Why tech disruptors ultimately have to invest in branding
While growth hackers might be great at immediate returns, they often lack the most important skill all marketers must master: the ability to create strong brands, writes Moensie Rossier.
In the growth stakes, tech disruptors or ‘growth hackers’ have left many brands for dust. While globally, BrandZ data indicates fewer than one in 10 brands grew between 2014 and 2017, many tech-based start-ups have successfully hacked their way to growth; often without a traditional marketing department or spend, let alone a brand.
Characterised by a ruthless focus on driving fast and efficient user and revenue growth, employing experimentation and prototyping to maximise clicks and conversion with minimal expenditure, growth hacking has been hailed as a paradigm shift – throwing away the old rules of marketing and heralding a new era of vastly improved, instant ROI. Disparaging of vague notions like branding and mind share, growth hackers have been quick to sound the death knell for brands.
But, before succumbing to the prophets of doom, let’s take a closer look at the progress of tech disruptors.
What happens when growth hackers grow up?
In the past few years, a number of the hacker generation have invested considerably in brand and ‘traditional’ marketing. For example, Google Alphabet’s ad spend rose from US$3 billion in 2014 to $5.1 billion in 2017. It seems that, at a certain point in their life cycle, growth hackers arrive at an ‘aha’ moment that brands are now critical to growth. There are three main triggers for this.
Reputation or perception issues may necessitate investing in brand and even crisis management. In the wake of the Cambridge Analytica scandal, Facebook ran a prolonged ‘Here Together’ public relations and advertising campaign to rebuild trust, by educating users about the platform and reassuring them that fake news is not their friend.
Uber has also had a run of bad publicity lately – exposing a ‘toxic’ company culture and raising questions about safety. Ideally, companies would begin brand building prior to this point, as a consistent, authentic brand is as much about prevention of reputation problems as cure.
Another call for brand investment is when the competitive environment becomes awash with copycat brands marketing aggressively. At this point it becomes harder to sustain a price premium. Take Expedia for instance, which rose above the competition with the promise ‘Travel Yourself Interesting,’ and successfully combatted price erosion. Airbnb, too, adopted the long-term organising idea ‘Belong Anywhere,’ which gave them a unique voice on big cultural issues.
A third trigger prompting tech companies to evolve to brands is research indicating customer confusion about what the company stands for and why they should choose them. Tech disruptors often stress the functional superiority of their products and underplay the importance of meaning in their quest for growth. This may have contributed to Shoes of Prey’s recent troubles. While it drove relevance and conversation, successfully tapping into a mass customisation trend, the brand story was ultimately quite functional.
Growth hacking can take you far, but it only gets you so far. As emerging categories come of age, a distinctive brand may be the biggest and most important growth hack there is. The trick is not to leave it too late.
So why the resistance to invest in brand?
The meeting of growth hacking and brand is not exactly a meeting of minds because they come from very different places ideologically. It’s more like the collision of an immovable object and an unstoppable force.
Let’s drop into a typical conversation between a growth hacker (GH) and an agency (A)…
GH: “We’re facing aggressive competition. Research shows customers don’t know what we stand for. We believe we need a brand.”
A: “That’s great. Can you give us an idea of the level of investment?”
GH: “Next to nothing. We’re growth hackers.”
A: “But your biggest competitor’s share of voice across paid, owned and earned is at least twenty times yours.”
GH: “You know we operate lean. Only when we’ve conducted a test to prove efficient conversion can we increase the investment. And we need to prove immediate ROI.”
A: “But brand effects are seen in the longer-term – about six months. And with negligible share of voice we’re set up to fail.”
GH: “No way can we wait six months to prove ROI. Our business was built on near-exponential ‘hockey stick’ growth.”
The conversation quickly begins to sound like a Marx Brothers comedy sketch. But, you can overcome this impasse with the following three steps.
Build competitive advantage with a unique brand.
The brand is the one thing a business uniquely owns. As categories mature, it may be the only competitive advantage. To turn the brand into a growth hack, don’t create a flaky ‘brand onion’ that sits in the marketing department, but rather operationalise the brand as a strategic filter for all business decisions.
Conduct a contained test
Knowing that growth hacking is all about test-and-learn with minimal expenditure until the effect is proven, conduct a contained test – e.g. in a specific geographical area, where you can have a much greater impact and share of voice. This will help the brand effect to be seen earlier, particularly if brand communication is combined with strong conversion.
Think ‘Bretail’
Bearing in mind that growth hacking seeks short-term ROI, instead of adopting a pure brand approach, adopt a ‘bretail’ approach, to drive sales conversion in the short-term while simultaneously building the brand. Kmart, for example, has done this brilliantly and consistently – and is a poster child for growth over many years.
So what?
Growth hackers understand the need to focus on sustained growth, while brands understand the importance of empathy and meaning. As markets mature, it’s time to unite the two. It may still be a bumpy ride, but growth hacking and brand can get along. They may not be ready for ‘happily ever after’, but they’re overdue for a Tinder date.
Moensie Rossier is head of Modern Masterbrand at BWM Dentsu and Haystac.
Great article. This has been a major problem in Australia as long as I’ve been online … 2001. In particular the use of brandable Premium Domain Names should be the first issue addressed!
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