What Builds More powerful Brand Equity Among Millennials – Advertising or Engagement?
The idea of brand equity (i.e. the perceived worth of a brandname) firmly showed up within the 1980’s when consumer goods companies reacted to some rush of vicious discounting with a brand new look for a more sustainable method to boost profits. The solution ended up being to pour money into well-crafted brands, increase prices, and highlight distinctive product features, all designed to produce a more compelling brand image that will result in greater loyalty. As David Aaker authored in the book in 1991, “Managing Brand Equity”, aggressive marketing is required to generate awareness, produce a positive thought of relevant brand characteristics, and also be loyalty, the 3 support beams of brand name equity.
My experience at Seagram within the 1980’s shown the validity of the approach. Seagram had just hired Phil Beekman, obama of Colgate, to consider over this respected spirits and wine business. He immediately altered the general business culture from sales intensive to brand building, by growing prices and advertising. The resulting sales and profit growth was outstanding, plus more powerful brand equity because of its top products.
While traditional advertising continues to be essential for building brands, it’s viewed increasingly more like a primary driver for creating awareness and/or reinforcing a brandname proposition for consumers. What’s different today may be the impact from the internet, specifically for the 86 million Millennials. Mass marketing died in the past, substituted with more targeted advertising inside a highly fragmented marketplace. The large problem with advertising with this Generation Y is trust and credibility. Their behavior isn’t influenced just as much by advertising anymore, but by online feedback and the expertise of their peers along with other respected sources:
• Only 6% of Millennials consider advertising to become credible (source: Edelman Research)
• Rather, 95% say buddies would be the most credible resource
• 92% say trust is an essential influential factor for purchases, although most don’t trust today’s advertising
Social engagement online is paramount driver for building brand equity today, greater than advertising (e.g. television viewing is lower 9% to date this season, more among more youthful people). An optimistic thought of a service or product brand is better produced by discussing a person’s experience, ideally from buddies who have honest, objective and non-commercial opinions.
A current Boston Talking to Group study detected this notable shift among Millennials from advertising as an origin of brand advice. The web is much more influential, as Millennials are considerably more trustful of social networking. For getting decisions among Millennials, 5 people (mainly buddies – 59%) are often contacted for advice versus only 3 among seniors. Typically, 49% of Millennials say they trust store websites, when compared with 35% for non-Millennials.
The significance of interactive engagement was identified by Gallup within their 2014 set of the “Condition from the American Consumer”, saying connecting on the internet is most important for creating a strong, loyal relationship with customers as well as employees, the heart of branding. Based on Gallup, firms that fully engage customers saw a 240% increase in their performance.
