Tom Doctoroff on Marketing in the Digital Era
Tom Doctoroff, CEO, J. Walter Thompson Asia Pacific, on why marketers need to embrace the digital era without forgetting the fundamentals of traditional branding and marketing
The explosion of digital platforms is causing many marketers to rethink how they engage with consumers. But, as Tom Doctoroff, the Shanghai-based CEO of J. Walter Thompson Asia Pacific, points out, sometimes in their hurry to embrace the digital world, companies often lose their way and forget the basic principles of good marketing and branding. “We furtively deploy the latest or hottest digital innovation without fully considering the basics of brand strategy or message consistency. Consumers end up more confused and less loyal,” he writes in his latest book Twitter is Not a Strategy: Remastering the Art of Brand Marketing.
What Doctoroff is proposing is a strategy combining the best of both worlds: the ‘new’ of digital marketing with the tried and tested fundamentals of traditional branding.
In this wide ranging interview, Doctoroff talks about that as well as other issues that keep marketers and brand owners awake at night.
Q. In the late 1990s Hal Varian and Carl Shapiro said that the power of big brands would shrink due to better access to information. In recent times in a book titled Absolute Value, Itamar Simonson and Emanuel Rosen argue that brands are needed less when consumers can access information through reviews and expert opinions. To what extent do you think that traditional branding, as we know it, is on the decline?
A. If you measure it in terms of percentage of media spend, clearly digital is widening and traditional is declining. The crux of [my] book is the alignment between the new and the so-called traditional. If you take a look at traditional as media channels, then of course, it is going to be declining as the role of data increases. That decline could be inexorable, though it probably won’t go beneath a certain asymptotic plain. On the other hand, if you take a look at traditional branding as message clarity, as positioning, as the role of brands in life, and as the need for a compelling proposition and brand idea that forges order across different channels conceptually and executionally, then this is more important now than ever before as different engagement platforms proliferate.
If you define traditional branding as mass media, it’s gonna be less important now than before, and it’s declining in importance. But if you define traditional advertising as the conceptual craftsmanship that we have traditionally associated with building marketing propositions and enduring brand relationships with consumers, that’s more important now than ever before. The role of a brand is for loyalty. Loyalty allows you to charge a higher price. With so many options that consumers have access to and the transparency of prices, the ability to charge a price premium is more important than ever before. Both in terms of confusion elimination or minimization and also the loyalty question in an era of proliferating branded and cheap alternatives, branding—traditional brand building if you want to call it that—becomes more important than ever before.
Q. We sometimes find that consumers are less loyal to brands. Where do you think this will leave the idea of branding?
A. That is the $64,000 question and I wholeheartedly reject it. All you have to ask yourself is: are there still products that people are willing to pay a premium for? That premium ipso facto is loyalty. When you think about brand loyalty, and declining brand loyalty, what you’re talking about on the flip side is increased price sensitivity. So perhaps it’s true, that as consumers evolve they become less brand loyal in some sectors, but more brand loyal in other sectors, as you scale the Maslowian hierarchy of needs, a cleaning detergent could be high involvement for you when you’re relatively poor and you need clothes to shine. [But] as you move up, what you wear in terms of a brand, your car or your mobile phone becomes more high-involvement for you and more relevant to your life and you’re willing to pay a higher price premium for that.
In emerging markets, you have waves of consumers entering different phases of economic development, so there will always be new consumers. With urbanization in China people are owning homes or moving to cities for the first time. So their brand choices are high involvement and then there’s loyalty. Societies are always evolving. Different segments of societies’ engagement with different types of categories is always shifting as well. Even in the US—in the recession of 1989 everybody thought that generics would take over the store. They haven’t because of the relationship that people have with categories and brands. So I don’t quite buy it, but I will say certain pockets of commoditization do occur.
Q. Some experts are saying that people are often ‘product loyal’ rather than ‘brand loyal’ and it’s easy to confuse the two. Is that a differentiation that we need to be paying attention to?
A. I disagree. I’m not saying that product attributes aren’t critically important. We have to define our terms: what is a brand? A brand is the role of a product in life and it is the relationship that a person has with a product. That relationship is forged through both product engagement, but also from a clear proposition that is in many cases passively received and actively defined by the manufacturer. When you are engaging with Apple, you are engaging with the Apple experience. Ultimately a brand is an experience. So if that experience is not only multidimensional, but also consistent, that experience becomes a holistic brand. Take Lego. It’s not just the fact that you have blocks that makes Lego a strong brand. It’s that you have a clearly defined brand idea, a relationship between the brand and consumer of inspiring builders of tomorrow. So every time you come into contact with that brand—whether it’s Lego Land, the Lego movie, the Lego retail experience, or the Lego toy itself—then you are reinforcing a predefined relationship. Once you start defining a brand as a relationship, you stop talking as if the product and brand can be separated. They can’t. The brand is a relationship that is an alignment of function, emotion and role in life, so that it’s all consistent. Of course if you don’t have a strong and cohesive brand, then the product becomes very important. But that [would be] a very vulnerable product because people can simply out-innovate you very quickly.
Q. In your book, you talk of ‘brand indifference’ and differences between the developed world vis-à-vis developing countries. What is that a function of, and how should big brands factor this into their strategies?
A. As consumers become wealthier and more able to digest communications and brand propositions, and less safety seeking and less in need of basic reassurance and reliability, they become more discriminating. That’s a long-winded way of saying that because developed market consumers are more experienced in digesting brands, their standards of what a brand experience should be to result in satisfaction are probably more multidimensional. Then the question is: does that mean that they are less embracing of good brands? The answer is no. There is still a great deal of loyalty for brands that have a significant role in life.
Q. The crux of your argument in the book is that the advent of digital marketing is creating a schism in marketing that is further hampering the development of brands. Where are you really coming from and why?
A. I see many clients and many industry people saying that the sky is falling. That there is a fundamental overturn caused by data. I see people increasingly immobilized. I don’t want to say that it’s sheer and utter chaos out there, but I feel there’s less confidence in people in terms of defining their future both personally and on a brand and marketing level. In our industry (advertising agencies) there are people that say we’re not creatives anymore, we’re inventors. Many advertising agencies [have] defined their mission without any direct or indirect association with ideas. So there is a gap in knowledge which is very unsettling for many people, and we as human beings want to fill that knowledge gap. But in the process I see us disregarding anything that is abstract. Brands, and timeless brand building is ultimately conceptual craftsmanship. That is, I think, a little bit denigrated these days in relation to the digital engineering that is happening at the most innovative technology companies. I’m seeing a loss of confidence.
Q. Can you give me an example of companies that have stepped too far away from the fundamentals of marketing into just a very extreme digital world?
A. What happens more often is you see lots of inconsistent messages. Inconsistency is often the fruit of an identity crisis. Adidas has lost its core message. A lot of Mercedes’ digital activities have nothing to do with the core proposition. They’re very tactical in targeting very direct and specific market targets for their specific variants or nameplates or sub-nameplates, but when you take a look at that versus BMW, BMW has maintained a much more cohesive brand idea across both broadcast and lean-back media and digital channels. In China Li-Ning’s methods have shattered as a result of the advent of digital, as a result of the multichannel confusion.
Q. Can you take an example of a brand and explain how they got it right?
A. If you look at Axe deodorant (known as Lynx in some countries like Australia and China), its brand idea is about irresistible attractiveness for the ordinary guy. The insight (or motivation) is that young men are not confident in their ability to attract young women; Axe gives you the confidence. That’s usually how its creative is expressed on television. If you look at the digital engagement platforms, they have a ‘sexy alarm clock’: a guy can have a beautiful girl wake him up every day and remind him to wear Axe. You can join an online air hostess club, a Mile-High Club, which again can be built into a loyalty program as well. So you’re taking from insight to brand idea to creative expression, then to engagement platform to digital and non-digital means, the exact same relationship with the brand.
UNIQLO has an insight for Asians in particular that don’t want to be defined by style, but want to have freedom in a framework. They want to be able to mix and match. So you have mix and match component clothing, and then you have a brand idea that is ultimately about your style, not ours. As you go into the digital platforms, you have a tick-tock clock called UNIQLOCK change your moves (UNIQLOCK is an online music and dance clock showing a four girls dancing wearing different combinations of UNIQLO clothes). It’s reinforcing that same relationship?
Q. What about brands that got it wrong—like Li-Ning?
A. Li-Ning has gone the wrong way not just for digital: but it has had several different, inconsistent brand ideas. It went from a Chinese-style play, then it went to ‘Make the Change’ for the post-90s generation. Now it’s re-launching itself with another brand idea. So on the brand idea and execution level, it’s always been very inconsistent. If you look at what it’s done in terms of e-commerce, it has absolutely nothing to do with it whatsoever. Its website has been very inconsistent as well. So Li-Ning is the ultimate fractionated brand, and as a result loyalty has dropped significantly. Anta used to have a follower position, now it’s leading both in terms of volume and in terms of profit by a large margin. And Anta has made mistakes as well. It hasn’t been a noble player either, but Li-Ning is just an example of a brand that has zigzagged for the last six or seven years, and has basically lost its credibility in the marketplace.
Q. Why do brands go down that path in the first place? Is it because within the organization maybe traditional marketing is seen as a different silo versus what is seen as digital?
A. The fundamental issue is that in general—and I don’t like using the word traditional—traditional marketing relies on lateral thinking. Digital marketing is much more analytic and linear. Corporations need to make great efforts to align a conceptual and a linear orientation. This difference could be further exacerbated structurally, though oftentimes digital and e-commerce would be in the domain of sales, whereas brand—particularly in Asia—is in the domain of marketing. Marketing is relatively unempowered relative to sales. The ultimate issue is corporate governance: the CEO [being] rewarded for long-term shareholder gains based on value propositions that yield higher profit. This type of leadership needs to be very strong and committed to brand building and the cohesion of a brand proposition. Unless he is, the structure of a corporation, the prominence of marketing relative to sales, where e-commerce comes into the proposition, where digital comes into the sales organization, whether it’s just another channel or a new way of engaging with consumers, is something that is ultimately structural.
Q. You have been in Asia for about 20 years. In your opinion, how evolved are Asian companies when it comes to these issues that you’re talking about?
A. Depending on the country, there’s a broad spectrum of sensitivity towards the value of brands, as we define them in developed markets. Japan is very unembracing of brands for fundamentally cultural reasons. They define brands as two things: innovation and scale. But when it comes to an explicit definition of what a brand proposition or brand idea is, this violates some cultural tendencies: it’s a very implicit culture where things are not expressed overtly. So the need in a highly harmonious society, that is relatively isolated, to define for the benefit of people who are not of the culture what a brand proposition is, is not fundamental.
If you move into China, Korea and other Confucian countries, the acceptance of a brand and what it can do for pragmatic purposes is huge. Just to give you an example, our revenue in J. Walter Thompson China is at least 45% from local companies. In Japan it’s been a much harder road to hoe. Chinese companies know that a brand is useful. The problem is that the structure of companies doesn’t let them pass through the inflection point required for consistency. And that gets back to the structural issues: the emperor is a CEO managing not just long-term shareholder gain, but the political imperatives. Therefore he is a defensive leader, a more fear-driven leader. So there are silos and Balkanization which keep the brand from being a unifying force. You’ve got a lot of people that want to have a brand as we know it in developed markets, but are not able to implement it operationally. Again, the most basic manifestation of this is sales, which is concrete, being more powerful in every respect than marketing, which is considered a little trifling.
In Southeast Asia the companies are not as evolved as brand producers, but there is a much more easy embrace of it. So when you do company training, people get it over there. Again, I think that there’s a scale issue that has precluded that from coming together. India, of course, is very brand sensitive, because Indians are great conceptualizers.
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