The best brand response to Covid-19 was to stop advertising, Byron Sharp has told Campaign in an interview to mark the tenth anniversary of his seminal book How Brands Grow.
Sharp was scathing about brands who sent messages about Covid, arguing it was "embarrassing arrogance" that marketers would think people were interested in what they had to say about the virus.
Instead, he praised Coca-Cola, which paused all UK marketing spend for three months over lockdown. "I think that's a much better thing to do than rushing down to your agency and saying: 'We've got to have a Covid ad'," he said. "Wait, and save your money."
Sharp's 2010 book had a huge impact on adland, reshaping marketing departments and philosophies across the world. It argued that in order to grow, a brand needs to focus primarily on attracting the largest number of customers possible, rather than encouraging existing customers to spend more. This requires broadly targeted, mass market communication, as well as creating a distinctive and memorable brand.
A decade on, Sharp, who is a professor of marketing science and director at the University of South Australia's Ehrenberg-Bass Institute, said he believes that despite societal shifts, an ever-evolving media landscape and the arrival of Covid, the fundamentals of marketing are still the same.
Having likened his marketing proposition to Isaac Newton's law of gravity, arguing they are both scientific principles that do not change, he said that marketers are too distracted by short-term changes and overlook the bigger trends. "Beware of charlatans who always claim that something has fundamentally changed. Consumers are very habitual. They liked their lives before and they want those lives back," he added.
As for the looming recession, he said marketers should not panic. The data from previous recessions shows that unless you are in a particularly affected category – travel for example – then purchasing habits do not change that much. "Recessions don't really affect what's sold in supermarkets," he said.
Here is an edited version of Campaign's interview:
A decade has passed since your iconic book How Brands Grow was published. Has anything changed?
That's a bit like asking if the laws of gravity still apply. Unfortunately, marketers get very distracted by what's going on this week and totally miss the big trends. If you are a global marketer, the biggest trend in your lifetime is the astonishing accumulation of wealth over the past 100 years. Before that, absolute poverty was the norm for 99.9% of the population. It seems a funny thing to say in the middle of a recession but in 10 years' time, we'll still look back and think that's the biggest change.
It's why marketers have got a job. The increase in wealth makes the biggest difference in poorer countries but even if you're in a wealthy country, you're seeing the rise of premium beer and wine and wealth investments services. The population is also ageing and getting better educated. These are the big trends.
Another thing people ask is what about all the new media? When How Brands Grow was published in 2010, the internet was already a mature medium. What we've seen is what always happens when new media comes along – it's got simpler. A new media comes along, that makes it more complicated for marketers because there's suddenly more choice and then we see consolidation.
The online media world is incredibly simple now. Google search takes half of all the [adspend] dollars. The other half is split between YouTube – which is essentially a big global TV station owned by Google – and all the print and display advertising is on Facebook, Instagram and Google's ad network. There's really not much left after that, other than traditional media sites such as TV, newspapers and magazines, which are now online, but that's just moving from paper to a screen. So the media world has actually got simpler since the book was published.
What do you most often see people getting wrong or misinterpreting from your book?
Clever marketers really got the message that you could not grow a marketing brand that hoped for some sustainable and serious growth without increasing the customer base. If you're in a B2B marketing area, that's easy to understand. For example, if you're an ad agency, you know you won't grow without winning some more accounts. But if you're a packaged-goods company it's a bit more complex.
What people found a little harder to get their heads around is that you increase penetration by reaching really, really light buyers. It's not about winning new customers. Yes there are some new customers to win, like those entering the category. But for a company like Coke, your "new customer" is someone who has consumed Coke before but they only buy it once every three or four years. Most of the growth comes from nudging people to be a bit more loyal.
That's another misconception – people say How Brands Grow taught them that loyalty doesn't exist. Actually there's a quote on one of the pages that says one of the fundamental things we see in every category we look at is loyalty. It's just not the [ex Saatchi & Saatchi chief executive] Kevin Roberts' "fall in love with your brands"-style loyalty. It's that most of us have repertoires and we keep returning to the brands that we've bought before. We're not quite as interesting and dynamic as we think we are.
Let's talk about Covid-19. During these unusual times, there have been research studies published saying consumers are becoming more promiscuous and trying new brands. For example, McKinsey said 36% of US consumers were trying a new product for the first time. While this switch may be down to stock shortages, it still pushes people out of their routines into new behaviours that may stick. Do you think that shoppers will now buy brands even fewer times a year than the average of five times or less?
These research studies are useless because they never tell you how many people tried new brands before. We've analysed shopping behaviour during the pandemic and the panic-buying period and it's remarkably similar to before. You would have thought that people would not do small shops because they could catch Covid. But there wasn't anywhere near as much stocking up as the media tried to make out. Things like toilet paper stocked out because it is made in big capital-intensive factories that are optimised for pretty steady demand, they are not optimised for any peaks. Stores and warehouses don't want to keep the stuff because it takes up a lot of space. So you only need a slight increase in demand to suddenly muck up the entire chain, which is what happened. People only need to buy a little bit more and the shelves are empty.
The other things we saw were what you'd expect during lockdown – on-premise sales collapsed, while home delivery rose. But when lockdown goes away, everything bounces back to normal again. Beware of charlatans who always claim that something has fundamentally changed. Consumers are very habitual. They liked their lives before and they want those lives back.
The latest Edelman Trust Barometer found that 64% of consumers said they would now only turn to established and recognised brands rather than new brands. If trust is so important, are we going to see greater loyalty towards bigger brands?
We did see a slight shift towards older, more established, bigger brands. That's probably down to the fact that people were trying to shop even faster than they normally shop – which is quite impressive because they shop quickly anyway – and that they had social-distancing restrictions. So they didn't linger and go: "Oh that's that little brand of kombucha that I bought last week, maybe I should try another of that." No. They said quickly, "We need drinks, grab the Coke", and then moved on to the next thing. But that's only a small rise.
The Edelman Trust barometer also found that consumers wanted advertisers to focus on how their products and services can help people cope with Covid-related life challenges. You have been scathing about brand purpose, but do you think that will be different in a post-Covid landscape?
It's incredible arrogance of marketers to think that their brand is so important in people's lives that if they send a message about Covid, amongst millions of other messages about Covid, including from chief medical officers, that people would actually want to pay attention to them. It's embarrassing arrogance. We're supposed to be the people who understand consumers and their lives.
Someone has stitched together all the Covid ads on YouTube and it shows that, like so many brand purpose ads, creativity is thrown out the window. Every ad says exactly the same thing: "In these unprecedented times, we're here to help you." It's pretty stupid, because the media was absolutely saturated with Covid stuff.
Coca-Cola in the UK just stopped advertising for a while, understanding that people were thinking about other things at the moment. I think that's a much better thing to do than rushing down to your agency and saying: "We've got to have a Covid ad."
Don't you normally say that if you don't communicate, people won't think about you and that will harm your brand?
Yes I'm a great advocate of consistency but compared with making Covid ads, it's a much more sensible thing to do. When you realise there's this tsunami of stuff, maybe you should wait and save your money. When you're a big brand like Coke, going off air for a couple of months isn't going to matter, and when things quieten down a little bit, you can remind them that Coca-Cola is still here.
There have been a few brands in the UK taking more opinionated stances on the big issues of the day such as politics or diversity. You have talked about not alienating any potential customers. Do you think these brands should remain neutral to attract the widest number of potential consumers?
If you take a political stand, there are people on both sides, so there is a real danger you and all your friends think you're on the right side of the debate, but you might alienate people. But as a professional, I'm more concerned that you are now talking about things that are just not related to your brand.
As marketers, particularly in this area of brand purpose, we are getting very arrogant. We were pretty surprised about the Brexit vote, then Trump's nomination, then Trump's election win, then Boris Johnson's landslide election, then Labour not winning the election in Australia. At a certain point you have to stop getting surprised and realise you've got something wrong.
I would love to do a survey on this actually. Ben & Jerry's is pointed out as one of the most purpose-driven brands. I would love to know how many consumers on the street have any idea about that. I think they would say: "That's the one with Cookie Dough isn't it?"
I remember hearing the CEO of Starbucks talking about how music was a big part of their success. They had a record label with tracks they used to play in stores. Seriously? That shows just how deluded senior people can be.
2020 has been a particularly tough year for small businesses in light of Covid. Your "double jeopardy law" says smaller brands suffer from both lower penetration and lower frequency of purchase. Do you have any practical advice for smaller businesses to escape this trap without the large budgets required to invest in mass-reaching, broadcast advertising?
I want to dispel one myth – people say that double jeopardy means small brands are doomed. It doesn't mean that. Small brands will have a small and less loyal customer base. It doesn't mean they can't grow or won't be around in 10 years' time. But it tells us how they will grow – by winning a lot more customers who will become more loyal and that will be the case because of physical and mental availability.
The great news for a small brand is that you can grow. Whereas I think textbooks in the past tried to tell small businesses they were small because they were too niche or only appealed to a select group of consumers. Usually, that's not the case at all. That's a fantastic positive story. Whereas it's hard for a very big brand to become bigger – you've got all these rivals nibbling at you.
How can brands adapt to the explosion in ecommerce?
In the institute there's quite a big research agenda that is not in the public domain which is about category growth and where you put your investment – which brands, which channels, which countries. It's very hard to grow if you don't get those investments right and you're not in growing channels.
Probably bigger than ecommerce for FMCG in the past decade has been the rise of discounter channels, like Aldi and Lidl. It's very hard to get growth if you're not in those growing channels. Just like in the US it would be hard to grow and not be in Walmart.
Ecommerce is a growing channel, but I would warn people there's a lot of hype and to check the real numbers. People talk about explosive growth but of course it looks like that if you start from very small numbers.
Unfortunately we are headed into a recession. What advice do you have for brands to navigate these choppy waters? What did you see in the data from the last recession?
If you're selling Champagne or overseas trips, then it's quite traumatic. But when we analysed data on the global financial crisis in areas like community stores, supermarkets, pharmacies or hardware stores, we were really surprised at how little the world changes. It was a remarkable thing. We didn't see any trading down. The average price paid, in virtually every category we looked at, stayed the same.
Some people might say they need to save money, but others are saying: "Well I'm not doing my expensive overseas trip so I can afford a luxury chocolate bar." There was a bit of a move to private labels but there was a trend to that before the crash, so it's impossible to see if the recession accelerated this or not. And some private labels lost share.
I'd say be very careful of headlines, they give us a very distorted view of the world. The worst are the ones that intuitively feel right – they are probably wrong. Anyone who studies the history of science has been telling us that the real world is a very weird place. It's really different to the way we thought it was.
My advice to marketers is don't panic. When you talk about recession-proof stocks, it's companies like McDonald's, the P&Gs, the Unilevers, the SC Johnsons. Recessions don't really affect what's sold in supermarkets.
Which country has built a more successful brand - the US or China?
China is a much wealthier country than it was. So they appear more in our lives than they used to. But I'm still amazed that if I open my newspaper in the morning, and I go to the world news, I get so much news on America and Trump and yet there are seven billion people on the planet and only 300 million in America.
Some people might say, "Well, it's the biggest economy", but Western Europe is just as big an economy. It's interesting, maybe it's a sense of loyalty thing. Last century was called the American century because it went from nothing to something. They still dominate our TV and our cinema, so we're exposed to an awful lot of American culture. I'm amazed at how much they are in our lives. So Brand USA is a very good brand, oddly so.
And lastly, have you ever seen a brand or situation that has made you reconsider elements of your thesis?
All the time – we're always checking. We're very sceptical even about results that we like. But can I think of a brand that got a lot bigger without increasing its mental and physical availability? No.