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Is ‘Brandtech’ The New Marketing?

Last August, McDonald’s Japan posted its first profit in eight quarters after it tied in with Pokémon Go. By turning its restaurants into PokéStops and PokéGyms within the AR mobile game, the Japanese unit of McDonald’s saw its sales jump 27% in July 2016.

That, in essence, is “brandtech,” which is defined as the leveraging of technology for marketing purposes.

“After that, people looked at it and said, ‘OK I get it. You can use augmented reality and location to drive major increases in footfalls and traffic and sales, and at no point has anyone seen an ad,’” said David Jones, the former Havas SA CEO and founder of brandtech firm You & Mr. Jones.

Jones, who raised $350 million to start his firm in 2015, is the most high-profile of brandtech, but he’s not the only one pushing the idea that all brands are or should be tech brands. There are also countless other examples. Those range from Tesla’s dealer-less, Internet-based sales process to Domino’s Pizza, which in recent years has introduced pizza emoji ordering, pizza drones, and zero-click ordering where you can fetch a pizza just by opening an app. If you’ve had a positive experience with a brand through a digital channel, then you’ve experienced brandtech.

Not all brands have an easy time pulling this off. Generally, established brands are at a disadvantage, and it’s more challenging for “low-touch” categories, such as insurance and consumer packaged goods, to embrace brandtech than high-touch segments, including retail and autos, where the sales process typically involves a lot of human interaction. Brandtech proponents, however, say as more and more of consumers’ brand interactions are via digital devices, brandtech will become the primary form of marketing.

Based On Experiences
The ability to create emotional product experiences that consumers want to share with others is what distinguishes brandtech brands, according to Rasmus Bech Hansen, a U.K.-based brand consultant. After all, that’s how brands including Uber, Airbnb, and Instagram spread.

“To change a person’s brand perception, nothing is more effective than real-life encounters,” Bech Hansen told CMO.com. “Nothing is more memorable.” That is especially true in a time when 18% of U.S. Internet users employ ad blockers, and 86% of them suffer from “banner blindness”–meaning only 14% said they could recall the last banner ad they saw.

“What’s changed is companies have saturated the media with advertising, and consumers have become inured to it,” said Bobby Calder, a professor of marketing at the Kellogg School of Management at Northwestern University.

The traditional model for advertising was to piggyback on media and use interruptive messages that sought to persuade consumers, he told CMO.com. But marketers know that it’s tough to get consumers to engage with advertising they see as interruptive.

“They went from there to why not change the whole paradigm from persuasion to experience?” Calder said.

Brandtech In Action
Experiences don’t have to be delivered solely in the tech realm. Amazon, for instance, is rolling out physical stores to create experiences that it can’t in the digital realm. Adidas has rolled out fitness classes to compete with Lululemon, which is known for its in-store fitness classes. Many brands are also experimenting with pop-up stores to reach consumers offline (although many of the stores have strong digital components).

In digital channels, successful brandtech brands work hard not to interrupt consumers’ experiences but to instead make those experiences easier. A good example is Google, whose Google Now app reminds consumers where they parked their cars and tells them when to leave for the airport to catch a flight.

L’Oreal, the make-up brand, also illustrated brandtech with Beauty Gifter. The Facebook Messenger bot asks the intended recipient of a gift to answer a few questions to help narrow down the type of gift she would like to receive. This takes some friction out of gift-giving.

“One of the key insights we had was, for men or even women, buying a beauty-related gift is really hard,” said Greg Pal, chief digital officer for Automat Technologies, which created the experience. (You & Mr. Jones is an investor in Automat.)

In both examples, brands find a pain point–forgetting where your car is parked or having to pick out a beauty gift–and applies technology to make the consumer’s life a little bit easier.

But brandtech isn’t just about removing friction. Zappar, a company that Jones has invested in, for instance, creates AR apps for S.C. Johnson, Crocs, and others that “makes packaging come alive,” Jones said. In that case, brandtech is providing a value-add: a little unexpected fun in a boring category, package design.

New Brands And Tech Companies Have An Advantage
Companies that start as web or mobile entities have a big advantage over established brands because it’s generally easier to add elements, such as brick-and-mortar stores, than it is to build a strong bond with consumers via digital channels.

Another problem is getting the right people to pull off such a metamorphosis. “It’s hard to get the best talent,” Bech Hansen said. “It’s harder for non-tech firms to recruit.”

It’s not just new firms that have an edge in brandtech, though. Tech companies overall have an upper hand. In its BrandZ global 100 list for 2017, for instance, the seven new entrants to the list–which included Netflix, XFinity, YouTube, Snapchat, and Sprint–were all brands whose tech-enabled interfaces were a prime source of communication with consumers. Atop the list were tech giants Google, Apple, Microsoft, Amazon, and Facebook.

Sana Carlton, senior vice president at Kantar Millward Brown, said that tech is merely a new channel to build consumer-centric ecosystems. “In the process, they have the opportunity to make our lives easier, simpler, and better, which is a very direct way to build meaning and difference,” she told CMO.com. “It isn’t just tech for tech’s sake. It’s what they deliver and the overall experience.”

Can Every Brand Do This?
Despite the natural advantages of tech firms and startups, established brands can still compete very well in brandtech. Some incumbents that have transitioned to becoming tech-first brands include Domino’s, Nike, Under Armour, and Red Bull. In addition to its canny cooptation of Pokémon Go in Japan, Carlton pointed out that McDonald’s has done a good job bridging the gap with in-store kiosks that improve service and experience. Starbucks also has restyled itself as a tech-forward brand whose app now has 19 million customers in the U.S.

Inevitably, some categories make it easier to become digital-first tech brands than others. It’s a simple, logical leap, for instance, to go from brick-and-mortar retail to omnichannel retail. Likewise, wearable technology gives fashion and athletic apparel brands entrée into brandtech. A great example of this is Under Armour, which now has a base of 77 million consumers who use its four mobile fitness platforms–UA Record, MapMyFitness, Endomondo, and MyFitnessPal.

On the other hand, can you be a brandtech firm if you sell consumer packaged goods or insurance or pharmaceuticals?

Absolutely, brandtech gurus said. Dollar Shave Club, for one, has shown that there’s an audience for a digital-based interface for men’s razors. (Unilever bought the startup in 2016 for $1 billion.) Insurance and pharma have yet to see a similar upstart successfully challenge their categories, but that doesn’t mean it won’t happen.

“It may take a little more time for every brand to switch onto it,” Jones told CMO.com. “But I don’t think there’s a scenario in which any brand can say, ‘That’s not going to impact us.’” 

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