Volume 57: Earnings calls are now branding events.
1. Building a story stock: The most important branding trend of 2021?
tl;dr: Mary Barra and GM show it’s not just for young tech companies.
One of the critical things distinguishing young tech stocks is how market capitalization growth is driven more by stories of future performance than actual earnings, which has led to a historic disconnection between EPS and stock market performance. Even if we look at the S&P500, we now see a few tech stocks sucking all of the oxygen out of the room…and everyone else.
When a stock attracts dominant investor interest in an industry, there are significant second- and third-order effects that this capital strength enables. They can survive without profits for longer, they can spend more on innovation than the competition, they can acquire weaker competitors, they can borrow more efficiently, and they can issue additional stock to put cash on the balance sheet. Ultimately, this creates an environment where success becomes a self-fulfilling prophecy. For example, Tesla has a sky-high valuation because investors believe it will dominate an electric future, and because it has a sky-high valuation it now finds itself in a position where this domination is more likely to occur.
This means a big question for everyone else is how best to catch the attention cycle and become a story stock too. And Mary Barra over at 100+year-old GM may just have cracked the code.
Over the past month, GM stock has risen by over 30%, and since it sure isn't because of their awful new logo, the question must be "why?" Well, unlike Elon Musk, Mary Barra is no carnival barker social media meme-savant. But what she and her team have done is deconstruct the narrative elements of a story stock and re-package it to fit their own circumstances.
Let's look at how they did it:
First, at the virtual version of CES, they announced a new logo with a metaphorical connection to electrification, backed that up with a new battery they claim offers 40% more efficiency, a contract to deliver electric vehicles for FedEx, and a Cadillac flying taxi concept. Then, after waiting a couple of weeks to gauge reaction, they doubled down by stating an intention to go all-electric by 2035.
This suggests an emerging story stock formula:
Announce an innovation you're working on for tomorrow that has the potential to significantly impact your category.
Follow with a "happening today" story to show things are already in motion.
Send up a bold imagination rocket to capture the news cycle in the ADHD world we live in so you can bring attention to points 1 and 2.
Reinforce 1,2 and 3 by making a big visual change to your corporate identity (optional).
Gauge the reaction and double down later with further bold moves if the market response is positive. (And likely let it all slide if not).
This inverts the traditional way a company like GM would typically operate. Instead of running a big ad campaign to craft an image of innovativeness, the innovations themselves become the critical story elements driving a broader narrative arc around future success.
What's striking to me is how brand-forward this all is. In terms of actual news, Ford is tracking right with GM in the electrification stakes. It has a more interesting mobility strategy, has a well-regarded new electric SUV, and just announced a wide-ranging business partnership with Google. Yet, GM's more attention-grabbing narrative arc means its stock is growing faster than Ford's.
There will be a lot spoken this year about branding trends. About the shift to post-pandemic life. About the permanent (or not) shifts in consumer behavior. But there's no doubt in my mind that one of the most important branding trends of 2021 is going to be this one. Not capturing the imagination of the consumer, but using branding techniques to capture the imagination of the investor.
2. Hey enterprise marketer, your boring ads aren’t working. Please stop.
tl;dr: Great work from the oddly named LinkedIn B2B Institute.
While it has a terribly ugly website, the LinkedIn B2B Institute has rapidly become a wellspring of useful research and insight in recent months.
Among other nuggets, I was particularly interested in their analysis of the B2B ads that work and don’t work. Cutting to the chase, the kind of rational and descriptive approaches so beloved of enterprise companies has little or no overall actual impact on the business. Instead, what works are creative ads that play to our emotions and include strong brand signifiers - distinctive logos, characters, etc.
Why? Well, not entirely surprisingly, the boring and generic stuff is exactly the kind of content we don’t notice, that we actively screen-out, and that we don’t remember. Put simply, boring ads don’t work, even boring B2B ads.
Now, this shouldn’t exactly be a revelation to anyone. It’s been clear for a while that we’ve become so obsessed with whom our media is going to be targeted at that we’ve almost entirely lost sight of the creative quality of the ads we intend to show them. This is why experts in the field now say there’s a complete disconnect between creativity and effectiveness, which is something that won’t be fixed by the snake-oil sellers and their “volume creative” AKA “spam.”
It was also really interesting to note that the kind of ads that are least likely to work are also the ads that product managers are most likely to sign off on or even create themselves. Just goes to show. There’s still room for marketers who’re paying attention to add value beyond the tech stack, lead gen, and targeting funnel.
3. Branding to the press release.
tl;dr: The accidental portfolio is more common than you think.
Brand architecture is one of those squirrelly areas where everyone kind of thinks they know what they’re doing but mostly not really. It’s common, for example, for people to have heard of concepts like master-brand, and sub-brand, and endorsed brand, but it’s surprisingly rare that they understand how these different approaches connect to the business model, competitive dynamics of the business, and allocation of scarce marketing resources.
What your brand architecture actually represents is the vehicle through which your business strategy presents itself to market, and as a result, there can be unexpectedly nasty knock-on effects if you choose the wrong path. Like branding to the press release.
What is branding to the press release you might ask? Well, put simply, it’s what happens when every new product, service, or solution you come up with launches as a separate and independent brand. Not because you’ve deliberately considered the implications of following a portfolio model, but because you’re seeking to maximize the impact of the launch day press-release. It’s particularly common in sales-driven B2B organizations, but by no means is it limited to these businesses.
Portfolio models work best when they represent category-level brands. For example, P&G operates a portfolio model (also known as a house of brands), but their execution is incredibly disciplined. Crest is the P&G category-level brand for oral health. What P&G isn’t doing is rolling out a new brand every time it launches a new toothpaste or toothbrush. And there’s a very simple reason for this. Building and managing brands is an expensive business, so accidentally fragmenting across multiple sub-scale brands that nobody has ever heard of is terribly risky.
In B2B environments, the challenge of over-fragmentation is exacerbated by there rarely being dedicated brand-building resources post-launch and the fact that you’re often dealing with a relationship sell that cuts across multiple products, services, and offerings. So, as your portfolio fragments, all that happens is you confuse your sales team and your potential customers, while simultaneously doing nothing to help you build your brand. Oops.
The simple fact is that just because you can doesn’t mean you should. While creating names and logos and websites has become cheap, turning these things you create into brands that are recognizable and meaningful is expensive. So before doing the former, you should really start by figuring out the best way to achieve the latter.