Is brand based advantage eroding as Umair Haque argues in a post entitled The Shrinking Advantage of Brands?
Umair points to Millward Brown's report about the top 100 most powerful brands in which the number one brand is Google as evidence that there is a shrinking advantage of brands.
I strongly disagree with the point Umair makes in the title to his post. Brands are just as important as ever. Just ask Ask or Yahoo? Would they like to be at the top of that list. You bet.
However, when I read the post I agree with the body of the argument he is making. If you substitute the word advertising for the word brand the argument makes sense. There is a shrinking advantage to advertising and advertising scale.
Because every other player in the top ten has spent decades - if not literally centuries, as for P&G and Coke - investing billions in advertising to build a brand.
But where these players invest on the order of 5-10% of revenues on advertising, Google's advertising expenditure is almost exactly zero.
Stop and think about that for a second: the top brand in the world belongs to a player that...uhhh...doesn't advertise.
The social web is way more powerful than traditional advertising based brand building efforts.
Communities have always been central to building brands as positive word of mouth has always been much more powerful than advertising in building brand strength and value. When our friends speak, we listen.
Google's brand has been built without any paid advertising. It has been built by the world's biggest community - the social web.
We've gone from people telling their physical communities about good stuff to global web based communities where strong positive word of mouth spreads virally across the globe at zero cost.
Brands that don't understand the power of the social web will shrink in advantage, those that do can build even stronger brands and more value.
Technorati Tags: social web, advertising, brand building, competitive advantage
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