Digital Branding – Implications On Strategy


Nike, Starbucks, Disney, McDonald’s, IKEA, Nokia, IBM, Coca-Cola and LEGO are some of the best known global brands around. All of these brands have been in existence for more than a couple of decades. Extensive investment has gone into building and maintaining these brands. As such, the iconicity of a brand have been largely impacted by the history of the company, the heritage of the brand and the context of the brand within the overall environmental landscape. One thing unique about most of these brands is that they were all pre-Internet brands. With the tremendous proliferation and adoption of the Internet across the world, the dynamics of business have changed fundamentally. Such a fundamental change has also had a dominant impact on the origin, emergence and growth of many brands.

Google, YouTube, LinkedIn and Facebook are just some of the highly popular brands of the current era. These brands are all post-Internet brands. These brands are relatively young and base their existence on the power of the Internet. These social platform brands offer extensive opportunities and challenges alike for companies that aspire to build brands online.

The Internet has had a profound impact on marketing and branding. The very nature of relationship between customers and companies has changed. Online advertising has been on the rise for some years now. With so much at stake for companies on the Internet, it is imperative that companies learn to adapt to some of these new ways of doing business if they wish to succeed in this new dynamic corporate scenario.

Impact of the Internet and digital technology

Before delving into the guidelines for companies on how to adapt to the changing times, it is imperative to understand the ways in which the Internet has impacted the existing business models.

Reduced information asymmetry: Right from the post world war times till the advent of the Internet, companies have thrived on the existing asymmetry between the companies and the customers. Consumers had very little say in corporate strategies with information being disseminated in a top-down fashion, and brands had complete control over what the public knew about them. Given the limitations on the access to information, geographical separation and interaction between customers, companies were able to establish a superior position and exploit customers.

But with the advent of the Internet, such asymmetry has reduced tremendously. Emergence of aggregation websites that collect information from various websites and provide comprehensive information about any product to customers have greatly facilitated customers in making informed decisions.

Similarly, many discussion forums have enabled customers to interact and share information with one another, thereby strengthening each other in making right purchase decisions. These developments have indeed leveled the corporate-consumer divide to such an extent that customers have become empowered.

Value co-creation: Yet another impact of the Internet on current business practices is the emergence of value co-creation as an alternative way to long term customer relationships, customer loyalty and eventual profitability. Value co-creation refers to a process where companies involve customers in different levels of corporate activities such as product development, communication, distribution and such in order to increase the value offered to the customer on one hand, and to enhance their relationship with the company on the other. Value co-creation involves fundamental shifts in corporate activities.

Companies will have to morph into entities that primarily facilitate value creation through constant inputs from customers rather than functioning as arbitrary creators of products and services. Such an orientation will require companies to formulate and implement strategies that would nurture such value co-creation.

Coca-Cola is a great example of successful value co-creation. Based on customer feedback, one of its exciting innovations, the FreeStyle machine offers over 100 products enabling virtually any flavor mix. Its mobile app also allows users to save their favorite blends, while this product and customer engagement data is constantly fed back to Coca-Cola. This winning strategy enables it to specially customize its drinks to the preferences of the millennial consumer.

Active collaboration: The wide spread adoption of the Internet by both companies and customers alike has made collaboration a key to corporate success. Collaboration in this sense refers not only with customers (value co-creation), but also with other business intermediaries. Companies will greatly benefit by leveraging the capabilities of each other in common domains rather than competing against each other. Such collaboration will again force companies to redesign and rethink their strategies wherein companies can co-exist profitably by competing and cooperating with each other simultaneously.

Corporate collaboration can take many forms. It can be collaborating to co-create new products – one example of this is how Coca-cola collaborated with Heinz to develop more sustainable containers. Companies can also collaborate to run marketing campaigns or promotions together. Fiat and Lavazza (Italy’s favorite coffee brand) has collaborated on an online marketing campaign with games and contests to promote the new Fiat 500L – which includes an espresso machine inside the car, providing extra convenience to drivers and passengers. Collaboration can also be in the form of promoting each other’s brands and sharing each other’s products to expand reach, which commonly happens in the fashion world.

Real time interactivity: The Internet has allowed customers to interact with other customers and companies in real time. The emergence of many discussion forums, company created online dashboards, chat rooms, virtual communities founded around specific products, issues, and companies allow customers to not only share information with each other but also to generate collective customer power that can impact corporate decisions.

Such collective customer power provides companies with a double edged sword. On one hand, such power will force companies to design product features in a way that would enhance customer experience and in turn entice customers to make purchases. On the other hand, such interactivity would allow companies to gather real time feedback, perceptions, and attitudes toward the company. Such feedback can prove crucial in enhancing brand equity.

Implications on brand strategy

As discussed earlier, the many changes brought about by the Internet have direct impact on the brand management processes. Traditionally, branding was carried out by companies in line with the dominant corporate orientation, which placed companies at an advantageous position. But, with the benefits offered by the Internet to customers, companies are being forced to change the old model.

Management of brand identity: The identity of a brand conveys the values, image and associations of the brand to its customers. As such, it is one of those corporate activities that are managed with utmost control, diligence and consistency. But with the changed dynamics between companies and customers, companies will have to include customers in their processes and as such, brand identity management will have to morph into a collaborative process with lesser control and constant change.

Such a transformation will require companies to carry out a structural shift in control, management, participation and co-creation. Therefore, companies will benefit if they carry out a due diligence to see their level of preparedness and level of willingness to implement such a shift.

Novel ways of customer engagement: Companies have traditionally made use of branding communications to communicate with customers. Advertising (print, online, TV and radio), billboards, sponsorships and endorsements have been some of the more dominant communication channels that have been extensively used in the past. Even though these channels appear to cover a wide array of options available to a company, the underlying premise of all these channels is that companies are the providers of the information and the customers are receivers of such communication.

As such, communication has primarily been a one way street for companies. But as discussed earlier, these have changed with the advent of the Internet and the wide spread adoption of interactive methods of communication. Hence, going ahead, companies should design novel ways to connect with customers. More importantly, any new channel chosen by the company must be one that would encourage and initiate a dialogue with its customers, rather than preserve the traditional one way communication.

Leverage customer and social networks: The connectivity of the Internet has enabled customers to create a strong web of virtual ties. Such a network not only allows customers to share their online existence with others but also provides them a sense of community and all the benefits of a community on the Internet.

Depending on the nature and purpose of connectedness, these networks enhance word of mouth communication, diffusion of innovation, real time feedback on product design, and monitoring the current and evolving trends in many sectors such as fashion and consumer electronics. Such information offers companies invaluable resources to effectively design suitable strategies.

But companies have been entrenched in the traditional model and as such, do not have the flexibility to respond to such new initiatives. The first step then would be to establish structures and policies within companies that allow them to quickly react to such new phenomenon and to effectively leverage them for the overall competence of the company.

Conclusion: Digital branding is here to stay

Much has been talked about the reach of the Internet, digital technology and more importantly its power to disrupt the existing processes and procedures. But it is clear from the discussion in this article that the Internet can be a great facilitator for companies. By allowing companies the reach and tools to better serve their customers, the Internet and digital technology has ushered in an era of coopetition that allows both the companies and the customers to reap benefits in the long run. As such, companies will benefit greatly if they choose to fine tune their processes and procedures such that they can not only respond to the ongoing changes caused by the Internet but also initiate changes that would be beneficial to their customers.

The era of customer empowerment and digital technology is for real. The sooner the companies learn to maneuver the changed lanes of business, the better it will be for their survival and success.