If you want your product to stand out, you need a strong brand. We're more likely to spend our money on something that we recognize and respect. So firms that prioritize their brand identity experience significant growth and competitive advantage over those that don't. And the big brands get bigger. But now new technologies mean smaller, more nimble start-ups are starting to muscle in on the incumbents. But there are challenges as well as opportunities in this fast-changing world for companies of all sizes and age. Brands must adapt to remain relevant and engaging. So how should you think about marketing your products in this new environment? I'm Georgie Frost, and this is The So What from BCG.

In the past, maybe 30, 50 years ago, generally, you had to be a big national brand to achieve any real scale. These days, you might be able to achieve what's effectively really high scale amongst a small group of people by using precision digital techniques.

Today, I'm talking to David Ratajak, Global Leader of BCG's Marketing Practice.

Just imagine yourself standing in front of a wall and you're hanging a picture and you have a nail on your hand and you have a toolbox next to you, you're going to reach for a tool. What tool would you reach for?

A hammer.

Would you say that was an easy question to answer? You didn't have to think about it? You weren't stressed from a marketing perspective. How did that association get into your brain in the first place? You may have, for example, picked up a hammer. You may have very recent experiences of hitting a nail. Or if you're a young person, maybe you only observed it, or maybe you saw a cartoon of it, all those things actually impressed the brain and created an association between, oh, if you have a nail, you think hammer and it's not a hard thing. If you think about the way economists think about how we choose things and decide things, you never asked me what other things were in the toolbox. You didn't compare all the tools. You didn't say, oh, let's think about all the features and the heft of the tool and the grip. Was it sticky? All these things. You just knew that when you're looking at the nail, you need a hammer. And this actually is a really important part of when we were thinking about branding and marketing. We want to actually get that easy, fast response so that when you have a problem and a contextual trigger is like standing in front of a wall, you just immediately think hammer.

You don't have to think about it. You don't compare or anything else. That's one way to answer the question around what are the aspects of the brain that we as marketers, are actually trying to tap into when we're creating a really clear association of our brand with the need?

Can you give me an example or some examples of where it's been done incredibly well? The steps, the process of making that association with a brand? Yeah.

The Apple Watch is an example. The watch can solve a number of different problems for you. You can obviously tell time, and there's some fitness aspects of it. And, of course, they compete with a number of other providers for fitness watches and trackers. But there was a recent campaign that I thought was really interesting, thinking about a different problem to solve that you might not have known you had, which is essentially, can you get your watch to actually call 911 or call emergency services automatically as a safety issue? And they came through that idea that was a demand space that was differentiated, that didn't have as much competition, where they had a unique feature and capability to help you do that. How would I market that? Well, I want to be able to show examples where people were saved by their watch. And an enormously compelling campaign came out that was around just sharing those 911 emergency service calls. And that was a way of associating then a new problem to solve that the watch was able to deliver, and one in which they had essentially a no competition. It's something you're already wearing. No other or no other fitness tracker would have been able to do that without all the other features and capabilities.

So they didn't sell, Oh, look, it's got GPS and it's got automatic calling and tell you and look at how great this is. It simply said, Look, we're going to save you life.

Powerful. And that's a very compelling thing. I mean, golly, doesn't that just sound like a good marketing message? So this is a very effective impression, very good. That idea of the competition, you can have an offering that has different problems that it solves, the way I just described, fitness and security. You may have a different current position in the market. You may be number one already, I might say, a champion. And you're so far ahead and people are so sensitive to your marketing already and people are so aware of it and talking about you and experiencing you that you don't really have to spend much on marketing. The product markets itself and people's brains are already so receptive to every message, fantastic. But in another space, you might be a challenger and it's high competition. And while you might be a better product, you're essentially having to rise above the noise of people who are extremely sensitive already to effective marketing from the champion. So where does your offering, your product or your service and what's associated with your brand, where do you have a right to win and where are you winning? And then there may be some where you have a right to win and you're not winning and you've got to get way ahead.

You need to invest heavily for a long period of time potentially to get into your rightful place as a champion.

How will technology change the way that brands target audiences? What opportunities will.

It present? Yeah, it's a really interesting question with the technologies available to us now. How can we potentially be more precise in how we reach people with the right message for what they care about. In the past, maybe 30, 50 years ago, there were not that many channels you could use. You could use national television and other types of publications. You could maybe reach out to people with phone and with mail. But generally, you had to be a big national brand to achieve any real scale. These days, you might be able to achieve what's effectively really high scale amongst a small group of people by using precision digital techniques. That's a real area of opportunity for new brands, maybe even small companies, to look big in a relatively smaller, more tight, focused audience or market or specific use case, that wasn't possible in 1970.

How do you sort the wheat from the chaff when it comes to data? Because there is a lot of data that you could get. How do you make sure what you're getting is the right quality?

This is a huge problem, getting high quality data, and especially with all of these privacy concerns and with some of the headwinds against capturing data in a more comprehensive way. Marketers are having to make do with the available data. They actually have to think about ways also to incentivize potential customers to part with their data in ways that are productive for both. But going back to your question, I think a marketer has to be analytical. They have to run tests, they have to run experiments. They have to pressure test whether or not the data they're getting is actually driving useful outcomes with a test and learn mentality. I also think that getting a real connection, whether it's even a digital connection through an email or getting someone to your website, can be really useful with technology to then come back to that person and say, Oh, listen, I'm not going to waste your time with something cookie cutter on average. I'm going to give you something that might really be useful. Almost like that old, Hey, you walked into my store. I asked you a question. I give you a curated answer. That's what we should strive to have as the relationship with a customer digitally.

We're not doing such a great job, but I think the vision is still there and the value should still be there.

I'm curious about personalization and whether that's the future of marketing really hyper-personalized. And you opened this podcast to the start talking about the way that almost you can hack our brains. I'm wondering if technology will make that just so much easier.

It's a very interesting question because the personalization of messages and experiences should drive value in so many different ways. One way is when I use your name in an email, you're more likely to open that email because you're sensitive to those cues. And if we could be smart as marketers to know what are the cues, including your name, to use to get you to be interested, that's really good marketing. And if it's different for you from someone else, fantastic. Although the problem is the tension is actually from a branding perspective, what we deal with is getting consistency. We'd actually like a consistent message that everybody hears that everybody talks about so that we don't have 30 different ideas and messages around. So we actually have this tension, which is personalization in some settings is really helpful. And in other settings, it creates fragmentation that actually causes less of that uniform, consistent, universal sense of what a brand is about. I'd also say the idea of trying to get information about someone so I can give them what they want, fantastic. But getting your information means I can talk to you in a free way. I can spend money on a TV ad to get you to come to my website, and it's expensive.

But once I get you to my website, if I can get your information and start to create one to one connection through an app on your mobile phone or through SMS or email, those are essentially free. And I can put my brand, I can put whatever message I want in there. I can create impression value to you without spending any money. Most companies think they need to spend a lot of their media dollars on existing customers. But actually, you should strive to spend almost none on your existing customers because you should be hopefully talking to them one to one in a personalized way through much cheaper channels. And that's actually a really hard thing for marketers because when they run media campaigns, the highest ROI campaigns are those that speak to your existing customers. And my claim is usually you would actually have an even higher ROI if you tried to simply use your personalized one to one communication with those customers and spend on the much tougher problem of trying to get new customers through your paid media.

Very interesting. I'm mentally tying myself in knots over the impact this will have on small and large companies. Half of me is saying, Well, with technological tools now, it can be cheaper and easier to access people, and so therefore you have an advantage, especially if you're flexible and nimble, etc. But then dollars do count and the large companies definitely have that. Who will benefit? Who will be affected, do you think? What will the landscape look like?

Well, I come back to the brain. If I can look like the dominant solution to a specific need, I win because your brain likes a champion. It likes one answer to things. There's a bunch of different factors, including increased sensitization to all the impressions, if you've seen a lot of impressions of something. Think about it as like economy of scale that the brain gives to winners, but it gives it to winners in a specific context or a specific category. A small company can potentially have advantage if they can nail a particular demand space, we might call it, which is a demand scenario and a specific audience. If I can look big, look like number one, I can get all the advantages that classically a large company could have enjoyed, at least from a marketing perspective. And I don't have to spend as much.

Just to jump in, the example that you gave, which seemed a very good example of looking at where the niche need is, was the Apple example. No one can call Apple a small startup company anymore.

No, that's right. Well, Apple is fascinating. Just think about the decades of Apple, on the one hand, playing a challenger to the PC. And then when they came in and they started dominating categories, they instead talked about the brand and the needs and moved away from talking about features or comparisons. They were smart. They've gotten big by thinking and disrupting themselves and playing smart, small ball where they needed to to grow into new categories, but also investing the right amount for long enough to actually deliver the outcomes they need over a multi year period. So I'd say there are some of the most patient marketers and investors from a barium perspective that I've ever seen and that I think is existing. There are other examples out there of marketers who are playing differently in a smart way, leveraging what we now know about impressions and branding. Cars are a fascinating example where the cars literally market themselves. So in theory, you don't really have to spend a whole lot. But the issue is, of course, you have to spend money in the right ways to prime the pump. Some companies have a harder time making the investments when they need to to get past some of the incumbent headwinds from being a challenger.

So there are opportunities to be had, certainly if you use data in the right way, if you use the technological tools in the right way that you could leverage those advantages. But what are the biggest challenges that you see in this environment for companies of all sizes?

The biggest challenges I see, one is that most of the measurement in marketing these days is really around near term ROI, near term actions. We expect when we do marketing that someone is going to perform an action like come to the website or walk into a store or buy something, hopefully see dollars so we can see a near term ROI. But the problem is that usually means that we're talking about the set of people who are ready to perform an action. So I sometimes talk about this as like there's visible matter and dark matter in the universe. So there's the visible matter is like when you shine a light, you see something back. When I spend something in marketing, I get some return or some action. That's mostly existing customers. It's mostly high frequency buyers. It's mostly people who are already activated in the market and thinking about buying. What will happen when you have a company that focuses in on those metrics, they will tend to spend mostly on their existing customers. They will spend mostly on messages that resonate with them that might be more technical to those that are savvy. Again, with all of their investment are potentially starving themselves of what really is necessary for growth, which is talking to the non customer or the low frequency customer.

They actually leave an opportunity for others to come in and grab new customers. And how do you then measure what the long term impact is, but measure it in the short term? And what I'm saying is to measure that dark matter of the universe, you actually have to measure and interrogate brains. You have to understand, Okay, I ran this marketing. Is that actually creating some association in your brain immediately? That's actually something we are now using as a basis for measuring how well campaigns are stimulating the brain. So as an example, if I were to ask you, imagine yourself on a beautiful day driving through a countryside and the windows are down, you're with someone you like, you listen to music. What car are you driving?

You've asked me a tough question. I don't really know anything about cars, but one that doesn't have a top on? A good car, sports car.

Something we might call a convertible.

Not the one I've got outside.

Okay, fair enough. Okay, so let's just say you may have had a harder time with that, so that you don't necessarily have a first fast response, and that's actually notable. But if I showed you a series of ads, you might have an answer. And by the way, I'll bet you you'll start to notice more ads for convertibles over the next 24 to 48 hours. But anyway, if you had the first fast response, what we could show is whatever you answered, you're much more likely to potentially purchase that brand of car in the future. And again, analytically, we can see if that's the demand context that matters for you in your purchase, you'll see that that first fast response or FFR ends up predicting purchase. We've also seen it, for example, in the Super Bowl. We looked at all of the beer commercials that were going on during the Super Bowl. And we actually looked at, okay, there are certain what we call demand spaces around beer. And there were some notable ads that really focused in on a specific demand space. For example, being able to relax at home on an otherwise non-notable moment of your life, that casual, relaxed idea.

The ad that focused in on that particular demand occasion saw that the first fast response associated with that occasion, the number of people answering their brand in that occasion, increased a lot. And then we could see afterwards that the number of people purchasing and then consuming in that occasion increased. And we saw that all with surveys. And we were able, because that particular ad was only shown in some markets, we could actually show that in the markets where it did occur and those that it didn't, there was a substantial lift. So we saw some causation in that exposure to the ad. That idea of the first fast response then leading to future purchase, that's a really important point for us then as marketers. When we talked about the difficulty of measurement, we have to then be able to pull measurements like that into our framework of what the long term total ROI is of the investments we're making. And not just these, economic analyzes that are really common in marketing.

I just want to delve into that a bit more about measurements because you're head of marketing, you're walking into the C-suite and they're wanting results. How do you measure something which with brand association can take many, many years to really.

Really embed? Well, this idea of measuring first, fast response or measuring the brain is a part of the answer, because what we can see is that when there are increases in that first fast response. I market to you saying, When you're home, drink my beer. I see a lift that when I ask people, Hey, if you were home, would you drink our beer? Increasing. Then future purchase of beer for that occasion. Then what you have is more people with their own first person experiences reinforcing that saying, Hey, I like that. Let me get that beer again. You have other people coming to your house seeing you. I'll call that a second person observation impression. They'll say, Hey, I like that idea. Maybe I should have that beer, et cetera, et cetera. This is why there's this long term, multicourt or multi year phenomena that builds on itself over time and why initial investments in marketing then take potentially a while to build up to a higher share of market. What we have to do to answer your question is we have to model the world in that way and start to see evidence that there is some flow of that type, that there's a high change in brains and then there's a high change in purchase, leading to higher first and second person impression volume, leading to higher mind share, leading to higher decision share.

It's a flywheel. And we need to measure the flywheel and all of its components over time to then project where we think your share of market will be in multiple years and give some confidence to the CFO, to the investors, to the CEO that they're on the right path. And part of what we do as BCG is try to analyze not only where to focus, where to focus the investment, what type of messages, but also derisk the process a bit by saying, okay, well, you may not have to do that in the US for three years to see a return. What you might want to do is focus in on one region of the US or even one state and try to prove out that like, Hey, this model says we should be hitting these goalposts over the next four quarters, and that should project to some value in three years. Oh, it is. Let's start to scale that up and explore and expand appropriately to manage our risk and also to be bolder where we have right to be. Because as I mentioned before, the second real problem that I'm dealing with is that there are companies who should be winning who aren't because they don't invest appropriately and we have to give them the confidence to invest more where they have a credible right to win.

David, what are the key takeouts for marketers who are listening to this?

What we do with our clients typically is, first of all, focus on where you have a right to win and ensure that the investment plan is designed to actually encourage a larger mind share, driving larger decision share than larger market share. The second thing from a marketing perspective is creating a plan where the message and the targeting is focused as much as possible on driving new customers in the areas where you have a right to win. The trick there is that often you will be seeing low, near term ROIs because you're reaching new customers in places where you weren't currently winning but should win. And you may be trying to beat an incumbent champion brand in that space. So expect that it will actually take a while of consistent investment to drive more Mindshare and drive higher ROI. And then finally, drive long term consistent investment with goalposts and milestones over quarters and years to ensure that you don't make the mistake of pulling back quickly and potentially giving up a lot of ground that you've invested a lot of money to try to drive.

David, thank you so much. And to you for listening. We'd love to know your thoughts to get in contact. Leave us a message at thesowhat@bcg. Com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us. It helps other people find us too.