The global downturn is taking many business casualties with it, but the strength of brands remains robust. Ken Roman, formerly of advertising firm Ogilvy & Mather Worldwide, explains the value of keeping a brand strong.
Even in the midst of an economic downturn we can see evidence of the surprising strength of brands, such as Bank of America’s acquisition of Merrill Lynch. Bank of America CEO Ken Lewis believes that the investment has long-term value. "That brand has a lot of value," he said. Citigroup is another example. As its CEO tries to juggle parts of this unwieldy financial monster, one part has been repeatedly cited as a crown jewel, to be parted with only reluctantly: Smith Barney.
When all the stupefying financial losses have been counted and all the banks and companies bailed out of trouble and toxic assets cleaned out, it is clear that an intangible – a brand – has enduring value.
The absence of strong brands is yet another problem facing the US city of Detroit. By producing cars without distinguishing characteristics, promoting them on the basis of technical features not understood by most consumers, and quacking on about leasing and financing deals, the city’s ‘Big Three’ auto manufacturers have diminished their historic brands without creating strong alternatives.
Building the brand
Brands are built by consistent advertising over a long period of time. The concept of brand image was first trumpeted by David Ogilvy. In a speech to the American Association of Advertising Agencies in 1995, he said: "Every advertisement is part of the long-term investment in personality of the brand."
He confessed that he did not invent the concept, and admitted he "pinched" it from an academic article in the Harvard Business Review. By putting a spotlight on it, however, he became known as the ‘apostle of the brand image’.
When Merrill Lynch came to Ogilvy’s agency, the finance firm was a Wall Street leader, although it lacked a distinguishing image. One campaign, ‘Merrill Lynch is Bullish on America,’ was so powerful that the firm adopted the bull as its logotype. When Smith Barney came to Ogilvy’s agency, it was a small brokerage house with a classy reputation but a low profile. Its reputation for outstanding research became the basis of a campaign in which actor John Houseman gruffly announced: "We make money the old-fashioned way. We earn it." That campaign created a brand that made a small brokerage house a swing factor in the future of the largest financial institution on Wall Street.
Ogilvy did not personally write either of those campaigns, but he established the principle on which they were built: the value of a brand.
Brands have tangible value, even in tough economic times. But brands can be weakened as well as built. They are not forever, and must be nurtured. There is an understandable temptation to take short-term actions – reducing product quality, cutting back on advertising and marketing, adding line extensions that dilute the essence of the brand – to reduce losses and make budgets.
There are far better ways to economise and deal with the financial realities, such as shorter message lengths on television, or less glitzy production standards. Not every product is a soft drink. Moving funds into measurable media such as direct marketing and digital media is also an option as is inventive media, such as TV monitors used in stores, and even some New York taxis now carry programming, with advertising, in the back seats.
It is also tempting to squeeze agencies on how much they get paid. Just remember that agencies produce the one thing nobody else can do as well: ideas. Cutting costs is a given, but few businesses have been built just on this platform. Innovation and differentiation are the pillars on which businesses are built.
The economic meltdown will pass. When the dust clears there will be a few companies that remain standing and ready to grow. Smith Barney will not bail out Citigroup, but it is one of the rocks on which a new company will be built. Merrill Lynch is not going to resolve its problems soon, but its strong brand will be part of Bank of America’s future growth.
The most famous advertising man in the world, Ogilvy became something of a brand himself. He would be astonished at current events, but gratified his prediction of more than 50 years ago is still relevant.
The King of Madison Avenue: David Ogilvy and the Making of Modern Advertising, £15.99, is available from Palgrave Macmillan.
