Brands act decisively, despite year of geopolitical disruption

June 15, 2017
Industry News
Content Provided By:

Rupam Borthakur
CEO, Kantar Insights Hong Kong
[email protected]

What an unusual year. Geopolitics, which typically hums in the background of daily life, became its loud soundtrack. The surprises of Brexit and the US election demonstrated the power of people to shape the destinies of nations—and potentially brands, which could not avoid the reverberations. Still, decisive brand-building activities took place across categories.

Some consumers, especially young people, expected brands to take a stand. Although most brands avoided becoming directly embroiled in controversy, the scrutiny prompted discussion of Brand Purpose. Leading technology brands—including Apple, Google, Facebook, and Microsoft— publicly opposed the Trump administration’s immigration policy, saying it contradicted their values and their need for a diverse workforce.

Despite the disruption, the BrandZTM Top 100 brands performed well, increasing 8 percent in brand value to $3.6 trillion, following a 3 percent rise a year ago. Seven categories rose moderately in value, and five categories declined or registered no change in value. Two categories — retail (driven by Amazon and Alibaba) and technology — increased by double-digits.

Year of action

Besides being an unusual year, it was also a year of decisive action. Across several categories—including retail, telecom providers and beer, brands launched transformative initiatives to cause or ameliorate disruption and to accelerate growth.

In retail, massively disrupted because of e-commerce, brands for years have attempted to coordinate online and offline (O2O) experiences. Progress has been mostly incremental — until now. Amazon planned to open a chain of physical grocery stores. And Amazon, being Amazon, expected to differentiate its stores with sophisticated technology. Its app automatically keeps track of purchases and handles payment, eliminating retail’s most dreaded friction point — the checkout.

Like retail, the telecom providers category also has been moving through a steady transformation, as brands attempt to escape their commodity roles as voice and data providers and become consumer- facing content and entertainment brands. In the beer category, the much anticipated corporate marriage between AB InBev and SAB Miller created the world’s fifth-largest consumer products company (after Nestlé, P&G, PepsiCo and Unilever, and ahead of Coca-Cola).

Reaction to turmoil

All this activity took place in the context of the year’s geopolitics. The technology category especially was drawn into the turmoil because of its vital role as data custodian and its centrality in connectivity and digital communications. Social media brands were at the center of the public debate when postings inflamed opinions about decency and free speech.

Google advertisers complained that programmatic technology, intended to align ads with relevant content, sometimes placed ads near controversial, even objectionable, material. YouTube and Facebook also were affected. The brands adjusted their practices. With over 1.2 billion daily active users, Facebook reaches more viewers than any traditional media outlet, and the torrent of news surrounding the year’s geopolitical events caused the brand to examine its publishing role and responsibilities.

In perhaps a counterpoint to the year’s unrest, the apparel brands stressed comfortable fit and retro style. Fast food went back to basics. McDonald’s and Burger King made better burgers. Luxury brands captured the spirit of the times differently, as logos returned and designs became bolder. The major fashion shows embraced themes of diversity and inclusiveness.

In the cars, and oil and gas categories, brands embraced reality. The oil and gas brands, which typically focus more on their upstream exploration businesses, also communicated with consumers about their Brand Purpose, The critical actions taken by brands across categories reflected the power of strong brands to sustain businesses during geopolitical drama or other disruptions. The BrandZTM Global Top 100 not only grew 8 percent in value this year, but since 2006, through the global recession, the value of the Top 100 ranking steadily increased, rising 152 percent.
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