An IPA essay, challenging the doctrines of advertising.
Every so often, you encounter an idea or an argument that profoundly changes the way you think.
He’s my TL;DR summary of Charlie Ebdy’s “The Hare and The Tortoise“, an essay that
inverts established doctrines in advertising, and shows how the things we think of as “brands” should still be in flux, even in the twenty-first century.
The vast majority of contemporary thinking around brands is based on the same 6 principles:
- Brands exist to grow long-term margins.
- Brands are the product of consistent behaviour.
- Brands are built around emotional appeal.
- Distinctive assets (i.e. Logos, imagery) reinforce this emotional appeal.
- Big brands should appeal to the broadest possible customer base.
- Heavy support – advertising and investment – is required to make this all work.
Instead, Charlie suggests that new brands should emulate the Hare first, and the Tortoise second. Hares follow these six principles:
- Short term recruitment of sales and customers to generate scale, fast.
- Impatient behaviour: “quickly identifying barriers to growth and iterating around them”, even if that means junking your name or logo.
- A focus on product experience to create love of a brand, which is then reinforced through advertising. (“A brand is just perception; perception will meet reality over time” Elon Musk).
- “Creating and embedding technology-backed proprietary assets into the brand” (see Peter Thiel, One to Zero).
- Small brands start with a sector focus, where they can establish a monopoly to demonstrate proof of concept. “Breadth is the ambition, not the tactic.”
- Eventual (paid media) support.
As Charlie puts it, “the brands that win today are the brands that POSTPONE paid media investment until they have wrung as much benefit as possible from owned and earned channels, and using the time instead to perfect their product experience.”
- 90% of brands fail in their first year of existence (marketing malpractice link)
- Existing beliefs and approaches to growing margins through branding are based on existing winners (the incumbents). They shouldn’t be applied to new companies wishing to grow.
- The average age of companies whose papers are winners of marketing effectiveness awards is 85. These brands were established in a different era, prior to the networked age we live in now.
- Corporate advantage is more transient, meaning today’s companies need to focus on generating monopoly status quickly (Peter Thiel)
Success of the Hare approach
Instead of stock-market beating companies the paper looks at the behaviours of pre-IPO companies currently worth more than $3 billion.
Startup growth and marketing strategies make up the majority of the examples included – showing at the least that this approach works in some instances.
Conclusion and implications
1. Brands are evolving, taking on source-code and technology attributes. While this won’t be relevant to all brands it does show that there is more than one approach to brand building, or even multiple types of brand.
2. Universal tactics apply to brands at any stage: long-term purpose, a focus on innovation, maximising distribution / sales opportunities and (of course) performance measurement by finding and using data more quickly.
3. Managing the switch from fast to slow. Charlie suggests once a narrow monopoly has been established within an initial sector; but looking at tech giants like Google and Facebook this happened much later. Either way, mass-advertising is inevitable as a way to maintain a monopoly / large market share.
4. Sales and customer acquisition. What stands out is that neither of these depend on mass advertising (Charlie even argues that they might be bankrupting small brands). Instagram and Snapchat’s growth came about more through the network effect (link) than as the result of marketing. OpenTable’s success came about through hard-won sales, city by city across the US until they’d established their network.
Lesson: advertising favours the incumbents; startups find their own path to growth