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GLOBAL 2016: Brands prepare for future of transformative technology

In a year of product iteration and consumer privacy concerns
 
Iteration, more than innovation, characterized a year when technology brands looked to the future, to the development of revolutionary products and their potential impact on society. Lacking a current shiny new thing to draw their attention, consumers were distracted by industry issues like privacy.
 



The conflict between Apple and the U.S. government over unlocking an iPhone to provide law enforcement access to personal data in a terrorism case, demonstrated the enormous social impact of the leading technology brands. This impact is likely to increase with the advent of the Internet of Things, the smart home and the automated car.
 
Implicit in these developments was the tension technology brands navigate by simultaneously pursuing the higher purposes of improving life and connecting the planet while competing for consumer spending with devices and ecosystems that attempt to create loyalty with frictionless customer experience.
 
European Union regulators charged that Google’s Android mobile operating system unfairly favors Google products over those of the competition. Arguing that Facebook would enjoy unfair advantage, India rejected the brand’s plan to provide free Internet access.
 
Facing the future, Google restructured under a holding company called Alphabet.
With the introduction of its next generation smartphones, Samsung positioned the brand as more than the sum of its devices. Apple added Apple Watch to its repertoire of seamlessly connected, highly designed products. Facebook introduced Oculus Rift, a virtual reality headset.
 
Competition increased, with devices of superior functionality and design available at lower prices from Indian and Chinese brands. And several of the consumer technology leaders also partnered with business brands as aspects of business-to-consumer and business-to-business technology converged. (Please see B2B story.)
 
On the strength of the global expansion of its video streaming business, Netflix entered the BrandZ™ Technology Top 20. Google returned to the number 1 rank in the BrandZ™ Top 100 Most Valuable Global Brands. The Technology Top 20 increased 6 percent in value, compared with a rise of 24 percent a year ago.
 
Competing for the future
By creating a holding company called Alphabet, Google increased transparency by sharing its growth plans and clarifying its priorities, which reassured stockholders. While currently deriving most of its revenue of $75.5 billion from advertising in its core search business, Google signaled a future in new businesses, including healthcare, life sciences and augmented reality. Along with new ventures, Alphabet includes a Google subsidiary with its core products, such as Android, Chrome, Gmail, Maps and Search. Google continued development of an autonomous car.
 
Apple began shipping Apple Watch in April 2015 and introduced updated versions of the iPhone, iPad, and Apple TV late in the year. Apple Pay expanded in the U.S. and UK. Apple sales rose 28 percent year-on-year to $233.7 billion, driven by a 52 percent increase in iPhone sales. Apple’s iPhone sales and margins weakened in 2016.
 
Apple did not release sales figures for the Apple Watch. But Apple’s introduction of a watch added excitement to the subcategory of technology wearables, which also included brands like Fitbit, Samsung, and China’s Xiaomi. Apple’s new product sales have not yet balanced slower iPad and iPhone growth, however. It was not clear whether Apple was developing an electric or autonomous car, a project where Apple’s design and consumer experience credentials could add value.
 
Facebook released its first virtual reality headset from Oculus Rift, the start-up company it acquired in 2014. Although priced at around $1,500, the device reflects Facebook’s shift to video and its determination to claim leadership in virtual reality experience. Google and Samsung offered virtual reality headsets, and Sony planned to release a PlayStation version.
 
Facebook also purchased Masquerade, maker of software that enables the user to add special effects to selfies, videos and other images. It includes a popular feature called “face swap.” Like its acquisitions of Instagram, WhatsApp, Oculus and Masquerade are part of Facebook’s effort to remain relevant across generations.
 
In an effort to monetize its audience, Facebook effectively shifted to mobile. With a total of 1.6 billion monthly active users, Facebook reported 1.4 billion mobile monthly active users, a 21 percent increase year-on-year. Mobile advertising reached 77 percent of total advertising revenue in 2015, up from 65 percent a year earlier and 45 percent in 2013.
 
Communicating emotion and purpose
In this competitive context, brands attempted to engage with consumers in new ways. Samsung, known for its wide range of devices and appliances, created more emotional advertising. Rather than focusing exclusively on the features of a particular device, the ads presented the company as a long-time leader and innovator across devices, including TVs, smartphones, watches and, most recently, virtual reality.
 
The brand was a Super Bowl sponsor and will be a sponsor of the Summer Olympics and Euro 2016, the European football championship. Because of the brand’s wide range of products, including home appliances, Samsung is viewed as well positioned to compete for leadership in the Internet of Things and, specifically, the smart home. Competition in several of these segments hurt Samsung’s results last year.
 
Along with emotional appeal, technology leaders articulated brand purpose as a way to connect with consumers. Many of the brands adopted both a narrow definition of purpose, improving the lives of customers, and wider definitions about improving the world in some way. Clarifying commercial and altruistic intent can be difficult, however.
 
For Facebook CEO Mark Zuckerberg, who announced that over time he would give away his personal fortune, the Facebook brand serves the wider purpose of creating a connected planet. When he attempted to advance this mission with free Internet access through Facebook’s Free Basics program, the Indian government rejected the offer, arguing that Facebook would gain an unfair advantage.
 
New competitors
As the technology leaders expanded in India, China and other markets they increasingly encountered strong competitors, such as Alibaba, Tencent, Baidu, and Huawei, among China’s most valuable brands.
 
Tencent, number one in the BrandZ™ China Top 100, continued to leverage its key strength: ubiquity. It increased the number of monthly users of WeChat, its messaging and caller app, to over 600 million. And the brand leveraged WeChat’s functionality to promote its payment system, which can be used for purchasing at physical locations and online.
 
To reach targeted buyers in the most appropriate online channel and provide ease of purchase, Tencent partnered with JD.com, China’s second largest e-commerce site after Alibaba and a newcomer to the BrandZ™ Global Top 100. At the same time, Tencent monetized its high penetration, doubling online and video advertising revenue. The brand also investigated ways to increase its gaming revenue by introducing its games abroad.
 
Baidu, China’s largest search engine, continued to enjoy strong advertising revenue from search, although it is rapidly shifting to mobile, which is less profitable. The brand worked on building O2O revenue by connecting some of its online search functions, such as mapping, with offline purchasing opportunities. Huawei, originally a maker of telecommunications equipment, shipped over 100 million smartphones worldwide in 2015, a 44 percent year-on-year improvement. (For more information, please see the BrandZ™ Top 100 Most Valuable Chinese Brands 2016, at www.brandz.com.)

Brand Building Action Points 

1. Stand for something meaningful.
Add something beneficial to people’s lives. Financial results may drive the share price, but shareholder satisfaction will not guarantee success unless it is accompanied by the innovative products and services that please customers.
 
2. Stay relevant.
The window for relying only on an annuity of past accomplishments is narrowing. Constantly question. Ask what the brand’s future economic relevance or impact will be. Pay attention to a wider consideration set of competitors.
 
3. Communicate emotionally.
The rise of smaller business-to-business disruptors threatens even iconic brands. Move faster and communicate more emotionally, not just about the brand’s competence, but also about its ease of access and doing business.
 
4. Show momentum.
Applicable to any brand, the need to demonstrate momentum by adding new customers is especially important for disrupter brands that offer innovative solutions but may lack the legitimacy that comes with experience, and which is required for building confidence among skeptical potential clients.
 
5. Be a talent magnet.
Be an attractive place to work. Provide challenging assignments and advancement opportunity. Otherwise the most talented marketers and technologists will go elsewhere, and the brand will suffer.
 
6. Inspire customer love.
Keep inventing the products and services that inspire customer love, for normal business reasons, and because, when a brand inevitably trips over an issue of data privacy and security, love will soften the fall.
 
7. Build the brand.
Always important, brand building becomes even more important for creating and protecting value in a competitive and commoditized market.