News Corporation's brand architecture defenses under siege

The phone hacking scandal at News Corp.'s The News of the World is testing the effectiveness of brand architecture as a way to protect a company from conflagration when one of its units burns to the ground.

The protective possibilities of brand architecture is an argument in favor of a "house of brands" model, a model where a company's products and services are all separately branded like Tide, Crest and Gillette for Procter & Gamble. The idea being that since consumers don't know that these separate brands are all part of the same company, then problems encountered by one brand won't affect the reputation of the others.

When BP, for example, was being pilloried for the Gulf oil spill, its Arco business benefited from the fact it's a separate and unconnected brand. Whereas all of Accenture, as a single company brand, was impacted by its association with Tiger Woods when his excesses came to light. Bank of America might now be wishing that it had kept its Countrywide Financial acquisition as a separate brand until all of its problems were sorted out because, as it is, the Bank of America brand is being tarnished.

News Corp. is a veritable Spelling manor, house of brands; As the world's second-largest media conglomerate and an aggressive acquirer, it has a huge number of papers, magazines, book publishers, movie studios and assets in TV broadcasting, cable and satellite. In addition to The News of the World, these include many well-known brands like Fox, The Wall Street Journal, The Times and Harper Collins.

So, the theory is that the problems at The News of the World should not affect the rest of the organization. But the facts suggest that this theory is not working. Just one measure: News Corp's share price has fallen dramatically in the last couple of weeks wiping almost 20% off the value of the company by some estimates. So what's going on here? A couple of things have undermined the usually reliable house of brands architecture defense.

1) The story is now about Rupert Murdoch, not the paper. He was the one who became the center of attention (and the target of a pie-attack) as he testified at the UK parliamentary hearing. And one of the underlying stories about  Rupert Murdoch is how he built his media empire so that means that all the other assets he owns are now in play.

2) The problems at The News of the World have been portrayed as a pattern of questionable ethical behavior that's pervasive in the whole company. One example that's been cited is News America, the in-store and newspaper insert marketing business. News Corp. has been reported as paying out over $650 million to settle corporate espionage accusations against that company.

The House of Brands may provide some risk protection but there are limits. The News Corp. story shows that if a fire is big enough, it will jump from one brand to the rest, and a house of brands model will not be able to stop it.

Photo credit

Is killing off the Picasa and Blogger brands a Plus?

According to Mashable, Google is going to rebrand Blogger and Picasa, two of its popular products. Blogger will be renamed Google Blogs and Picasa will be Google Photos. This is all part of an initiative to unify the brand portfolio ahead of the public launch of Google+, the company's latest and most significant social initiative.

Such a change certainly has the immediate advantage of signaling a strong, no prisoners, commitment to Google+. If the company is prepared to kill off two of its big brands to make the integration of Google+  smoother and more seamless, it's showing its determination to make this thing work.

Opinion is varied. A Huffington Post poll showed that 22% of people liked the change, 29% hated it and 49% were indifferent because "names don't matter." Arguing against the rational, names don't matter POV, Casey Chan at Gizmodo says: "I can go along with changing Picasa to Google Photos, it's an okay, undisgusting move. But swapping Blogger for Google Blogs? WHY?! That's unnecessarily generic. Evilly plain. Disgusting vanilla. Blogger is one of the tent poles of the Internet! You're not allowed to mess with those. I like + a little less now."

Casey's comment points to the potential downside of eliminating product brands in a portfolio in favor of a single brand. For all the benefits of a single brand, product brands bring important benefits of specificity and color. Without such brands, companies that do as many things as Google does can find it hard to compete against category specialists. Will the new social functionality of Google Blogs make it a viable competitor against WordPress?
 
It looks like Google recognizes that a single-branding approach has its limits because, apparently, YouTube is going to stay as-is (and not be renamed Google Videos). Just like some banks are "too big to fail," some brands are too big to be thrown away. What Casey expressed on behalf of Blogger, many more people would express on behalf of YouTube; the risk of consumer backlash outweighs any potential assimilation benefits. (Besides the company already had a Google Video product before and that didn't work out.)

As Ben Kunz pointed out in a recent post, Google has a classic branding challenge. It used to be something very specific (search) but, over the years, it's added more and more things (Gmail, Earth, Chrome, Earth, Talk, Offers .....), all great in their own way, but all doing their bit to cloud what Google is all about. Maybe Google+ will provide the glue that brings sense and meaning back. Or maybe it will become just another point of confusion. 

Jacobs by Marc Jacobs for Marc by Marc Jacobs in collaboration with....

Photo by Alex Do of sweater purchased at Marc by Marc Jacobs

Marc,

If you're joking, ha ha! If not, call me. I'm a brand architect. I can help

Regards,

Martin

The rise of Android, another killer ingredient brand

Nielsen data on smartphone share (recent acquirers) as reported in Fortune

When Android first started outselling the iPhone about a year ago, PCWorld said it was no big surprise because: "Two models of the iPhone (the 3GS and 3G) are doing battle with scads of Android handsets in an array of shapes and sizes" (my emphasis).

As you can see from the Nielsen data in the chart, Android has continued to move ahead and now has half of the market of recent acquirers. Even the launch of the Verizon iPhone hasn't slowed down Android's march to the top. Nokia, once the dominant market leader, has been reduced to irrelevance and there's increasing speculation about whether it will be forced to dump Symbian, its own operating system, and join the Android party. Forecasts suggest that there could half a billion people using the Android OS by 2015.

With results like this, Android can lay claim to the title of most successful ingredient brand of all time, challenging the previously unassailable Intel. Like Intel, Android has achieved its success at the expense of its host brands. We talk about Android phones, we don't talk about Motorola phones with the Android operating system. Motorola may have found a new lease of life by adopting the Android OS but its margin opportunities are significantly eroded if it's just one of many manufacturers who can supply Android phones. Any manufacturer that partners with an ingredient brand as strong as an Android or an Intel trades away a good portion of its equity and heads towards commodity status.

One important difference between Android and Intel is that Intel made itself really difficult to extract from its hosts. The significant marketing dollars that Intel has spent both directly to the consumer and indirectly through advertising subsidies to its OEM partners worked their magic. The OEMs became addicted to the money and consumers were trained to look for the Intel mark. Android has take a different route to market, gaining market traction quickly by being offered for “free" and without significant marketing support.

That means that, despite the huge success of Android so far, it's possible that some manufacturers may still be able to liberate themselves from their Android dependency. Indeed, there are reports that Motorola is going to try and develop a new, proprietary OS. There may not be much time left. A future where there's just Apple's iPhone vs. a mass of Android smartphones that compete against each other on price and a few relatively unimportant features (much like current PC’s) looks the most likely scenario.

Reference: Ingredient branding, or, finding your Nemo (Landor.com)

Every picture tells a story, don't it?

Dairy Cow With Problems (via Awkward Stock Photos)

So, nine times out of ten, while I write a blog post, I'll open up Flickr and see what Creative Commons photograph I can use to illustrate it with. But how about the other way around? How about starting with the photo?

@fritinancy pointed me towards this great new site: Awkward Stock Photos which has the most delightful and supposedly unusable stock photos--a great source of photographs to test my new approach.

Here we have, as you can see, a cow stuck on a fence so my first thought is the post will have to be about the dangers of sitting on the fence and not making a decision one way or another. Perhaps I could write a post about the dangers of compromise solutions that try and please everyone but which are udderly ineffective?

I actually have a brand architecture project right now which might fall in this category--half of the people want a house of brands solution where they keep their focused brands, the other half want to adopt a branded house solution with just one brand to save money and consolidate their efforts. But in this case, I think that an endorsement approach might actually be a viable option so what I need is a "cake and eat it too" picture and definitely not this cow on the fence one. Can someone find me one of those, please?

Branding features. Don't be a Kanye.

"JUST GOT TO LONDON!!! YOU KNOW I HAD TO PUT MY CAPS LOCK ON! I DON'T TYPE IN CAPS CAUSE I'M MAD I TYPE IN CAPS CAUSE I'M LAZY!!!" Kanye West tweet

Kanye's Kanye so if he wants to type in ALL CAPS no-one is going to stop him. But collective opinion is very much against it. It's the written equivalent of shouting and tells us that the author is trying to demand too much of our attention. So disliked is the all cap style that, as this Slate article points out, many online publications ban comments that are typed in all caps. An anti all caps group launched a "Caps Off" campaign to pressure hardware manufacturers to get rid of the Caps Lock key, trying to make it harder for all cap writers to operate.

In the world of brand architecture, the equivalent of ALL CAPS is ALL BRANDED FEATURES. Primarily an affliction of technology companies, branded features are often found in the nurturing environment of  trade show product brochures. At their worst, these brochures become a blizzard of TMs as companies brand and then try and protect every single one of the features that's built into their products.

It's an affliction often fueled by the worthy intention of giving credit to all the different project teams that have put in countless hours to build and complete these individual features. But the net result is TOO MUCH NOISE. If the volume is "11" for everything, the important things, the things that are really better, different and valuable to customers get drowned out by a wall of noise.

It may be difficult to implement but a system that limits the use of branded features pays great dividends. Such a system requires both of a process (all new names to be created/vetted by a nominated group) and a set of rules and guidelines (nothing will be branded unless it delivers competitive advantage and is supported by a marketing budget). If you don't want to be a Kanye, it's a worthwhile investment.

Increase your odds of M&A success with brand architecture

The Diamond Foods portfolio

In my new article on brand architecture, I make the case that a solid brand architecture plan can significantly improve the odds of acquisition success. Given that the odds are no better than 50/50 (based on analysis of how many past acquisitions increased shareholder value), companies should make sure they have their brand architecture ducks in a row before they join the impending stampede to buy companies or brands.

Brands have great potential to screw up acquisitions. They often represent a big part of shareholder value (well over 50% in the case of brands like Disney or Coca-Cola) and, at the same, they're notoriously difficult to value accurately. Whatever value they have is also significantly affected by who owns them and what they do with them. A good brand architecture plan can't eliminate these inherent challenges but it can at least keep brands more front and center in the acquisition process and help companies move quickly post-acquisition to integrate new brands into their portfolio.

Companies that generally have the easiest time absorbing new brands into their portfolio are "house of brands" companies like P&G. These companies can slot new brands into position alongside their existing portfolio. In the article I talk about the success that Diamond Foods (a Landor client) has had with its new acquisitions. Each new brand it has acquired has helped the company extend its geographical and retail footprint giving it a strong probability of increasing its overall shareholder value.

Companies on the other end of the spectrum have a tougher challenge since the master brand model is inherently hostile to acquired brands. Shareholder value can still be increased if companies are able to transfer some of the equity of the acquired brand and/or use the acquired products and services to enhance its existing business and add more overall value to the customer. But it's definitely more of a challenge.

My three tips for M&A success:
1. Develop a robust, well-articulated brand architecture strategy
2. Value brands based on what they are worth to you (not what they were worth to the previous owner)
3. Plan, plan, plan and move fast to execute once a deal is finalized

Differentiating your brand cost effectively

It takes time, effort, creativity and money for brands to successfully differentiate themselves from the competition. It takes brilliance in innovation or design or advertising creativity or customer service or a combination of these and other factors to develop a brand that stands out from the crowd.

All this effort has its reward. Differentiation translates into products and services that are worth more to people. They will pay more for them and be more loyal to them. If the products are really differentiated, people may even queue all night for them.

But will consumers pay enough for all the brilliance and hard work? Can you drive enough revenue from your sources of differentiation to cover the cost of the resources required to create them?

This was a key principle expressed by Michael Porter in his book: Competitive Advantage, celebrating its 25th anniversary this year. As Porter says: "Differentiation leads to superior performance if the price premium achieved exceeds any added costs of being unique." It's the net benefit that counts.

This way of thinking comes in handy when considering brand architecture. In a typical scenario, we will be working with a business that has grown organically or by acquisition and has more brands in its portfolio than it can manage or support. The principle of net benefit provides a framework for evaluating the portfolio. Which brands are pulling their weight? Which are not? Could a streamlined portfolio widen the gap between differentiated-driven revenue and costs? Often it turns out that less is more, even when portfolios are made up of well-known brands.

And that's the beauty of this net benefit principle. It creates a bias towards simplification and puts the focus on sources of value. There are many ways to differentiate. The net benefit principle can help you evaluate which of all those ways is the most effective.

Photo: and sometimes I have to do it all in COLOR by Robert S Donovan on Flickr

Fairfax CA: A Trader Joe's type of town

Photo: Fairfax Parade by Martin Bishop (Flickr)

Does anyone know a way, there's got to be be a way to make this news Brand Mix-blog-worthy--Men's Journal has chosen Fairfax (CA), my home town, as one of its 2010 Best Places to Live. (Let's just ignore the fact that the list, no offense to its citizens, also includes Houston.)

I already wrote about Fairfax once before, talking about how its tagline "Only in Fairfax" captures its spirit and state-of-mind. So what's the angle now?

OK. How about this? The Men's Journal article mentions that one of the charms of Fairfax is that there are "No chain anythings here" which is true as long as you don't count Bank of America as a chain. There are no Blockbusters, that's for sure.

It has its own ice cream shop (Fairfax Scoop), its own natural foods store (Good Earth Natural Foods) and many local bars (like the Sleeping Lady). It's the Trader Joe's model for a town vs., say, a Safeway model. Rather than have the same brands as everyone else which would make it look and feel the same, it has its own unique set of brands which makes it look and feel different. That makes it a candidate for a best place to live and, hopefully, just-about-acceptably worthy of a post.

Predator or Partner? Different ways to think about M&A

Photo: Risk! by geoftheref (Flickr)

Here's one view of mergers and acquisition. In talking about M&A opportunities, The Boston Consulting Group says that companies must analyze their position to ensure that they are prepared for the coming economic upturn.

"A good one-fifth of all companies will be 'predators' that are ready for acquisitions, while another one-fifth will be 'prey'--unless they take radical steps to survive" (my emphasis).

In this view, there are winners and there are losers. Very Von Clausewitzian, very aggressive, very competitive. And if your goal is to eliminate competition, reduce costs by combining assets and control everything from HQ, and if your intention is to quickly absorb an acquired company, throw out the executives and give it very little operating autonomy, maybe appropriate.

Still, it's a troubling fact that most acquisitions don't work. McKinsey & Co. has estimated that nearly 80% of mergers don't even earn back the cost of the deal itself and there are many other studies that suggest that most mergers don't create value for shareholders.

Prashant Kale, Harbir Singh and Anand P. Raman suggest that there may be an alternative approach to acquisitions that is kinder, gentler and, in many cases, more likely to succeed. They call this approach to acquisitions: "Partnering" and it's the preferred approach of emerging multinationals like Tata Group and Ülker (a Turkish group that acquired Godiva).

Writing in the Harvard Business Review (gated), they describe partnering as: "Keeping an acquisition structurally separate and maintaining its own identity and organization. The acquirers retain the senior executives, particularly the CEOs, of the corporations they buy and give them the same power and autonomy they used to enjoy." 'What's the point in that?' the Von Clausewitz in you may be asking.

"By doing so," say the authors, "emerging multinationals are able to manage acquisitions' organizational drivers in a non-threatening way, reduce the unintended consequences of integration, and create an environment in which companies can easily share knowledge and best practices."

Partnering does not mean that the acquired company is left completely independent and alone. Those following this approach look for natural synergies, focusing on activities that can be coordinated to yield cost savings or revenue enhancement without disrupting core businesses. Things like raw material purchases and sharing best practices.

It's not that surprising that partnering has become the preferred approach for emerging multinationals. As they expand their footprint into new markets, they are buying companies that own powerful brands, state-of-the-art technologies and strong management teams. They are not making acquisitions to slash and burn; they are acquiring to grow and learn.

But, as the authors point out, it would be a mistake to dismiss the idea of partnering as something that only makes sense for these companies. As the authors point out, a similar approach has been adopted by Disney to get the most out of its Pixar acquisition and by Amazon with Zappos.

Partnering isn't for everyone or for every occasion. Companies with strong command and control, centrally managed organizations and cultures won't be willing or able to adapt to this model. Companies that are trying to build a single, global brand to serve the needs of global customers won't find the model that useful.

But, for companies that can take a longer term view, are tolerant of risk and ambiguity, have experience of similar business relationships (like strategic alliances and joint ventures), the partnering approach should be an attractive option. It holds out the possibility of succeeding with acquisitions where so many currently fail as they are beaten down by the disruptions of merging separate operations and the collapse of organization morale, challenges that are often drastically underestimated in the thrill of the hunt.

Jarden Corporation: ready for some boo-yah!?

Would a new approach to branding double Jarden's share price?

I'm not a big fan of Mad Money. The whole Jim Cramer thing--the shouting, the close-ups, the boosterism, the hysteria--it just doesn't work for me. But this segment was interesting. Cramer had invited Martin Franklin, CEO of Jarden Corporation, to talk about why home goods, specifically appliances, are doing so well this holiday season. Also, to harangue him about the fact that Jarden may be one of the biggest companies that no one's ever heard of.

Jarden is a $5 billion plus company or as Cramer put it: "a pastiche of a company, a mosaic of different brands." The brands include (among many others): Mr. Coffee, Crock Pot, Sunbeam, Oster, Coleman Outdoor and, for you skiing fans, K2, Marker and Volkl. It's #1 in 20 different categories and particular strong in home appliances sold through Target and other mass merchants.

Cramer thinks highly of the company and wishes it was better known. Standing in front of a large collection of Jarden products, he told Franklin: "What I'm amazed about, at this moment in time, is that all these brands are yours but no-one knows it. When is this going to be the Jarden Crock Pot? You'd double your stock if you'd let us know. What's the matter? You don't want to double your stock?"

Franklin responded that the Jarden brand is known to retailers and that it was never the goal to make it a consumer-facing brand. But does Cramer have a point when he says that Jarden is undervalued because it's not well known? And would slapping a Jarden logo on all of its products help?

Better known = Better valuation? As Franklin pointed out, retailers all know Jarden and presumably key analysts and investment managers also know the company. So, who cares if anyone else knows who they are? But, in fact, it does make a difference both for individual and professional investors.

Individual investors prefer to invest in stocks they know well and strong brands do better in the market than weak ones. From 2000 to 2008 the top 100 brands generated a 31% return vs. a 28% loss for the S&P 500 according to this article in TradingMarkets.com. For these investors, the challenge is to establish the link between the brands they know (like Mr. Coffee) and Jarden, the company whose shares they buy.

For professional investors it's more about how they classify a stock. In the case of Jarden, its chosen path of public anonymity positions it as a holding company or conglomerate. For a variety of reasons, these companies typically trade at a discount to the market (as much as 10%, according to CFO Magazine). If Jarden raised its profile it could potentially escape this label.

Logo-slapping? If Jarden wanted to raise its profile, would Cramer's logo-slapping idea work? It's worked for some companies--Nestlé and Mattel for example and it would establish the connection between Jarden and its well-known brands. But would it work? Probably not. The problem is that there isn't a common thread linking all of Jarden's product portfolio. K2 sales would not be helped by association (via Jarden) with Crock Pot. At best, the Jarden brand could be used to endorse a subset of its portfolio (like its home appliances) in the same way that Nestlé is used to endorse its human food brands but not its dog food brands.

The alternative to logo-slapping is to develop awareness and reputation for the company by investing in the corporate brand in the mode of, say, P&G. Could this work for Jarden? Possibly but it would require time, commitment and investment before it paid dividends. To be effective, Jarden would need to find and express a purpose for its brand (something to stand for).

So, could a new approach to branding double Jarden's share price? I'm going to say "yes" but with a high level of difficulty. Agree?

Marriott launches Autograph Collection: a tricky proposition

As a brand architect, I've always loved Marriott International. Here's a company that's really explored all the brand architecture options. See how, on this frequently-used chart of mine, the company has managed the relationship between the Marriott brand and its hotel properties up and down the price/quality spectrum. Its lower-priced hotels get a Marriott seal of quality endorsement but are kept at some distance. The JW Marriott uses the founder's name to signal a more upscale product and the Ritz Carlton stands alone.

With its extensive brand portfolio and the careful use of its flagship brand, Marriott has managed to compete successfully across a wide range of properties, providing consistent, appropriate and predictable quality to different customer segments. But what to do with those pesky, growing number of people who prefer independent, boutique hotels and who yearn for something that they would describe as less cookie-cutter. What to do about them?

Well, here's what Marriott has decided. It's launching a new brand called the Autograph Collection which will bring together high-end, unique properties in an upscale franchise. From a business perspective, this looks good. The high-end properties benefit from the marketing and operating efficiencies of tapping into Marriott's powerful infrastructure. Marriott benefits by partnering with these hotels to attract this tough-to-reach, independent-minded segment.

From a branding perspective, it's tricky. How can one of the strongest hotel brands successfully appeal to a segment of people who are trying to escape strong hotel brands? How can its new brand stay low enough key that it doesn't get in the way of the individuality of its independent hotel partners but still drive business?

In this Washington Post article, Don Semmler, Marriott's executive vice president of brand management, says that the purpose of the Autograph Collection is to bring a level of consistency to the new hotels, which the company hopes will build trust in the new brand among potential customers. He told The Post: "The universe of independent hotels has a lot of variation, some good, some bad. Our research tells us they want a trusted expert to help them navigate, so there is no disappointment."

That speaks to another problem. Will a company that has been so successful at delivering consistent hospitality experiences be able to stop itself from driving out all the quirks, inconsistencies and peculiarities that give these independent hotels the character that makes them attractive in the first place?