If you look at your garage, your grocery cart, or your television/tablet, the products in those respective domains may come from different producers than they did 25 years ago, when the Internet was in its commercial infancy. With a seamlessly global communications platform (for the most part, excepting the great firewall, North Korea, and a few outliers) now up and running, the old techniques of brand-building can seem antiquated: Consumer Reports, newspapers, and store shelves all function differently than they did in 1997.
A recent journal article by Jan-Benedict E.M. Steenkamp, a high-profile scholar at the University of North Carolina, highlights five trends:
1) rise of global sales channels
2) cocreation of global brand strategy
3) global transparency of brand activities
4) global connectivity among the brand’s consumers
5) the Internet of Things.
My take is substantially less expert, to be sure, but I don’t see numbers 2 or 5 happening that much, and 4 is only true in selected instances: Amazon shut down both Echo Look and the Dash Button, and Alexa growth appears to be stalling (https://voicebot.ai/2021/12/
There’s a common division in the literature between a house of brands (GM’s Chevrolet, Cadillac, Hummer, and Buick) and a branded house (Apple). Both have been shown to work in the new millennium. Here are some possibly surprising examples.
Amazon is now home to more than 400 own-label brands, including more than 80 in apparel alone. In tools, where I hang out a lot, the names range from macho posturing (Hammerhead) to brand new words that sound like they were created by an AI: Yiou, Aproca, Luckut, C P Chantpower. Why Amazon needs such a collection of names in an already-crowded segment is a mystery from the outside, but I have zero doubt that there is data to back up the decision.
In non-Amazonian power tools, there’s global consolidation. Most people have no idea who or what Techtronic Industries is, but the brands in their house are familiar: Ryobi and Milwaukee, Hoover and Oreck, Homelite and Dirt Devil. Across the big-box tool aisle, Stanley Black+Decker owns Bostich, Craftsman, DeWalt, Irwin, Lenox, and Porter-Cable. In contrast to the EU, where there is some standardization, batteries from any of these brands don’t fit their stable-mates: Ryobi and Milwaukee tools likely come off the same assembly lines but there’s no interoperability, maintaining the brand distinction. Meanwhile Bosch is pretty much going it alone. (Incidentally, the Bosch power tools unit is part of a fascinating conglomerate that is primarily owned by a charitable foundation — but said foundation has no voting rights.)
Let’s go outside to the woods or more likely campus or club. VF Corporation used to be Vanity Fair Mills, founded in Pennsylvania. Today it has moved on from the days of silk lingerie (it exited that business in 2007) to own both Lee and Wrangler (before it spun them off), both JanSport and Eastpack, both Icebreaker and Smartwool. Dickies workwear lives inside VF, alongside VF Imagewear, the supplier of those sharp-looking TSA and CBP uniforms. Core brandsTimberland, Supreme, Vans, and The North Face survive; Nautica was bought then sold. Confusingly, the VF Outlet business no longer belongs to VF but to Contour, where Lee and Wrangler ended up.
If you want to play tennis or softball, or ski or hike, there’s a good chance you’re interacting with Helsinki-based ANTA Sports. They own Wilson and Louisville Slugger, Salomon (France) and Atomic (Austria), Arcteryx (Canada) and Armada (U.S.), and the Suunto (Finland) GPS watch operation. Confusingly, ANTA was acquired by a Chinese company in 2019, though day-to-day operations seem not to be affected. How much of this is driven by private-equity trends vs Internet effects is hard to say: Norway-based Helly Hansen was owned from 2015-2018 by the Ontario Teachers’ Pension Plan; it’s currently part of Canadian Tire, a multi-line retail chain.
What about the grocery store? Here, it’s less clear that there’s global brand consolidation because of the Internet redefining other channels; equities markets and geopolitics are major drivers. For whatever reasons, brands are constantly on the move. Food brands have long been global: think Nestle, Lipton, or Lux. More recently, acquisitions align with changes in economics and diet: the Chinese firm WH Group purchased Smithfield Ham in 2013. (TIL that China has a national pork reserve much as Canada holds a strategic reserve of maple syrup.) All-American Ben & Jerry’s is owned by UK-based Unilever.
J&J is splitting into a pharma company and a consumer company next year, so Tylenol, the eponymous baby shampoo, Band-Aids, Listerine, and Neutrogena will be housed in a straight-ahead CPG operation. DePuy, Janssen, Ethicon, and the vaccine business can focus on the medical channels. Elsewhere in grocery, Budweiser parent Anheuser Busch is 28% owned by a trio of Belgian families and about 23% owned by Brazil-based 3G capital. Parent company AB InBev has only 3 global brands: Bud, Corona, and Stella Artois. The 400-strong brand portfolio also includes “local champions” including Labatt and Michelob.
Staying with things you drink — one hesitates to call them “beverages” — energy drinks are massively connected to the rise of the Internet. Red Bull’s use of YouTube is masterful, to take just one example: adrenaline sports are often niche markets, but the enthusiasts are passionate, so Red Bull can promote wing-suiting, backcountry skiing, or whatever without global television network deals lining up. The brand’s investment in Formula 1 is also paying off handsomely in light of Netflix’s huge boost of interest in the sport.
Elsewhere, I suspect Internet business models are driving change at existing brands. Airbnb is now a major player in the travel sector. What have hotel chains done in response? Install more kitchenettes, for one thing: so-called “extended stay” formats seem to be proliferating. Hilton has not only Embassy Suites and Homewood Suites, but has added Home2 Suites in the extended stay category. Other sub-brands strive to be hip, eco-chic, “curated,” or ultra-luxurious and exclusive. Canopy, LXR, Motto, Signia, and Tempo brands all strive to say “we’re not Hilton” while being Hilton. All of those brands date to the Airbnb era.
Slicing the problem a different way — looking at the big “branded houses” through the lens of the Interbrand brand equity ranking — we see that 12 of the top 50 brands are largely or entirely creatures of the Internet. I’ll split that out a bit. 6 of those 12 are heavily dependent on the Net for operational purposes as distinct from branding: these firms might run cloud software but advertise heavily on network television, let’s say. In the other bucket are the Teslas, 6 companies that build their brand via online mechanisms, whether they use it operationally or not.
Operations-primary:
Nike (11) Nike.com has doubled its contribution to retail sales, off a bigger base, in the past decade, smartly avoiding fallout from the death of malls
Facebook (15)
Adobe (21) Cloud software has completely taken over in the graphic arts
Netflix (36)
Salesforce (38)
PayPal (42) That ranking is just a hair behind Visa and comfortably ahead of Mastercard
Branding-primary:
Apple (1)
Amazon (2)
Google (3) For the better part of a decade Google didn’t have to advertise: journalists so loved the search engine that they wrote so many stories about how great it was that ads weren’t necessary.
Tesla (14) This still ranks behind Toyota, Mercedes-Benz, and BMW, market capitalization notwithstanding, but well ahead of Honda
Instagram (19)
YouTube (26)
It will bear watching to see how soon Instagram passes Facebook, how the carmakers do as fleets become increasingly electric, and how long Apple can continue its dominance.
My Penn State colleague Arvind Rangaswamy taught that brand and search played opposite roles: nobody’s going to Google Kleenex, and the people who sell replacement automobile cabin air filters on eBay aren’t going to buy Super Bowl spots. That was before social media had its moment, a moment that might be receding: TikTok doesn’t overtly care who your real-world friends are, and Facebook is responding by increasing algorithmic contributions to the Instagram and Facebook feeds — to less than wide acclaim (https://www.cnn.com/2022/07/
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