Consumers don’t care about most brands; Brand owners have never been less sure of ad spending returns; P&G and Mondelez recently squeeze ad agencies by delaying payments for 75 days and 120 days respectively

June 5, 2013 4:18 pm

Inside Business: Consumers don’t care about most brands

By Andrew Edgecliffe-Johnson

Brand owners have never been less sure of ad spending returns

Marketing can sound woefully fluffy. The language of “emotional engagement”, “consumer passion-points” and “key influencers” the industry has become so fond of is a tough sell to senior executives under pressure to deliver hard returns from their investment in advertising.

Little wonder that executives at Procter & Gamble and Mondelez International have felt able to recently squeeze ad agencies by delaying payments for 75 days and 120 days respectively.Advertising spending will hit $518bn this year, ZenithOptimedia estimates, yet as the media face rapid digital, mobile and social changes, brand owners have never been less sure of the returns that investment will yield.

It is tempting, then, to ignore a report about “meaningful brands” as more waffle. The idea of a phone, a car, a shampoo or a running shoe having much meaning sounds like an ad executive’s outlandishly lofty promise for “a product that will change your life”.

Yet the Meaningful Brands study released this week by the media buying arm of French marketing group Havas deserves to be taken more seriously.

First, its methodology lends it weight: Havas asked 134,000 consumers in 23 countries for their views on 700 brands, and set out to define “meaning” by 12 measures of brands’ contributions to individuals’ quality of life and to wider society. Some metrics were borrowed from OECD and World Bank indices of what some call gross national happiness, for what Umair Haque, a Havas Media director, dubs the first attempt to connect human wellbeing with brands.

Second, it focuses precisely on the hard numbers that corporate bean-counters like. The 25 brands that consumers deemed “most meaningful” outperformed global equities by 120 per cent in the last decade.

Those top brands are not all obvious ones, when measured by usual benchmarks of revenues, market capitalisation or brand value. Apple, for example, is the world’s most valuable company – at the time of writing – and tops WPP’s BrandZ list of the world’s most valuable brands, but ranks at 22 on the Meaningful Brands list. Other brands – Google, Samsung, Microsoft and Sony – share the top five spots in the list with Nestlé; a reflection, Havas says, of how technology has empowered consumers.

Havas diplomatically declines to name the laggards, but McDonald’s, number four on the BrandZ list, is not in its 25 most meaningful. Nor is General Motors, one of America’s biggest advertisers. Financial and energy companies score badly, and despite their global growth, Chinese brands are not breaking through.

The third point bolstering the report’s credibility is its deeply uncomfortable message for marketers. Most people around the world, Havas found, would not care if 73 per cent of all brands disappeared. There are even more sobering findings in Europe and the US, where consumers would not care if 92 per cent of brands disappeared.

The disconnect has not happened overnight. But what caused it, and how can brands be more meaningful?

In mature markets, brand saturation may be part of the problem. You hardly need to spend long in an American supermarket to conclude there are simply too many indifferent brands out there.

More importantly, too many brands have been making promises they cannot fulfil. Slightly less than a third of consumers think brands communicate honestly, resulting in growing distrust.

After the effort and money spent on corporate social responsibility programmes, sustainability initiatives and what Michael Porter calls “shared value”, an attempt to marry economic and social progress, this is a dispiriting finding.

More constructively, the study shows that consumers reward brands that listen to them, provide good quality, innovative products at fair prices; make their lives happier, easier and healthier; and support the environment, the economy and the community. “A new model for human prosperity is emerging, centred around the idea of human potential and wellbeing,” Mr Haque says. That is a big claim.

But there is nothing fluffy in the correlation between contributing to consumers’ wellbeing and being rewarded by consumers and, in turn, by investors. Mr Haque wants to use the data to derive a new financial metric, the “price to wellbeing ratio”. Executives may massage earnings, he notes, but “you can’t massage meaning”.

That might even be a way for the marketing community to convince penny-pinching procurement executives it can still be meaningful.