized Differentiation. What do you mean by this?
John Gerzema:
We found consumers were captivated by some brands because they weren’t just different – they kept being different. This consumer perception of meaning, motion, and direction is what we call energized differentiation. Energy itself is new and plays a significant new role in enhancing brand differentiation. It has three components:
- Vision – The brand’s purpose and aspirations, often originating from its leadership, convictions and reputation of the company behind the brand.
- Invention – The most tangible dimension, demonstrating the brand’s vision through product/service innovation, design, content and other tactile brand experiences.
- Dynamism – How the brand expresses its vision in a dynamic way in the marketplace to create persona, emotion, advocacy and evangelism through its marketing and other forms of conversations with consumers.
When a brand builds energized differentiation, it improves its loyalty and pricing power. And vision, invention and dynamism, the building blocks of energy are essentially the consumer’s mandate for integrated marketing. They see brands holistically, and we should too.
DH: The Brand Bubble details a five-stage model highlighting key points to ensure sustainable, profitable performance. Can you elaborate on one or two of these stages?
John Gerzema:
In the book we walk the reader through a five-stage model to drive the brand through their organization and to collaborate from the standpoint of what the consumer wants and needs. Since marketing is often narrowly applied in many companies (e.g. communications), this process involves the entire enterprise to align the brand strategy with the business strategy. Every department and division through value chain plays a role in igniting the energy of the brand, by contributing creativity and ideas that lead the brand forward. The entire company has to become marketing-led, not just a company with a marketing department.
“Many brands will become commoditized, replaced by new brands or ‘Lazarus’ brands like Adidas, Puma, LaCoste or Marks & Spencer.”
Then there are five “Laws of Energy” that help enterprises re-examine how they approach and implement their creativity, their messaging, their flexibility and ability to evolve their brand, their approach to marketing, and their use of strategies and tactics. They force difficult managerial decisions and keep the consumer and the brand at the forefront of all business decision making, from R&D to finance. The argument we’re making is that the best CEO’s think like CMO’s and the best-managed brands have people who think like brand managers across all functions and lines of business. Together they can amplify marketing’s role and organize deeper more enriching brand experiences that consumers are now demanding.
DH: BrandAsset® Valuator (BAV) is a research tool that Y&R has maintained for more than fifteen years. Can you provide us with a little background to this tool?
John Gerzema:
BrandAsset Valuatorâ is considered the world’s largest global database on brands, and because of its scale and longevity, it is recognized as a reliable diagnostic tool for understanding how successful brands are built. Each year we interview almost 500,000 customers in 44 countries across 40,000 brands on more than 70 brand metrics. We conduct surveys in more than forty languages. From Arabic to Zulu, we ask consumers how they feel about local, regional, and multinational brands, media, and celebrities.
We’ve invested almost $115 million dollars in our study and our data tracks back to 1993. And we have opened up our database for the first time for anyone to use. Go to thebrandbubble.com/explore and conduct your own brand research. Or try the tool on Facebook by searching for “The Brand Bubble.”
DH: You say that today’s consumers are voracious planners. A craze which is equally characteristic of Baby Boomers, Gen Xers and Millennials. What characteristics do you see for future consumers?
John Gerzema:
In our research, we noticed behavioural patterns indicating that consumers are acting towards brands like investors in companies. Consumers hold both a short-term and long-term horizon, imagining future utility in a brand, while demanding instant gratification. This is similar to how an investor seeks both growth and dividends in a stock. And like investors, consumers demand brand transparency and a more direct participatory relationship. And they have unprecedented power to make or break a brand. This is especially true of Millennials, who actively blog, vlog, mash up, twitter and epinion a brand to criticism or acclaim.
“With commoditization a reality of every day life, only the brands that are continuously creative will attract and hold our attention, and our affection.”
By thinking of consumers as investors, we can urge others in the company to see their customer through a lens that’s familiar, the shareholder. And brand management can begin to act like a company under Sarbanes Oxley because brands have nowhere to hide.
DH: To quote your book: “the more salient distinction about today’s ConsumerLand is that the nature of change itself has changed.” Can you explain what you mean by this?
John Gerzema:
ConsumerLand describes a broadband-enabled world of limitless consumer potential and endless control over brands. I believe the nature and pace of change is different because of our Moore’s Law-like consumerist expectations for innovation and progress. Consumers are much quicker to punish uninterested brands and therefore brand equity decays at an accelerated rate. Just consider in the span of three years consumers now trust each other more than they trust brands. Media Edge/CIA found that 76 per cent of people rely on what others say versus 15 per cent on advertising. Today, 92 per cent of consumers now cite word of mouth as the best source for product and brand information. No wonder reviews sites, such as Digg and Reddit, have become the third-most-common use of the Internet after e-mail and search. Everything is moving faster except brand management.
DH: In what ways can an organization monitor and evaluate the progress of its brand?
John Gerzema:
In today’s world, brands are verbs. Yet too often we manage a brand for what it is today, rather than what it could be tomorrow. An open, forward looking expansive vision of a brand’s potential is essential to leading and inspiring consumers and orchestrating the best efforts of the company. This type of thinking is found in high-energy brands. They hate complacency and they never sit still. Many brands will become commoditized, replaced by new brands or “Lazarus” brands like Adidas, Puma, LaCoste or Marks & Spencer.
Therefore the economic value of brands must be front and centre, not using input metrics or things that look backward, but providing metrics that demonstrate a brand’s future potential. This is what energized differentiation is all about. And instead of a “nice to have”, creativity will be a “must have” competitive advantage for business. With commoditization a reality of every day life, only the brands that are continuously creative will attract and hold our attention, and our affection.
DH: Personally speaking, which brands do you most admire, and why?
John Gerzema:
I admire Zappos for its relentless focus on customer service. I love Virgin Atlantic for its mastery over the brand experience. I applaud Starbuck’s for having a cultural conversation about its own health. I think Xerox has one of the coolest and most collaborate corporate cultures. And I salute brands like Geico, Axe, Subway and Method for branding desire in commoditized categories. All of them remind us that brands have never been more important, yet there are too few important brands.
DH: To end, do you have any plans to write another book in the near future?
John Gerzema:
I’m very interested in how brands will emerge from this recession and what can be applied to future economic downturns. I’m spending a fair bit of time in India and amazed by business there and the rise of brands like Tata Motors, Titan and Kingfisher. And with the speed of technology, I believe we’ve only seen the beginning of the brand bubble.
December 2008.