How to Build a Digital Brand That Lasts

How to Build a Digital Brand That Lasts

by Bloomberg Stocks
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What makes a brand durable even as business models, technology and consumer behavior radically change? They key is that durable brands are adaptable brands — even legacy ones. To create durability, apply the MACE framework: 1) Mastery: Give your consumers non-transferrable rewards for using your products and engaging with your content; 2) Accessibility: Make your brand easily available to as many consumers as possible; 3) Cadence: Constantly create news and content around your brand; and 4) Ensnarement: Make your brand as sticky as possible by building in switching costs and creating network effects.

What makes a brand last? Knowing the answer is what separates sustainable success from eventual obscurity. Almost every company devotes significant resources to defining their brand. But few ask the equally important question: how to protect it?

Historically, brands have risen and fallen in prominence slowly. Look at almost any decade from the 1950s on, and the world’s most valuable consumer brands – from Oreo to AT&T – barely changed in ranking. Even as recently as the new millennium, this trend continued. Between 2000 and 2010 just two of Interbrand’s top 10 brands fell off the list. But only half of the brands on the list in 2010 remained as of 2019.

The internet era makes brands less durable in part because consumer habits have digitized, creating new business models that have blindsided many traditional brands. But there is nothing inherently antagonistic to legacy brands about digital lifestyles. Coca-Cola remains one of the world’s most valuable brands – and it was invented in 1892!

What, then, is it that makes a brand durable even as business models, technology, and consumer behavior radically change? They key is that durable brands are adaptable brands — even legacy ones, as we’ll see.

So let me share what I have learned from working for the past five years as an entrepreneur and expert on esports. While esports brands certainly aren’t legacy brands, their rapid explosion holds lessons on the art of adaptability for any company.

Esports has skyrocketed this decade to become a $27 billion dollar industry, more popular than the NBA. Pro gamers number among this generation’s highest earning celebrities. And the primary platform for watching esports, Twitch (acquired by Amazon for $1 billion in 2014), outperforms traditional broadcasters like ESPN.

But arguably esports’ greatest success is the popular game Fortnite. In 2019, Fortnite grossed $1.9 billion dollars. NFL quarterbacks perform Fortnite victory dances in the end zone. And Star Wars announced the return of its arch-villain, the Emperor, by broadcasting his interstellar message inside the game.

Fortnite wasn’t always a hit. In fact, the game launched in 2017 as a me-too zombie shooter that struggled in the face of an entrenched competitor: Player Unknown’s Battlegrounds (PUBG). PUBG sold more than five million copies of its innovative “battle royale” format which allowed one hundred players to simultaneously engage in free-for-all gunplay.

To recover, Fortnite rushed out its own version of a battle royale mode in just two months. But, crucially, Fortnite didn’t slavishly imitate PUBG. Its designers noticed that PUBG’s chaotic battles made hiding more effective than fighting, emphasizing patience over skill. So Fortnite allowed players to erect defensive structures anywhere on its map, favoring strategic thinking. As a result, Fortnite deeply rewarded mastery. Spending the time to learn the game’s unique building mechanics alongside traditional shooting skills resulted in consistent victories.

Secondly, Fortnite made itself accessible, releasing as a free-to-play game, compared to PUBG’s $29.99 price. Furthermore, it employed a cartoony all-ages aesthetic, in contrast to PUBG’s gritty military look. And the game quickly made itself playable on any device: from high-end gaming PCs to mobile phones. Fortnite also recognized that not every gamer wants to shoot things in the head, and so launched concerts and creative play modes to appeal to the broadest swathe of consumers.

Third, Fortnite committed to delivering a fast cadence of new content, releasing new character abilities and weapons almost every week. These changes kept the game constantly fresh and top-of-mind.

Lastly, Fortnite ensnared its customers by introducing social features, matchmaking algorithms to pair players of equivalent skill, and a massive catalog of cosmetic items, such as NFL co-branded uniforms. These locked in its player base with network effects and switching costs.

These four strategies catapulted Fortnite to meteoric success. By the end of 2018, Fortnite boasted 200 million registered users, while PUBG’s player population collapsed by 66%.

The MACE Framework

These same tactics — what together I call the “MACE framework” — are not one-offs, but generalizable to all brands. Let’s look at them more closely.

Mastery: Give your consumers non-transferrable rewards for using your products and engaging with your content. Ideally, these rewards require public displays of affinity or small (non-monetary) sacrifices to exploit the endowment effect (overvaluing losses) and familiarity effect (overvaluing affinity).  For example, Hasbro’s brand Magic, first released in 1993, grew 30% year-on-year in 2019 on the back of innovative products like Secret Lair, which are short-notice, 24-hours exclusives requiring a “digital queue” to purchase.

Accessibility: Make your brand easily available to as many consumers as possible by following three simple rules. First, make your entry-level products as cheap as you can, and ideally free. For many industries, this means leveraging alternative pricing models (such as deferred payments, leases and subscriptions) to minimize upfront costs. Second, distribute your product or service through as many sales channels as possible. And third, design and market your products to appeal to younger and first-time customers. While older or existing buyers are likely higher margin, focusing primarily here limits the growth of your long-term customer base. For example, Marvel’s superhero films have significantly outperformed rival DC’s at the box office, in part because of a strategic decision to focus on PG-13 ratings and light-hearted humor that can appeal to all ages.

Cadence: Constantly create news and content around your brand. First, frequently release new products (or product updates). Second, maximize promotional assets, such as marketing videos, by editing long-form media into micro-content. Third, encourage user generated content wherever possible. And fourth, communicate everything; even failure. Have a product launch that bombed? Start talking about it publicly. You’ll be surprised by the results, as Apple was during its feud with Taylor Swift. By directly admitting exploitative royalties, Apple transformed bad PR into viral social media praise, culminating in Swift herself advertising Apple’s products.

Ensnarement: Make your brand as sticky as possible by building in switching costs and creating network effects. Two generalizable strategies for accomplishing this — systemization and spawning — involve product development: Systemized product lines are best embodied by LEGO. The brand eschews one-off releases (bricks) in favor of selling entire systems (LEGO model kits). Imagine how vulnerable LEGO would be to low cost brick competitors if all it sold was individual pieces! Spawning products include a built-in reason to share. Consider Coca-Cola’s Share-A-Coke promotion. By printing common names on Coke cans, the brand encouraged gifting amongst friends – helping grow sales from 1.7 billion to 1.9 billion servings a day.

To illustrate the generalizability of the MACE model, let’s apply it to a more mundane world: thermostats. At first blush, you’d think home appliances have little to do with Fortnite’s multiplayer shootouts. But in fact their brand strategies are surprisingly similar.

The success of the original smart thermostat, Nest, is a perfect example of how even staid, CPG products can be reinterpreted as MACE-ready brands for the digital age. Here’s how Nest strategy layered in MACE factors over its lifetime:

Mastery: Nest thermostats reward mastery in a direct way: by saving customers money. The thermostats tracks energy savings, rewarding eco-friendly settings by displaying a Nest leaf. This leaf becomes more difficult to achieve over time, encouraging users to continuously interact with the device to further economize on heating and cooling costs.

Accessibility: This was arguably Nest’s biggest point of differentiation at launch. The thermostat are designed for the digital generation: app-integrated, intuitive, and elegantly styled.

Cadence: You might not think of a thermostat having a content cadence. Traditional thermostats are programmed once; then likely never again. But Nest updates its users, usually via its app. It automatically adjusts routines, such as lowering temperatures at bedtime. It displays time to reach desired temperature. It tracks activity patterns based on the weather. And much more. Smart thermostats don’t need to generate content, but Nest does.

Ensnarement: Finally, Nest locks in its users with switching costs and network effects. As part of a broader Google smart home system of cameras, doorbells, alarms and locks, out-of-ecosystem purchases are painfully isolated. Even more cleverly, Nest leverages network effects by aggregating user behavioral data to create better algorithms for temperature adjustment.

MACE is a blueprint for any brand — even traditional ones — to evolve for long-term relevancy. It is true that brands without inherent, digital connectivity require clever thinking to leverage this framework. But companies that cannot effectively engage with consumers on digital platforms are destined to be dinosaurs. Even the most traditional products, like thermostats can, and must, effectively do this. Manage with MACE in mind, and ensure your brand endures in our increasingly digitized world.

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