The end of megalomania in high tech branding?

Google has roughly a billion unique visitors and I would guess Nestle has somewhere between three to five billion unique buyers (for sake of comparison, let’s say that’s someone who bought a Nestle product last month). That’s a difference of several billion, quite a few folks, but it’s the same order of magnitude (2011 revenues are about 2x apart).

Here’s the interesting thing- Nestle has 8,000 brands and Google has 2 (Google and YouTube).

Facebook is pushing 1 billion users and has the same number of brands: 1.

Why is that? Does it still make sense? As applications get easier to build, will product and brand development in high tech go the way of Nestle and its peers in consumer packaged goods? Dear reader, we’ll answer all this and more in just a few paragraphs.

Why do we think this way?

The present is a lagging indicator of the past and in the recent past most of technology’s big wins were platform plays created by audacious technologists- see Microsoft, Yahoo!, Google, and Facebook. Getting a critical mass of customers onto a platform with high switching costs was the name of the game. Geoff Moore’s update to the technology adoption lifecycle, Crossing the Chasm, is probably the most influential summary of this point of view:

Does this still make sense? Whereas Facebook was launched to a very specific audience and expanded over time, Google+ was launched as ‘this is another social network that’s linked up with Google’. It hasn’t gone all that well. I’m sure Google will bring their considerable resources to bear on Google+ and eventually make it a valuable property. But what if they had launched a series of targeted sub brands- one for businesses, one for families, one for tweens, etc.? It could all be using the same back end and even front end templates. Of course, users could reach each other across the networks. It would still thread back to Google. It just wouldn’t be this one monolithic brand that doesn’t stand for much of anything in particular.

What about Google Offers? Wasn’t there something (or several things) out there more compelling to choice customer segments than ‘this is Google’s version of GroupOn’?

After paying good money for the brand, why did Yahoo! flush the brand of online music pioneers Launch.com? Why not just leave Launch.com in place and use the technology to build Yahoo Music? If everyone abandoned Launch for Yahoo Music, sure, there’s market validation that they prefer to be under the Yahoo! umbrella. I’m not privy to the inside story, maybe there was a good reason, but my guess is that it was a case of brand megalomania.

Why did Cisco do away with the Linksys brand? My understanding is that it has to do with a world domination strategy- to connect everything everywhere. Not to say it can’t work, but every run at that (see Sony) hasn’t gone well and home communications gear increasingly tends to just work no matter who makes it. Personally, I would rather have a residential/lower end brand in my portfolio to use for experiments, keep my segments clean, and protect my prices at the higher end of the line.

Let’s look at some counter examples where high tech companies made use of more surgical product/brand strategies. I have a company I mentor that’s developing an exciting photo-social app. We’ve been working on personas. Mom’s are one of the most important personas. One of the founders also has a prior business relationship with a well-known rapper. Particularly given the social aspect of the product, it’s important the initial segment or segments have an affinity for one another. While Snoop Dog fans and soccer mom’s spend a lot of time together in minivans, neither of them are going to regard a new product as just for them at the same time. The team will probably either focus on one segment or the other or launch two (or more) branded versions of the app.

When AOL/Time Warner launched TMZ, they had the good judgment not to brand it ‘AOL Gossip’. That probably has something to do with the more traditional brand sensibilities of Time Warner, the original parent.

The games industry is a useful example since it’s right at the intersection of technology and consumer marketing. After two decades of experimentation with monolithic vs. product/audience-oriented branding, most of the major firms have come done on the side of product-specific branding- see Vivendi, Electronic Arts.

What’s next?

Getting customers on a platform is still important. But with all these great platforms out there and applications increasingly easy to build, I think building products with more empathic, targeted brands will become increasingly important. Another important driver for this is the increasing recognition that short-cycle, empirical product development makes firms more competitive by accelerating learning and optimization. If A/B testing a user interface delivers good results, what about A/B/C testing brands? That’s what offline companies like Nestle and Procter & Gamble do, and it’s proved a highly durable recipe for product development.

If the technology adoption lifecycle isn’t necessarily the best fit for some of today’s products, then what? Personally, I like billiards (pool) as a heuristic for thinking about customer development by segment. I’m not a great pool player. But after learning to (kind of) hit the ball the next thing I learned was that you always have to look where you’re leaving the cue ball (the white ball) for your next shot. It’s not just about making the one shot; it’s about putting yourself in a position to make the next one. Likewise with segment acquisition (going viral), you need to think through the user base you want to have and then figure out the rough sequencing of how your segments will influence each other. Sometimes there’s no shot- and that’s a sign you should think about alternate/spin-off brand identities for your product.

How do you prepare?

If you’d like to prepare yourself for such a shift, here are four practical tips:

1. Learn about ‘Design Thinking’
This is a general rubric for applying more empathy and creativity to product development. I cover it in Chapter 3 of ‘Starting a Tech Business’ as well as a talk which you can watch here online. There’s also a lot of good stuff you can read for free on the web and a number of other very good books on the topic- my favorites are here.

2. Learn about Customer Development
Customer Development is a highly empirical, customer-driven technique for developing your ideas. I cover it in Chapter 1 and Chapter 2 of ‘Starting a Tech Business’. Steven Gary Blank’s ‘Four Steps to the Epiphany’ is the seminal book on the topic.

3. Learn about Consumer Packaged Goods
Consumer packaged goods is the term for companies like Nestle, Procter & Gamble, and Unilever that develop and market food and household goods. Having trouble differentiating your app? These folks have been successfully differentiating sugar water and soap for decade upon decade. When it comes to brand development, there’s a lot to learn from them. If you have a classmate, cousin, or friend (or friend of friend) grab the opportunity to sit down with them and learn how they do things.

4. Practice Agile
In high tech, I think agile’s as close to universally liked as you can get. Frequently, though, I run into operations where it’s mostly practiced within engineering, sometimes product development. But marketing, sales, and often product development are uninvolved or minimally involved in developing the customer personas and user stories that are core of empathic product and brand development.

And you?

What do you think? Agree? Disagree? What’s been your experience? If you’d like to post back in any fashion, it would be great to hear from you.

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  • Joni Paulo

    Very informative. This blog entry just confirmed that I am on the right track for our new services and additional sites. Thanks Alex. 🙂

    • Glad to hear it Joni, and good luck with your new services and sites!

  • I think the Google ‘Alphabet’ move is a very interesting event that’s consistent with this direction- bringing high tech brands in line with branding best practices in other industries.