Challengers make headaches for brands
At both the bottom and top of the spectrum, upstart brands are creating headaches for their much larger counterparts. Examples include Brandless, a cheap online grocer; MATE, an ethical clothing brand; Shinola, a watchmaker; and Glossier, a rapidly growing cosmetics company. Benefiting from a narrow focus, reduced channel costs, organic marketing through user generated content, and data-enabled business models, they are not only taking market share from major brands but also setting higher consumer expectations for quality and service in the US.
Voice, the new frontier
The popularity of smart speakers has send brands in the US scrambling. While they had long grappled with the problem of keeping their brand identity in tact on the Web, in this realms, they don’t get to look or sound like themselves. Some have responded with their own “skills,” with Tide’s “Stain Remover” one of the more successful implementations. Others have tried to game the technology in order to make their products appear first in the much-restricted number of voice recommendations. No one has yet cracked the code, but look for this to continue to be an area of focus as smart speaker adoption soars.
Make America high again
In January 2018, Attorney General Jeff Sessions, a staunch opponent of marijuana, rescinded a memo that had allowed states to effectively decriminalize it. If his hope was to kill the nascent free pot movement, he couldn’t have settled on a worse methodology. He soon buckled under a vigorous backlash, including harsh criticism from members of his own party. Make no mistake, legalized weed is broadly popular in the US and soon coming to large parts of it, much as legalized gaming did in the 1980s. Sin is in, and marketers should not get caught flat-footed. Brands like Coca-Cola and Pepsi are already experimenting with cannabis-themed drinks. Public acceptance could spur major opportunities for brands, including disruptive growth in a newly invigorated “munchies” category.
Millions cry #MeToo
While national controversies over sexual harassment in the US date back at least to the nomination of Supreme Court justice Clarence Thomas, the #MeToo movement has overnight become a force like few others in United States life. Numerous celebrities and leaders of brands that include Nike and CBS have faced allegations of impropriety, often leading them to lose their jobs and be shunned from public life. This reached its peak with the raging scandal over Supreme Court nominee Brett Kavanaugh, who was accused of sexual assault. As a result, brands are reviewing their policies and cultures to ensure they are providing a safe workplace for all employees. As employer brands become ever more important, #MeToo is a not a moment, but a mandate.
The agony and the ecstasy of martech
For several years now, marketers have been in an ongoing frenzy of marketing technology investments, often communicating using a bewildering number of abbreviations: DMP, CMS, DCO, SFA, CAC, and MoM. While the investments are not always substantial when compared to media spending, they represent a significant shift in how marketers think about advertising. Top brands have coupled these with proprietary systems that enable them to extract great value from their digital investments. The bulk of marketers however report more humdrum results: small improvements that do not seem to justify the investment. Look for 2019 to be the year when marketing technology will either start proving its value—or when marketers stop obsessing over it.
Convenience trumps brand safety
American brands, like all around the world, face a challenging digital environment, where their ads can appear before and during the most noxious of content. on social media and video sharing sites. While some brands, like J. P. Morgan, have withdrawn their ads, most are continuing to increase their digital advertising spend in the US, which is projected to continue to grow. The reason? Probably ease and convenience. With programmatic buying designed to reach highly targeted segments, marketers are looking for ways to do more with less, and digital, for all its faults, seems perfectly designed for this.
B2B: the next battlefield
Most B2B brands in the Top 100 notched huge gains in brand value in 2018. Adobe, Salesforce, Oracle, Accenture, and the like are becoming more visible and recognized in the world. As customer expectations are soaring in the consumer market, that may soon translate to higher expectations in the business world. It may no longer be good enough to be the rational best choice for a business, but to have a brand experience that works for employees too. Shoring up brand promises and brand stories may be a good first step to keep pace in 2019.
Fresh, local, seasonal ho!
In the early 1800s, Americans were already obsessed with what they put into their bodies. Once the country achieved a certain level of economic security, it turned towards its diet, inventing things like Salisbury steak (based on an analysis of human teeth), corn flakes (to accommodate the vegetarian diets of 7th Day Adventists), and Graham crackers (which had the impressive remit of curbing stimulation, warding off cholera, reducing masturbation in youth, and promoting a Christian lifestyle). Today’s modern equivalents are organic, local, seasonal, paleo, macrobiotic, and products made from superfoods like quinoa, chia seeds, and even pulverized crickets. While most of these trends are based on dubious science, that does little to discourage a people so accustomed to putting unusual things in their mouths in the name of health. Smart brands like Lay’s, the only food brand in the Top 100, watch them with a “tipping point” mentality and rush to move products out in order not to get blindsided by disruptive new upstarts.
Take this regular job and shove it
From packed cafés to Uber driving and WeWork hubs, more and more Americans are taking part in the gig economy, living the dream of being their own bosses. As Emmanuel Probst, in an expanded look at this topic later in this report notes, 94 percent of new jobs created over the last 10 years have been freelance or part time. Part of this reflects an ugly reality: companies don’t have to pay these workers’ income tax or healthcare costs, nor do they have to match contributions to their retirement accounts. But for most members of Probst’s Freelancia, there also benefits: freedom, flexibility, and the ability to choose their own hours. As he details, these workers also represent a big opportunity for brands looking to make efficient use of talent.
The drive to get direct with consumers
Whether it’s Nike’s retail push or Coke’s purchase of coffee-chain Costa, “direct to consumer” (DTC) became the buzziest of buzzwords in 2018. The benefits of DTC are obvious. At a time in which it’s become increasingly important to understand and anticipate customer needs, nothing beats selling directly to people and collecting the first party data that comes with the effort. But DTC is also an oblique way to deal with the growing behemoth called Amazon, whose warehouse-like interface is off brand for many products. By cutting out channel middlemen, brands can put a human face on themselves, serving and interacting with people face to face. As “commerce” consultancies mushroom around the US, look for more and more brands to dive or dabble in new kinds of retail.
A delivery mad world
The drone wars are on in the US. Thanks to the Federal Aviation Administration’s Unmanned Aircraft Systems Integration Pilot Program, brands like GE, FedEx, Google, and Uber will soon begin testing drones in towns across the US. This reflects the country’s obsession with fast, free delivery. Spurred on by Amazon Prime, brands are looking for ever faster and more efficient ways to get their products in the hands of consumers. While UPS and FedEx are already fast, an unmanned aircraft would be even faster. Curiously, however, Amazon was left off the program, likely a reflection of the Trump administration’s feud with its founder Jeff Bezos.
Apps are the new face of loyalty
While Starbucks probably had the earliest success with a loyalty app, other brands are finding that there’s no stigma to being a copycat. Retailers and restaurants alike have rolled out apps, typically with great incentives for members of their loyalty programs to use them. These apps deliver more than convenience and a chance to gamify commerce with points and lightning deals. They also give brands great data and insight into when, where, and how people engage with a brand, and what drives them to move from casual customer to loyal fan.
Clean and rinse data today
With the rise of AI and other advanced data technology, many traditional brands are finding themselves saddled with legacy data systems that aren’t ready for the magic that many younger and more technically enabled brands are pulling off. As a result, “data readiness” has emerged as a key buzzword in the brand landscape. Clearly, this is an area where short and long-term efforts are necessary. To win, brands must first ensure that they’re doing everything possible to improve the customer experience today, while thinking about (and beginning) the more onerous and less immediately remunerative work of getting their data in shape.
AI is top of mind, but no silver bullet
Right now, Americans are experiencing a wave of innovative AI and machine learning experiences, including everything from popular driving app Waze to Amazon’s Alexa and Google Assistant. But a persistent perception in the market that brands can simply unleash AI on their data and uncover insights without effort is a little misguided. AI is an opportunity only if brands put in the hard work of designing the right solutions and asking the right questions. It’s not time to get lazy about AI, but to dig in and understand its potential to assist in the unique challenges of each brand.
A health crazed, if not particularly healthy country
Roughly a third of all Americans are obese. This has had profound complications for the American healthcare system, which struggles with high rates of diabetes and cardiovascular disease. At the same time, many parts of the country are obsessed with a new range of “healthy” eating trends: Paleo, gluten-free, sugar free, and organic. Because of the higher cost associated with these products, the trend is sometimes seen negatively, with critics complaining that ordinary people are left out in the rush to healthier living. Others might point out that a chip made out of kale and quinoa is still, in the end, a chip.
The unbearable cost of dwelling
The median home price in the US in August 2018 was a staggering $320,200, up from a modest $64,600 in 1980. Nothing highlights the incredible rise in prices in west coast cities like Seattle and San Francisco more than the decision of tech giant Facebook to create its own miniature town, Willow Village, also known as Zucktown. Sandwiched between two poor neighborhoods in Menlo Park, it will provide housing and amenities for employees close to the office. The inability to find affordable housing in traditional silicon strongholds is also driving tech companies eastward to places like Austin and Boise, where the American dream (i.e. owning your own home) can still, if barely, be made into reality.
Hispanic consumers rising
One of the oddities of American data is that the US Census does not consider Hispanics as a separate category and instead classifies them as belonging to different ethnic groups (Hispanic black, Hispanic white, etc.). Marketers would do well not to follow that lead. If people of Hispanic origin in the US were their own country, they would have they 7th largest GDP in the world, and that GDP is growing 70 percent faster than the rest of the US. They are also young, with a median age of only 28. Marketing to them, however, is not simply a matter of slapping a translation on your ads—in fact Hispanics prefer English by a wide margin. Instead, smart brands instead are doing what’s known as “in culture” marketing, targeting millennials and other young people with culturally aware ads—in English.
“Buy, own, earn” makes way for CX
The strategy was simple: create a great owned presence on the web, make great ads, and then reap rewards as your delighted customers share your content on social media. Today, this happy scenario seems less and less a viable strategy. As platforms have multiplied and users fragmented, organic sharing has declined. However, the single biggest factor in this is Facebook’s suppression of branded content, which was intended to and succeeded in boosting media buys. Today, US brands are largely returning to a traditional pay-to-pay model, where “earned” media, such as positive Amazon reviews, needs to result from positive customer experiences.
The digital haves and have nots
While the US enjoys arguable the most advanced digital services on the planet, a surprising number of Americans have just said no to broadband Internet, 23 percent of them in fact. Part of the reason certainly lies in rural poverty and the vast geography of the country, which leaves significant areas of the west without coverage (or with less than ideal coverage). But it also represents the distrust of technology and independent streak of many Americans. Still, 23 percent is a large segment in a wealthy country with a population of roughly 350 million and represents an opportunity for brands that reach out through traditional media and direct mail.
The Trumpian consumer paradox
Read a profile of a Trump voter, and you’ll find yourself in a diner with an angry blue collar worker who has lost his job. And certainly, Trump enjoys his healthiest advantage among white males without a college education. However, a Trump rally is not necessarily a good reflection of the average Trump voter. Core Trump supporters tend to be significantly better off than the average American. A survey of Trump primary voters taken in 2016, for example, found their median income to be $76,000, well above the median income of average Americans, which at the time was $56,000. In other words, his supporters include not only those who have experienced what he calls “this American carnage,” but many of the business people responsible for it. Marketers should understand this distinction and realize that this is a consumer block that is considerably valuable, even if they do not share its values.
Although American marketers have access to arguably the most sophisticated ad tech in the world today, they also face a public that is the most suspicious of nations when it comes to data security. Fully 60% are concerned about what companies may know about them. In other words, with great tools also come great responsibility. Common sense would say that brands should use targeting wisely, making sure that the messages they send are welcome, not overbearing, and certainly not creepy. At the same time, it’s worth remembering that Amazon seems to have no worries about the creepiness factor. It chases people around the Internet, continually flashing them deals on products they’ve just looked at—to the point that married couples sharing the same account have to go to great lengths to conceal gift shopping from each other. And that doesn’t seem to hurt Amazon a bit.
An explosion of brands
Only 21 percent of Americans prefer products made by big global corporations, compared with 41 percent of people globally. This demonstrates the strength of two important trends in the United States. The first is the successful branding of the term “local,” where Americans have been encouraged to shop nearby businesses, especially for categories like food and cosmetics. The second is the rise of small brands. These include higher end brands, like Annie’s, which offers things like organic macaroni and cheese. But there are also bargains too, like Brandless, which offers online shopping in which every product is $3 or less. Together these upstarts are making headaches for brands that are too large to counter every threat quickly.
Trust is no simple matter
Recently, VW has bucked the trend of falling car sales in the United States, notching large gains in the last year, which is remarkable given its Dieselgate scandal in 2015. Facebook also recovered quickly from its $134 billion market value drop in the wake of the Cambridge Analytica scandal. Conventional wisdom often suggests that scandals involving trust damage brands irreparably, but the real story seems more nuanced, and the real question might be: “Trusted to do what?” While scandals certainly harm brands in the short term, in the long term strong brands seem to be able to admit their mistakes and can often regain trust in consumers’ minds.