Are Digital Brands different from Other Brands?

Open your TV, tune into your radio, flip open a newspaper (on your phone or in print), go out shopping. Which brands are you likely to see and notice?

CPG, B2B, Luxury Brands, Start-up Brands, Streaming, Smartphones, Tourism, Charity and so on. But digital brands? Only a very, very small cohort of digital brands actively invest in “traditional medium” consistently. Why is that? There are few reasons that have been cited for this,

Spillover: Some of the newer digital brands are not widely physically available. A media plan with higher investment in traditional media would not be feasible or may not be as effective as investing heavily in digital

Be where your customer is: Digital brands espouse the analogy that since they are available only on digital, their customers transact with brands on digital, it seems prudent to ensure higher investment in digital media

While both these reasons seem plausible, they simply do not have any scientific standing whatsoever. Moreover, It is highly unlikely that your digital spends are accurately being shown to the customer who fits your profile. The pervasiveness of digital ad fraud lends credence to the argument that solely relying on digital investment is not a good idea. Coming to the second argument, I can extend the argument to say, why does Hyundai need to have active digital marketing investments. People cannot and do not buy cars online. Reductio Ad Absurdum. But digital surely helps ensure high mental availability of the brand right?

A recent WARC article by Tom Morton, speculated that digital brands might be different. That, in addition to penetration and purchase frequency, growth can also come from selling additional products to customers. This is theoretically true, though not unique to digital brands. Plenty of FMCG, Durables, automobile and banking companies follow the same notion. Over the years, they have been adding newer products and services under a single brand, leveraging the respective brand’s mental availability and regular buyer groups to sell these offerings. It is possible.

In the same article, Tom Morton’s speculation was based on two cases. The first, that Apple has recently grown its revenue faster than its penetration. But the same is true for any company with many growing brands. For example, Procter & Gamble’s, Marico’s and Puma’s organic sales have grown at an impressive rate both before and during the pandemic, but the company’s overall penetration can’t have grown (they are selling to the same households!). It is P&G’s, Marico’s and Puma’s individual brands that have grown penetration (just as Airpods, Macbook, and so on have for Apple).

The second example was an actual digital service: Instagram which has achieved impressive penetration growth and “has also grown the time that users spend with the app”. Yes, (social media) brands follow the Double Jeopardy law.

It’s an interesting speculation that brands (both durable products like Apple, or digital services like data apps) might today be more easily able to cross-sell, and perhaps thereby lock-in loyalty. But the evidence isn’t compelling. Adding additional services (as an ecosystem) doesn’t appear to be any easier or less risky for digital brands, e.g. Google’s four attempts at social media all failed, YouTube Shorts appears to have had near zero impact on TikTok user growth, and no one seems to remember Facebook Poke (its version of Snapchat), nor its much publicised yet brief foray into cryptocurrency.

What we do know is that digital brands have to work with the same empirical laws that describe buying patterns in every category. Success depends on winning many users by building (mental and physical1) availability, and then working hard to keep these users using the service. This is why Netflix shares fell 25% when (April 2022) they announced a decline in users, in spite of more revenue per user.

It shouldn’t need to be said but yes, physical availability includes online presence, paid search, apps installed etc.

So, digital brands are not different from non-digital brands. They also follow the same marketing principles and fundamentals that have been laid down previously for other brands.