Our podcast guest is Simon Bailey, co-author of Myths of Branding, this month’s Bigeye Book Club selection. Simon discusses some of the false myths that abound in branding. From the titular belief that a brand is just a logo, to the perception that it’s a ‘soft’ area of marketing that doesn’t go beyond visual identity – hear why these couldn’t be further from the truth. For a 20 percent discount on Myths of Branding, go to KoganPage.com and use promo code BIGEYE20 at checkout.
Episode Transcript
Adrian Tennant: Coming up in this episode of IN CLEAR FOCUS:
Simon Bailey: Ultimately, brands are there to perform two tasks really. The first is to help sustain demand. And the second is to generate loyalty.
Adrian Tennant: You’re listening to IN CLEAR FOCUS, fresh perspectives on the business of advertising, produced weekly by Bigeye. Hello. I’m your host, Adrian Tennant, VP of insights at Bigeye – a strategy-led, full-service creative agency, growing brands for clients globally. Thank you for joining us. Today’s podcast marks the launch of the Bigeye Book Club in partnership with our friends at Kogan Page. To kick things off, it’s my pleasure to welcome an expert in delivering brand-led business growth, who is also the co-author of our featured book club selection this month, Myths Of Branding, A Brand Is Just A Logo And Other Popular Misconceptions. Simon Bailey has led several well-known global branding consultancies and is now Managing Partner of The Caffeine Partnership. Simon appears regularly in the media discussing marketing and branding. To discuss brand strategy and the book he co-authored, Simon is joining us today from his home office in London, England. Simon, welcome to IN CLEAR FOCUS.
Simon Bailey: Thank you very much. Nice to be here.
Adrian Tennant: How did your early career lead you to brand and strategy?
Simon Bailey: Yeah, it was a kind of interesting start. I originally trained as a lawyer, and graduated law school, but I came out and sort of had a sense that maybe the law wasn’t for me. So I went to London. As you do, sort of seek your fortune. And actually I finished up working for The Guardian Media Group. And at that point, the MD of the business was Carolyn McCall, and Carolyn McCall went on to run an airline and now runs the ITV media broadcast network. But at the time, and this was quite a few years ago, she spent a lot of time talking about how The Guardian newspaper was a brand. And actually as a result, as representatives of the newspaper, we should be confident about what the brand stood for, and also why it could justify a price premium. And actually, that got me thinking quite a bit about the subject of branding and brands because we were talking about it so much. And that ultimately led me to a position where I saw a job advertised for a very well-known sort of leading brand business. I went to see the CMO at the time of The Guardian and said, “If you were going to work with a brand business, who would you work for?” And he was kind enough to put the one I was going to potentially try and work for at the top of the list. So I thought, “that’s really interesting,” and then I joined that business. And then over 20 years worked for both Omnicom and WPP and finished up leading businesses with both of those organizations.
Adrian Tennant: Now you’ve known the co-author of Myths Of Branding Andy Milligan for 20 years or so. How did you two first meet?
Simon Bailey: Well, actually, I will say this once, so I’ll give them a name check. Andy was working at Interbrand, and I then came to Interbrand and met Andy. Andy’s a couple of years older than me. I won’t reveal any more than that. But he, at the time, was one of the sort of leading lights in their strategy teams and naming teams as well. and yeah, got to know him through that. And then we’ve remained in contact and good friends really, ever since. And then of course, more recently we joined together in The Caffeine Partnership.
Adrian Tennant: So how do you define a brand?
Simon Bailey: Well, of course, there was a legal definition. Things like the name, the design, the symbol, and many other facets, which technically help to differentiate the goods and services of one undertaking over on another. And that’s important because of course brands are protectable. But actually, it’s probably more helpful to think about brands as a mix of functional and emotional attributes that you associate with a particular product or service. If it’s more helpful and you want to simplify it further, you could probably talk about the real estate that you’ve got to occupy in somebody’s mind, or potentially even the famous quote by Jeff Bezos. When he said that “a brand is really the things that people say about you when you’re not in the room,” which is a kind of a nice, succinct definition.
Adrian Tennant: Can you tell us a bit about the work The Caffeine Partnership undertakes for clients?
Simon Bailey: Yeah, sure. So, The Caffeine Partnership is focused on helping impatient leaders accelerate growth. And we do that through three distinct areas. So, brand – helping people leverage the power of their brands. Customer experience – helping customers to have a fantastic experience, but more importantly, the owners to focus on what matters most for their customers and making sure that’s consistent across the experience. And then finally, what you broadly term brand engagement, and that can cover anything from helping to facilitate a board meeting or a strategy away day, all the way through to helping large organizations mobilize workforces, get people behind an idea, or indeed help them understand how they need to take on a brand or deliver a fantastic experience.
Adrian Tennant: So what prompted you to write a book focusing on misconceptions about branding?
Simon Bailey: I think the glib answer and I was talking to Andy about this is essentially, we were actually asked to do it. So that’s one thing, but of course, it’s also a field littered with misconceptions. Together we thought actually it would be a great opportunity to bust a few myths and to try and give our own points of view on the subject and also an opportunity to lay down some of the things that we may have learned or experienced over the years.
Adrian Tennant: So Simon, let’s start with the titular misconception, “A brand is just a logo.” Where did this idea originate and why is it a myth?
Simon Bailey: Ultimately, because it’s such a persistent myth. I think that’s why it became the title for the book. It’s one that we hear most frequently, throughout our time inthe sector, really. And of course, brands are so much more than just the logo, which is why it could also be maddening and a bit frustrating. But I think the reason for that is that it’s the logo that people do identify with. That’s the job of the logo: to act as an identifier for goods and services, and an experience, it’s the promise of an experience to some extent. And so I think what happens is those people that are more skeptical about brands or don’t like them, or just want to be a bit derogatory about them will say, “Well, brands are just about the logo” and they’ll tend to believe that’s what it’s all about. And of course, it isn’t. It’s much more than that. And it struck us that was the most frequently encountered, most common almost meta myth that we were trying to address head-on and have a bit of fun with it and make it the title of the book.
Adrian Tennant: Well, chronologically, the first myth in the book is “brands are just a way of charging you more for the same product.” But you write that brands are rarely that.
Simon Bailey: When you buy the brand, you aren’t just buying the immediate product or service that’s in front of you. You’re actually buying all of the marketing investment that’s gone into building that brand in the first place. And actually, that really matters because we identify with brands. They are to some extent, an expression of kind of who we are and the values that we hold. But brands, of course, also act as a kind of guarantor of quality or of the promise of a specific type of experience. Let’s give you a practical example. If you were in a fortunate position to be able to afford a Louis Vuitton handbag, yes, of course, you are buying into some of the intrinsics, you know, what you would hope to be good quality, great design. But you are also buying into an experience and a lifestyle. And that’s partly what you’re paying for really. And consumers understand that, you know, if you want to invert that idea for a minute, think about it the other way around. When people buy a fake Rolex, and I’m sure that people may have done that in the past, you are really paying less for less. You know, it’s great fun, but close scrutiny usually reveals that it’s a fake. And even if people don’t spot it straight away, then you’ll rarely find it keeping good time in a couple of years. You know, consumers understand the trade-off and they understand that in the end brands are much more than just the product. They are a whole kind of collection of attributes that they’re buying into.
Adrian Tennant: Myth 13 in the book is “Branding is subjective. It’s all fluff and art with no rigor and science.” Now, marketing has academic literature, including journals and studies that underscore its status as an established discipline. Advertising too boasts several professional bodies that offer models of advertising effectiveness. But as you point out, the misconception about branding means that it hasn’t attained quite the same level of respect. Why do you think that is?
Simon Bailey: I think it’s because ultimately, a brand or the brand isn’t consistently owned by the same person or group of people across different types of organizations. So for example, if you think about a large FMCG business, you’ll often have people called brand managers, but actually, when you look more closely, those brand managers are really marketeers. They’re often responsible for the P and L and for the end-to-end performance of the brand.
Adrian Tennant: So a quick UK English to US English translation: in the UK, FMCG stands for fast-moving consumer goods, which in the US are generally known as CPG or consumer packaged goods. Different terms, but they mean the same.
Simon Bailey: Thanks, Adrian. In another organization of a different size or orientation, you might find the brand owned by the finance department or the legal department, because for that business, brand has always sat with the legal because they’re the ones that entertain any issues or infringements. You know, in another business, you might find someone charged with the brand or called a brand manager or brand director where their job is to make sure that the brand is applied consistently or managed appropriately across channels. You’ll have some people focused on trying to make sure that the brand idea is manifested across all those channels. And then you’ll have businesses possibly the more enlightened ones where the CEO themselves see themselves as the brand manager in a sense. And I think it’s to do with the fact that it doesn’t belong in a place necessarily that branding sometimes struggles to achieve the kind of professional parity that you would expect us to believe that it does ultimately deserve. So I think that’s probably at the heart of some of these issues.
Adrian Tennant: Myth number six is “brands don’t have financial value.” Can you tell us more?
Simon Bailey: Yeah. we would assert that brands most definitely do have a value and that value can be quantified. And I think it’s important before we just look at some examples to reflect on why they can and that’s because ultimately, brands are there to perform fundamentally two tasks really. The first is to help sustain demand. And the second is to generate loyalty. They are in a sense, a guarantee of future revenues. As far back as I think, 1988, and I’ll give you a few figures, but treat them as indicative because whenever you go back and have a look at these things, they change depending on who reported them. But Phillip Morris bought Kraft in 1988 for approximately $12.9 billion, which at the time was four times the tangible value of the business. Similarly, I think Grand Met, a little bit later acquired Pillsbury, for something like $5.5 billion, which was a 50% premium on book value. And as we come through the decades, in 2011 Kraft bought Cadbury, the chocolate and confectionery manufacturer, and it obviously went on to form Mondolez, and Kraft paid for that approximately $19.6 billion, which at the time was something like 13 times that EBITDA. So they’re earning before interest tax deductions and so on. And actually, for this asset, I saw a commentator describe that as a very good price. So all of that intangible value is being allocated. And then later on in 2017, Amazon purchased Whole Foods. And I think nearly 70% of the purchase price was allocated to goodwill. And of course, goodwill and brand value are not quite the same things, but within that conduit of goodwill will set a substantial amount of brand value. And I thought it’s interesting just to reflect on two more things very quickly. I think it’s always been part of Warren Buffett’s investment strategy, if you go back, to invest in very well known, very well established brands, because in a sense they are less risky. They are there to generate future revenues as a higher level of confidence, that’s what they will be able to achieve. And then today, I looked just at one of the valuation league tables, one of the more established ones, and Apple’s brand value is, in their view, worth approximately $400 billion. Hopefully, some examples to get people thinking. Of course, it’s also recognized in various accounting standards as well as a genuine asset.
Adrian Tennant: So from a practical perspective, Simon, how should organizations arrive at a financial value for their brands?
Simon Bailey: There are different methods of valuing brands. And, I think, listeners might begin to glaze over if we get into the intricacies of those. But I think it’s probably worth saying that there are purely financial approaches, which, if there are any accountants listening to they’ll understand the kind of process and method that you approach to do that. But then there are methods and approaches, which seek to delve a bit deeper and what they do, or certainly, the ones that have achieved suitable accreditation, what they try to do is establish the amount of earnings that are attributable to the brand, and they call those brand earnings, and they will then try and combine that with an assessment of how strong they think the brand is, or how well managed it is. And that’s used then to create a discount curve, which enables them to establish almost like a net present value over a certain time horizon. And that will provide a value for the brand and for the assets. And that brand’s strength factor then, depending on how you choose to do that, can be done with consumers so that you’re getting that fed directly into the process. It’s also worth just mentioning this as an adjunct, which is of course the role of the brand, in generating earnings differs by category. So if you take petrol retailing, brands are valuable, but the role of the brand in petrol or gas retailing is going to be much smaller than it will be in say the luxury apparel category, because when you’re looking for a gas station, You may have a preferred brand, but if that’s not available, you’ll definitely fill up with the one that’s closest to you. It’s convenient. Whereas in luxury branding, you’re really buying that brand and it’s that brand and nothing else that you’re seeking. So they’ll look to establish when they’re looking at those brand learnings, you know, the amount that’s attributable to the brand.
Adrian Tennant: Absolutely. Let’s take a short break. We’ll be right back after these messages.
Dana Cassell: I’m Dana Cassell, Bigeye’s Senior Strategist. Every week, IN CLEAR FOCUS addresses topics that impact our work as marketing professionals, often inspired by data points reported in consumer research studies. At Bigeye, we put audiences first. For every engagement, through our own research, we develop a deep understanding of our client’s prospects and customers – analyzing their attitudes, behaviors, and motivations. We distill this data into actionable insights to inspire creative brand-building and persuasive activation campaigns – with strategic, cost-efficient media placements. If you’d like to know more about how to put Bigeye’s audience-focused insights to work for your brand, please contact us. Email info@bigeyeagency.com.
Adrian Tennant: Each month, in partnership with our friends at Kogan Page, the Bigeye Book Club features interviews with authors who are experts in specific areas of marketing. January’s featured book is Myths Of Branding by Simon Bailey and Andy Milligan. IN CLEAR FOCUS listeners can save 20 percent on a print or electronic version of the book with exclusive promo code, BIGEYE20 – that’s B I G E Y E 2 0. This code is valid for all products and pre-orders and applies to Kogan Page’s free ebook offer. To learn more, visit our website at bigeyeagency.com/insights.
Adrian Tennant: Welcome back. I’m talking with Simon Bailey, the co-author of this month’s Bigeye Book Club selection, Myths Of Branding: A Brand Is Just A Logo And Other Popular Misconceptions. Myth number 20 is “there’s no such thing as brand loyalty.” Professor Byron Sharp of the Ehrenberg-Bass Institute, who’s also the author of How Brands Grow, believes that brand loyalty does not exist and that consumers typically choose from a basket of brands, but you think he’s wrong?
Simon Bailey: Well, actually, it’s not so much that he’s wrong. I think we’re making a slightly different argument in our book. And what we’re saying is that actually, we agree that in a lot of instances, consumers don’t tend to spend enormous amounts of time thinking about brands. You know, you’re not lying in your bed very often thinking about any great depth to your supermarket brand, for example. Actually, brand owners might have milliseconds to occupy some kind of mental real estate that we talked about So we don’t really take issue with that, that we perceive ourselves certainly to be time-poor and lots of things competing for our attention. Our point really is that differentiation and being distinctive are really the same thing. And to back that up, if you look at the dictionary definitions, you’ll find each one refers to the other in an attempt to define what it does. So we think it’s a slightly semantic distinction, really, which is that in the end, what brands have to be is memorable, and if they achieve a memorable status in your mind and they’re there and you’re thinking about them when you’re making a relevant purchase, then that’s achieved its job. So we think that’s a bit semantic. Brands have to be memorable. They have to stand out. And to some extent, it was ever thus. What I would say though, is that he does make really interesting and well-evidenced observations about how brands are built, or if you want to get technical, how to drive penetration. But I think even those instructions or suggestions are sometimes misinterpreted either because people, you know, don’t take the time to read it, or haven’t always fully understood exactly what he means.
Adrian Tennant: Yum! Brands’ chief marketing officer Kan Muench oversees global marketing for KFC, Pizza Hut, and Taco Bell. He recently told Marketing Week – and I quote: “Brand purpose truly is a bunch of“ – and I won’t say what he said, but it’s an expletive – “because it’s disingenuous. You’re saying my purpose is to make the world a better place. No, your purpose is to make money,” end quote. Simon, your thoughts on Ken’s comments, please?
Simon Bailey: Yeah, you might have to stop me on this one, Adrian. This is a bit of a Caffeine specialist subject. You know, we, uh, we write a lot about purpose and Andy has written actually a couple of books on purpose. And as you know, there’s a chapter on that in the book. So I think the first thing is we’d say actually, no. And we challenge what he said. We’d say that the purpose of a business fundamentally is to deliver value to the customer. And by doing that, you deliver value to shareholders and beyond. And that’s quite an important point. Um, and to be fair to him, I think he does go on in his interview to make the point that he thinks that brands and businesses should improve. You know, he’s just taking issue with a thing that we think people often do, which is conflate or confuse purpose with CSR responsibilities or the ESG agenda, because actually for us, purpose is really seeking to answer the why. So in other words, why you are in business or if you like, why you do what you do.
Adrian Tennant: Just to explain a couple of acronyms. CSR is corporate social responsibility and ESG is short for environmental, social, and corporate governance.
Simon Bailey: Yeah. And actually, we’d argue that there’s plenty of evidence to suggest that consumers care not just about what you do or what you offer, but increasingly why you do it. So I would point listeners in the direction of the Havas Meaningful Brand survey and they make some fascinating points about how consumers engage with brands that they fundamentally perceive as more meaningful. And they generate nine times the share of wallet and they are the brands which if not available, a consumer would wait for, as in most instances, you know, consumers will have to buy the brands that come to them. Purpose for us needs to be customer-led. That’s a really important distinction. They need to be really focused first of all, on how they deliver value for customers. But then they need to also take account of obviously the financial and societal impact of what they do. A good business should be always looking to mitigate its impact and to make a positive contribution to a business. That’s just the rules of the game for being in business and to be a successful brand. But for us, a purpose is seeking to deliver value for customers and to answer that question, which is why. And that why matters, because we’re living in many economies in a place where there are lots and lots of choices. And consumers are increasingly asking, “Okay, not just what’s this, but why do you do what you do? What’s behind what you do?” I can give you a very good example. It is a UK one, We did some work for Premier Inn, which is a kind of budget hotel group. And we work with them to establish a purpose. And after lots of work, we alighted on a purpose really about giving customers a brilliant night’s sleep. And the reason that purpose was so motivating is it sits at the kind of intersection of what we believed mattered most to both the customers that went there and the employees that were there to deliver the experience. Because if you’re staying in one of these kinds of budgets and mid-priced hotels, what you’re looking for is a great night’s sleep. ‘Cause you’re getting up for a sales conference or a meeting, or if it’s the weekend, it’s a wedding or, a christening or those types of activities. You want to feel great and you want to feel motivated. But the really important point, I think this serves to illustrate the power of purpose, is that the group, then it’s quite a large group, decided that they were going to focus their experience around that idea too. And so they invested in a Hypnos bed solution, which is a high-end bed that you would normally find in a five-star hotel, put those in all their hotel rooms. They fixed all the air conditioning, made sure that everything was working on a soundproofing level. And then taught and trained their staff to help deliver to customers a brilliant night’s sleep, including some little behavioral nudges and signs asking people to be quiet at night. And it’s been fantastically successful as a brand because it’s very clear and very purposeful about what it’s doing. So for us, that’s an example of delivering value to customers, which delivers value to shareholders, through a customer-led purpose.
Adrian Tennant: Between the original publication of Myths Of Branding in 2019, and our conversation today, the world’s population has been impacted by the COVID-19 pandemic. Based on the changes you’ve observed in consumer behaviors, what lessons can we apply to brand strategy moving forward?
Simon Bailey: We’ve got a new edition of Myths Of Branding coming out next year and that’s currently being written, and we will try and update the book and hopefully capture some of these key changes because of course a lot’s happened in a relatively short period. But in a sense, and aside from the loss of life and the negative consequences it’s had for many people and many families, and the next point is not to diminish that, that needs to be acknowledged, but it’s really just to say that in another sense, COVID whether we like it or not, as finished up being a huge social experiment. Because actually, nobody really knows exactly what is going to happen. They don’t. And the reason for that is that we know that some behavior, although not all, some behaviors will probably have been changed forever as a result of the pandemic. And that the pendulum will swing to a new direction, to form a habit. Well, we’ve had, depending on your jurisdiction, probably over two years of people behaving differently and it’s likely that some of those behaviors will stick. I think where you can begin to be more confident and I can assure you that brand owners across the world of every shape and size are busy scratching their heads and employing people to help them navigate some of these things. But I think you could probably take a view that things like safety and security and health and wellness – including mental health – these are all factors which I don’t think are going to go away anytime soon. I think that for certain parts of the population in certain countries, all over the world, those things are going to remain big issues. But we will undoubtedly also see people wanting to spend, go out and enjoy themselves where they can. And I think again, in certain economies, you can see that happening and you can see that happening in, the big numbers, things like inflation and the shortage in availability of products, as well as, you know, stuff that you might be able to point to more anecdotally. But I think it’s fair to say that those changes are underway and there’ll be lots of other things as well. I mean, that’s probably the tip of the iceberg of some of the changes. But I think what we have definitely seen also is how adaptable technology has become. And so I’m amazed that even bars and restaurants in my local community did an amazing job of – when they were able to – turning their premises into tech-enabled, COVID -compliant retail outlets. It was absolutely amazing. In fact, some of their apps are better than some I’ve seen, you know, in organizations many times bigger. And secondly, the flexibility that it will afford for new ways of living and working. And I think that flexibility has definitely worked for certain groups of people. And I think that there will be a clamor and petitioning for people to be able to work more flexibly in the future. I don’t think that’s going to go away. And I also have a sense of that because when I speak to friends and contacts, for example, in the real estate business, this is an immediate live issue. Whether it’s, you know, retailing on the high street, office accommodation, thinking about new buildings and how things are changing the demand at the moment for logistics space and the ability to meet online demand. all happening in real-time right now.
Adrian Tennant: Simon, if IN CLEAR FOCUS listeners would like to learn more about you, your work at The Caffeine Partnership, or Myths Of Branding, where can they find you?
Simon Bailey: Hopefully, we’ve got a memorable name. So you should be able to find The Caffeine Partnership – you’ll find us online. We’ve obviously got a website, ThisIsCaffeine.com, where you’ll find further information about us, including details of the people in the business, myself and Andy and my colleagues. But you can, of course, also buy the book and we’re on all the key social channels.
Adrian Tennant: And IN CLEAR FOCUS listeners can take advantage of a special promo code that takes 20 percent off Myths Of Branding or any other Kogan Page title. Go to KoganPage.com, that’s Kogan with a “k”, and enter the code BIGEYE20 – that’s BIGEYE20- at checkout. This also applies to Kogan Page’s free e-book offer. You’re the first author we’ve interviewed for the Bigeye Book Club, so Simon, thank you very much indeed for being our guest this week.
Simon Bailey: Brilliant, thanks for having me, appreciate it.
Adrian Tennant: Thanks to my guest this week, Simon Bailey of The Caffeine Partnership, and the co-author of Myths Of Branding. You’ll find a transcript with links to the resources we discussed today on the IN CLEAR FOCUS page at Bigeyeagency.com under insights, just select podcast. If you enjoyed this episode, please consider following us wherever you listen to podcasts and contributing a rating or a review. Thank you for listening to IN CLEAR FOCUS, produced by Bigeye. I’ve been your host, Adrian Tennant. Until next week, goodbye.
