In 2003 Osborne co-founded the firm Fusionbrand and has over the years become one of Asia’s top thought leaders on the subject of branding. He willingly shares his knowledge with the thousands of readers of his long-running blog, “Brand Consultant Asia,” where he provides often frank assessments and refreshingly candid advice on how to build “future-proof” brands.
In March, Osborne distilled the past two decades of living and working in the region into the insightful book “Stop Advertising, Start Branding: How to Build the Brand That Will Build Your Business.”
CMO.com contributor Bobby McGill recently caught up with Osborne to discuss the book, his take on the branding versus advertising concept, and how Western brands can better positon their products and services to Southeast Asian consumers.
CMO.com: Where did the idea for the title of your book come from?
Osborne: The inspiration for the title is the result of many events but primarily the fact that in 2014 you couldn’t do anything or go anywhere in Southeast Asia without seeing a Samsung advertisement. It seemed like they had bought every piece of advertising real estate, online and physical. And the ads were outstanding–beautifully created and executed while simultaneously hitting all the cool, high-tech, must-have buttons. We now know this was part of a strategy to outsell Apple and become No. 1 globally in the smartphone sector. Samsung spent an astonishing US$14 billion on advertising that year, more than the GDP of Laos and about the same as Iceland.
Following this worldwide advertising carpet-bombing, Samsung reported its first year-on-year loss in 2015. It had failed miserably to unseat Apple. This and many other similar examples, from Microsoft to Malaysia Airlines and Volvo, are covered in the book. The fundamental point is that companies that really should know better are starting their brand strategies with advertising campaigns. And the attitude in Southeast Asia seems to be that, if you adopt the same approach that was used 60 years ago for the big Western multinationals, then it must be good enough for us. This is despite the fact that few Southeast Asian firms have US$14 million to spend on advertising, let alone US$14 billion. It’s like 100,000 lemmings can’t be wrong!
CMO.com: So what is it that they’re missing?
Osborne: The world has changed a lot in the past 60 years, and the economies and markets of Southeast Asia bear no resemblance to those of the West. There are better, more effective, and less expensive ways to build brands today, and my book outlines how to move away from an advertising-driven approach to brand building. It advocates focusing on the organization to make it better. It also recommends focusing on the customer, what they perceive as value, and delivering that value at every touch point.
CMO.com: From a financial perspective, should businesses expect a difference in cost between an advertising- and a branding-based strategy?
Osborne: Undoubtedly. First of all, advertising is acquisition-focused and does little to engage with consumers once they become customers. The theory is that the advertising creates enough awareness of the product or service to ensure enough people will pay up to sustain the company. If it doesn’t work, you try again or fire the agency and try again with a new agency. If that doesn’t work, you slash prices, and, if you’ve got any money left, you go through the process again. An advertising-driven strategy also presumes that it will continuously drive traffic to your brand, even after the advertising has stopped.
This model is obviously flawed on many levels. For instance, we know that 80% of consumers buy the same products all the time, so you are using advertising to reach just the other 20%. But the problem is, so is everyone else. And if Samsung can’t do it with US$14 billion, it’s unlikely you are going to do it with your advertising budget. And if you do make a sale, how will advertising ensure repeat sales? With an advertising-driven strategy, there’s a very good chance you are wasting much of the money you spend.
CMO.com: Is this flawed approach particularly prevalent in the Asia-Pacific region?
Osborne: Yes, because many companies in Southeast Asia look at staff as a cost, not an investment, so they don’t spend enough on training. Even if your advertising is successful, it’s often not backed up by staff at key touch points, making the experience a letdown for customers. If the experience doesn’t live up to expectations, you are not going to build a brand, no matter how much you spend on advertising.
Branding is driven by the organization, data, and experiences and focuses more on retention than acquisition. Of course, you need to acquire customers before you can keep them, and, depending on the industry, this may require advertising. Branding, however, ensures that your organization is always ready at every touch point to deliver a compelling experience that ensures customers want to come back.
To date, every company we’ve worked with has saved money by moving from an advertising to a branding strategy. They’ve become more focused, have a better understanding of what their customers want through the collection and use of the right data, and know what value is important to their customers.
CMO.com: In the preface to the book you write that “there are dreadful pitfalls lying in wait for those who don’t adapt.” Can you give us some examples?
Osborne: Southeast Asia is at a crossroads. New trade agreements, increased domestic competition, more discerning consumers, and a burgeoning middle class with more disposable income is making the global giants in nearly every sector look to the region for future growth. If local businesses don’t change the way they think and do business, many of them will be annihilated by these global multinationals.
Think of Proton in Malaysia. Despite huge import duties, taxes, and tariffs on foreign cars that can add 300% to the cost of a family saloon–giving it a huge price advantage–Proton’s market share has dropped from about 85% to 17% in 15 years. Proton hasn’t adapted to the new environment, and even when it has, it hasn’t communicated its offering effectively, preferring instead to continue using advertising to convince consumers to buy its brand.
Have the global players done well branding themselves overall in Southeast Asia? Well, some have. In the automotive sector, Mercedes-Benz has done a fantastic job of building its brand in Asia. Part of its success is due to its investments in countries such as China and Malaysia, and this will need to continue, especially in potentially lucrative markets such as Indonesia, where it assembles cars but isn’t sourcing enough materials locally. In the aviation sector, I like what Airbus has done. The luxury hospitality brands have done very well by bringing their exceptional service levels here and merging them with the Asian culture of politeness.
CMO.com: Are there any standout brand campaigns in the region that have won you over?
Osborne: Like everyone else, I rarely take notice of interruptive communications, so I can’t think of any. I’m also not a big fan of the term “brand campaign.” It suggests something transient and temporary that has a timeline that can be controlled by the organization and will end when it wants it to end. It also suggests a series of tactics, such as campaigns, are the way to brand. They aren’t. A brand needs to deliver economic, experiential, and emotional value at every touch point, so it’s more an ongoing process than a campaign. And, of course, social media, which is the preferred media channel for most people today, doesn’t lend itself well to the concept of a campaign.
That’s why we don’t talk about brand stories anymore; we talk about brand narratives. Those narratives are constantly evolving, and the author is not the company but the consumer. The company is more a curator that establishes the narrative content and direction. They often contribute to the narrative and can influence it, but they don’t control it and certainly don’t determine when it ends.
Having said that, I’m very impressed with what Mercedes-Benz is doing in the region. They are connecting all the branding dots, although some of the lines may not be as strong as others. Apple has also done really well in Southeast Asia, despite the fact that the Apple experience in some countries is not as sensational as it is in the West. Apple is also advertising for the sake of advertising, and that is wasting money.
CMO.com: How about campaigns that have left you shaking your head?
Osborne: The whole BMW experience for me personally has been a massive disappointment. There is a huge gap between what the brand promises and what it delivers. Malaysia Airlines is a brand close to my heart. It thinks it can sacrifice its brand just to make a short-term profit. It will make a profit, and it will do it ahead of schedule, but the brand has been decimated, and, as a result, it will take a lot longer to rebuild the brand into the premium carrier it once was. That means its profitability is based on weak foundations.
CMO.com: Any advice for Western-based firms looking to expand their presence in emerging ASEAN economies?
Osborne: Asia is littered with the carcasses of failed Western brands–Wendy’s and River Island in Singapore, Aston Martin in Malaysia, L’Oreal and Tesco in China. Most of these brands thought they could do things the same way here as they did in the West. They can’t. And despite having deep pockets, don’t think for one moment you can convince Asians to buy your brands with advertising. Just go into an Asian home and see what they do when the commercials come on. They talk even more during the commercials than they do during the programme. You really need to work with a local team with an international perspective. Find someone who understands your business and your customers, and, if the chemistry is right, work with them.
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