What goes up must come down. But does that mean that what goes up quickly must go down quickly? And is this a phenomenon that is being amplified by our hyper-connected digital world?
Trends and fads are a result of identity signalling. We humans are social animals and our behaviour is interdependent. What we do, what we buy and what we talk about depends on the behaviour of those around us. Adopting a trend is a sign of discernment – a signal to others that we know what’s what – and so is dis-adopting one.
Jonah Berger, a marketing professor at the Wharton School, and an expert in trends, says people tend to like to occupy a middle ground – we don’t want to be laggards, but neither do most people want to be trendsetters.
We like to establish common ground, so we tend to talk about things we know are popular, bestsellers and blockbusters. The Lego set we’re getting Johnny for Christmas, rather than the obscure wooden toy we’ve imported from Denmark.
Studying Billboard charts and baby names led Berger to notice that trends that go up quickly also go down quickly. Artists that make the top 100 with their first hit tend to have a quick blaze of success before fading into obscurity, whereas one or two hits within the top 200 leads to longer careers and more album sales. If your name is Tricia, chances are you were born in the 1970s when the name rocketed into popularity before falling equally quickly into disuse. Pre-1950 almost no one named their daughter Tricia and the name is no longer in the top 1000 names for girls.
Berger suggests that the principle of what goes up quickly, must go down quickly, is applicable to all “identity relevant domains” – times when we know others are watching; when we’re shopping, when we like things on the Internet.
Love you long time
Brands are identity relevant. Much of our interaction with brands is about identity signalling (see Geoffrey Miller’s excellent book Spent), which, in line with Berger’s findings, suggests that the biggest and most successful brands have been built much more organically over time than we think.
Nike, founded in 1964 as ‘Blue Ribbon Sports’, officially became Nike in 1971. The famous ‘Just Do It’ tagline didn’t originate until 1988, when Nike, which till then had targeted marathon runners, expanded to take on Reebok. Nike’s take no prisoners attitude to sport took it to stratospheric heights. According to Millward Brown’s 2015 BrandZ rankings, the Nike brand is now worth US$29.7 billion and is the most valuable apparel brand (that’s not just sports apparel) in the world.
The current profusion of active-wear (or ‘athleisure’) amongst the masses demonstrates the success of Nike. What was once a brand for elite runners recently produced an ad celebrating a woman coming last in a marathon.
Other apparel brands have not shared this success. Crocs launched in 2006, reached a share price high of US$75.21 in 2007 and then slumped to $14.74 today. Contrast this with UGG, arguably a brand with similar aesthetic merit, which has grown consistently since the late 1980s.
Ed Hardy by Christian Audigier launched in 2006, peaked in 2009, and crashed in 2010. A case of too many celebrities, too much ubiquity, too fast.
Easy come. Easy go.
Stuck in the middle
Of course, marketers aspire to be trendsetters, to target exciting niche audiences and early-adopters, but there’s money in being middle-of-the-road (and having a solid and reliable base).
Even the new technology brands – the innovators, the disrupters, the ones that are changing everything – haven’t done it overnight.
Airbnb grew quickly, but it took more than seven years to reach its current market cap of over US$10 billion. Their launch was a near total failure when only three people agreed to open their homes. In late 2008 their revenue was a miserly $200 a week and they were selling novelty breakfast cereal to stay afloat. They were living on leftover cereal when the venture capitalists came knocking.
Now with 20 millions users, Airbnb seems like it’s here to stay. Cities have started to legalise (and tax) Airbnb’s activities, and Airbnb has altered how it operates, evolving from a renegade to a responsible corporate citizen. And it’s become mainstream. What was once the domain of Silicon Valley techies is now providing retirement income for empty nesters.
Founder Joe Gebbia is quoted in The Telegraph saying, “We can see ourselves doing this for a decade to come – a generation.” Not long, but perhaps 15 years is the new long-term for innovation brands.
Tesla Motors, a brand that is not yet available in New Zealand, launched in 2003 with a vision of making electric vehicles appealing to a wider audience (and ‘affordable’ by 2016).
After nearly going bankrupt in 2008, it now has a market capitalisation of around US$28 billion. Morgan Stanley calls it “the world’s most important car company,” and a nationwide survey found that Tesla’s Model S was the ‘Most Loved Vehicle in America’ in 2014.
The sales figures seem to support this story. The Model 3 outsold both the Mercedes-Benz S-Class and the BMW 7 Series in the USA in 2013.
We should not be afraid of failure; it’s good fertilizer. Mistakes make a company stronger and more resilient. Airbnb and Tesla are successful not just because of their perseverance, but because taking risks and flirting with failure has provided valuable opportunities to learn. As Elon Musk says, “if things are not failing, you are not innovating enough.” What doesn’t kill you makes you stronger.
Successful brands are like hardwoods; slow to grow, but strong, robust, dense and valuable. Brands that grow fast are soft, easily snapped or blown over in a storm.
There is no such thing as a quick win. But we seem content to chase sawtooth success, short sales bursts followed by abrupt slumps. Steady growth takes focus and discipline. And that’s hard. Humans are impatient. We’d rather have $100 now than $125 in a year’s time.
Renowned advertising effectiveness expert, Peter Field, describes short-termism as “the single greatest threat facing marketing”. There is pressure on budgets, scrutiny on results. Digital channels mean campaigns are more measureable than ever, and the clicks, eyeballs and engagement metrics make it easy to forget that similar improvements have not been made in tracking long-term impact – price elasticity, profitability, and brand image can’t be gleaned from a ‘dashboard’.
According to a McKinsey study, most companies have a management horizon of three months, but 70-90% of company value is realised more than three years out. Forbes reports that average agency-client tenure has dropped from 8.5 years in the 1980s to three years today.
The profusion of social media means that trends build faster. Behaviours are more public; people share things that they didn’t use to. And online, people are more aware of being watched by peers.
So how do we resist the temptation of a short-term win when our context all but demands it?
PR has always recognised the difference between creating a big spike of awareness (i.e. a stunt) that quickly fades and seeding a long-term strategy (i.e. corporate comms). In PR, there are very pragmatic drawbacks of growing too fast.
Building PR coverage too soon can be hugely detrimental to brand launches. A lack of material or interest can lead to a loss of momentum, and it’s hard to get pick up a second time round. Going too big too soon can also mean that a company isn’t in a position to ramp up and cope with increased demand, leading to decreased quality and bad press. Don’t create hype you can’t live up to.
John Hayes, the former CMO of American Express, said, “we tend to overvalue the things we can measure and undervalue the things we cannot”. In an age where so much of what we do can be tracked instantaneously, how we determine and measure success is crucial. Whilst short-term metrics like persuasion scores, click-throughs, search and likes and follows may be alluring, we cannot allow them to distract us from long-term effects on price-elasticity, brand image, profitability and market share – metrics that can take considerable expertise and effort to determine.
It all adds up
There’s substantial evidence that a focus on the long-term is more profitable. Les Binet and Peter Field found no evidence of advertising campaigns shorter than three months having any impact on price sensitivity. Volume growth can be achieved in the short-term, but pricing effects take longer: optimum profit growth over the long term requires both, so a focus on short-term results will not maximise long-run profitability.
We need to give our brands time to grow.
This means setting realistic targets and timeframes when launching new brands. Especially in FMCG where the intransigence of grocery shopping habits makes it hard to get new products on the radar. Promising big returns too soon can mean a product gets pulled before it has a chance to gain traction.
And we need to ensure we are clear about the roles of strategy and tactics. Strategy is the long game, the big picture: the what. Tactics are the detail: the how. As Seth Godin says, “the right strategy makes any tactic work better. The right strategy puts less pressure on executing your tactics perfectly.”
Let’s consider the cumulative effect of all marketing activity rather than just the impact of the next campaign.
Perhaps we could take a lesson from Sir Alex Ferguson, manager of Manchester United from 1986-2013, and the most successful manager in British football with 49 trophies. He firmly believed in building a club, not a team. His advice: “Winning a game is only a short-term gain – you can lose the next game. Building a club brings stability and consistency.”