In my earlier articles from the ‘Brands in the Boardroom’ series, I advocated that within the higher layers of organizations, more attention should be paid to the business, financial, and organizational sides of brand management. In my first article, I’ve shared some tips on how brand managers can be heard in the boardroom, by focussing more on the ‘logic’ of branding instead of only the ‘magic’ (creative) behind the brand. For boards to make decisions on what, where, and how much to invest in the brand, it is key to understand the financial engineering around brands – which I talked about in my second article. In the third article in the series, I’ve shared my vision for the future of communications and branding. In this fourth one, I’ll now dive deeper into why now is the time to unify brand architecture and operations.
With intangible assets such as brand making up almost 20%* of the market capitalization of the largest companies in the world, the smartest players understand that long-term growth will be underpinned by how well an organization’s brands (or brand) are leveraged to deliver strategic outcomes. That’s why brand unification is a subject that is top-of-mind for most leading brands in the world today.
*Brand Finance (2018)
What I mean by brand unification
Brand unification means moving more and more to a one-brand strategy (branded house) or bringing more alignment to your brand portfolio. It is a way of streamlining and simplifying brand operations, making the organization of your brand more efficient, effective, and transparent, and helping to reduce operational expenditure, and improve internal processes and overall brand performance. It enables organizations to hit a new level of speed and scale for all sorts of brand efforts, essential to improving competitiveness and agility.
I appreciate that there will be organizations for whom unification doesn’t work – the strategy, market, or business model may not allow it. However, now is the time to more seriously consider what unification could mean for your organization. Covid-19 clearly demonstrates that the challenges facing brands will become ever more complex, pulling into focus the value that unification could potentially offer.
Is unification of brand architecture always a good idea?
No, definitely not. There can be all sorts of reasons why not, but roughly speaking there are two main categories of considerations:
1. From a perspective of market segmentation and potential, brands with unique differentiation can communicate much more clear and direct with their key audience, resulting in higher engagement and conversion. If this translates to higher margins, one should be careful in considering unifying such a brand to fit one’s brand architecture.
2. From a perspective of risk management, if products or services within a brand architecture speak to different categories, unification should be carefully considered. We’ve seen this various times when product recalls from a company were associated with other divisions of the same company, negatively impacting their reputation.
How increased transparency is influencing the quest for unification
Clearly visible is the increased transparency that’s been driven by more digitalization, and a societal, customer-driven quest for more understanding on who is behind a brand. This becomes very clear when one looks at the tremendous rise of the relevance of non-financial performance reporting, currently laid out in many ESG-regulations (Environmental, Societal, and Governmental). Although it’s not yet clear which reporting-framework will prevail here, this development implies that it will become increasingly difficult to keep brands separate, as people demand more transparency from organizations and have more powerful (digital) tools to help them investigate potential connections.
It’s about more than products and services
Traditionally, we’ve seen brand unification in sectors where organizations have wanted to demonstrate their global presence. We’ve seen this trend for example in the telco, banking, and logistics sectors (companies like HSBC, ING, Vodafone, Deutsche Telekom, FedEx). In the tech sector, we also see this amongst the Big Four (Apple, Amazon, Google, and Microsoft), as they work on simplifying their brand architecture, driven by the need to communicate understandably. And, in the case of Facebook, perhaps the desire to create the impression of an organization so intertwined, that it would be difficult to break up?
In terms of employer branding, there is a big positive in brand unification, as most employees are already part of the bigger ecosystem behind a portfolio of products and services, and are also increasingly communicating their opinions on social media, which increases complexity and confusion if not well aligned through brand unification.
Doing more with less
Every separate brand requires its own marketing budget and allocated resources – i.e., marketing and communication teams, so a big driver for simplification comes from the decision-makers in organizations – fewer brands means less expenditure, or more money available to concentrate on the same (coordinated) brand effort. Also, if you approach this from an organizational perspective – to manage touchpoints and channels along the customer journeys of the brands within their portfolio, companies will likely have a set of tools that can become much more effective (not to mention cheaper!) once they get more rationalized and focused.
Unification creates value at almost all levels, and given the number of organizations that have already embarked on this process, it seems that the business community agrees. Fundamentally, unification promotes harmonization of the experiences brands deliver for stakeholders, including customers. This combined coherency of brand experience enables organizations to create deeper, more powerful connections, translating into brand loyalty and advocacy. Unification, and simplification, are therefore important mechanisms to reduce operational expenditure, streamline internal processes, and improve overall brand performance – highly desirable outcomes for leadership teams.
Cover image source: Casey Horner