Category: Perspectives

Is there really such thing as an “untacklable” or unstoppable brand? After two decades as a brand consultant, my gut reaction is, “of course not, any brand can meet its demise through mismanagement, malfeasance and a host of other activities whether in or out of control of the leadership”. Although, not so fast…

It seems as though the NFL’s offseason (or in season for that matter) is beset with ever growing scandal each year. From a commissioner who is perceived as anti-labor to domestic abuse, animal cruelty, drug abuse and more by players. Organizations who hold their municipalities’ hostage in negotiations for facilities. Teams accused of outright cheating, which many thought would be the death sentence for the league, challenging the very integrity of the game.

All of that said, anyone who thought that the NFL would suffer any financial impact from any of this, clearly has never set foot in an NFL venue on game day. The fans, the truest example of fanatics, will not be deterred. Full disclosure, I am a big fan of the NFL, in particular the Pittsburgh Steelers (who have had their own issues), but nonetheless I am fascinated by the resiliency of this brand which has faltered so grandly and on such a public stage yet is immune to any financial repercussions.

The cause of this could be the very structure of this brand. It really is a composition of many brands, the league itself and its 32 teams. It’s this structure that allows fans to adopt an attitude that, “it’s my team vs. the NFL, the other teams”. It allows people to rationalize their passion for the team and absolve themselves of any guilt. It’s a case where fans can say, “the league has its problems, I’m just glad that isn’t what my team stands for”. For example, are Tom Brady and the Patriots cheaters, does Ray Rice deserve a second chance or should he be scorned forever because of domestic abuse and the gruesome images that we saw on that video. The NFL has made commercials to address the fact that domestic violence is wrong, but shouldn’t that just be common sense? In spite of this and other episodes of domestic violence, the female fan base continues to grow. What about Adrian Peterson? Michael Vick? Civic pride and passion for your team allows people to overlook the shortcomings of their favorite team.

As a Steelers fan, it has been interesting to watch the reaction to Michael Vick as he’s been welcomed to the team. While he was not brought to Pittsburgh without some rumblings, some of the fans that screamed the loudest when he was first reinstated to the league aren’t screaming so loud these days.

In the final analysis of the success of the league, TV ratings, which lead to the all mighty dollar, none of this appears to matter. Ratings for the NFL kickoff game on NBC just keep getting stronger, up 5% from last year and 9% from the year before that. I think ultimately, the NFL is about competition, story lines, passion and drama. Far from damaging the brand, I think these things make it grow. It has been ingrained in our society, the Super Bowl is a national holiday. It may not be “unsinkable”, but it’s hard to imagine the crisis that would derail the NFL. I’m not making a value judgement on whether that’s a good thing or a bad thing, I’ll leave that up to the individual to judge, it’s just the reality of it.

As Partner of CoreBrand Analytics, Brad Puckey is charged with helping leading brands and organizations understand how their brand builds value. Having helped establish the CoreBrand^® Index, a quantitative database based on continuous benchmark tracking of nearly 1,000 companies, we thought we’d delve into the Volkswagen brand and examine the forces and implications of “dieselgate,” the company’s latest crisis that could significantly tarnish its brand reputation, value and appeal in the minds of both consumers and investors.

Tenet, through its CoreBrand Index (CBI), has been measuring the strength and value of corporate brands since 1990. Providing prescriptive insights on brand performance, it is based on two critical dimensions that contribute to a company’s ability to drive long-term growth: Familiarity (brand awareness) and Favorability (measuring corporate reputation, perception of management, and investment potential). Turning to Tenet’s CBI data, what trends or general movement is revealed when looking at the Volkswagen brand before and after this event?

Volkswagen has had a very strong and relatively stable brand when compared to the 1,000 companies that we track. The company’s Familiarity score is around 90 out of 100 making them one of the most highly recognized brands in the world. Their Favorability has been hovering in the mid-70’s out of 100, indicating that they have been fairly well perceived.

With Familiarity that high, it means that Volkswagen will not be able to hide from this event. In a crisis, typically we see Familiarity increase as media attention grows and Favorability plummet as the perception is damaged. It remains to be seen how the three attributes we measure (Overall Reputation, Perception of Management and Investment Potential) will be impacted. Because there was condoned lying and cheating by management, Perception of Management will likely be driving the expected downward spiral. However, the company has also given away a significant portion of its market cap so the damage to Investment Potential may be significant as well. Investment Potential can recover relatively quickly if the company’s stock performance improves soon. The damage to Perception of Management is likely going to suffer in the long-term since they were knowledgeable about this and complicit beforehand.

The company said it would set aside $7.3 billion to cover the cost of repairing nearly 11 million vehicles impacted by the scandal, in addition to other efforts to win back the trust of customers. In your view, what steps should the company take to undo the damage it has done?

First of all, they need complete transparency and cannot try to cover their tracks or deflect blame. They have been caught red handed and now must fully commit themselves to do right. Any further lies or attempts to cover the truth will have a disastrous impact on the company’s already declining credibility.

They have to put their customers above all else. They need to quickly implement the recalls and fix any deficiencies in these vehicles. The customers don’t want to hear about it, they want action. A recall is an inconvenience to their customers and they have to act to minimize this inconvenience.

The problem that Volkswagen faces in restoring trust is that this was not an accident – it was intentional fraudulent activity meant to fool regulatory bodies. The knowingly installed so-called “defeat devices” to make their cars pass federal emissions tests. They will likely need the help and expertise of crisis communication consultants to help them convey appropriate messages moving forward, but even that may not be enough. We live in a society that will forgive accidental missteps. However, in this case, they devised a methodology to defeat the regulators. That is a tough, if not impossible fix.

In today’s data-driven business landscape, companies want greater transparency and a clear line of sight into what’s driving the value of their brand equity. Could you describe Tenet’s approach to Brand Equity Valuation? Is it possible that VW has already incurred a loss of brand value following this event?

Our valuation approach uses an explicit measure of the strength of the brand, BrandPower (Familiarity and Favorability), which has been consistently tracked across 1,000 companies since 1990 and is available quarterly. BrandPower is then one variable in a statistical model that identifies the brand’s contribution to market cap and the dollar value of the brand.

We have examined what this crisis has already meant to the brand and it is not good. In terms of brand valuation, the company’s brand was at its peak for 2015 in March at $11.2Bil. It was already headed downward and on September 18th was at $8.8Bil. By the close of the market on September 21st the brands’ value was down to $7.3Bil, and as mid-morning trading on the 22nd brand value continued to drop and was at $5.9Bil,a drop of $2.9Bil from Friday afternoon until mid-morning on Tuesday. This represents a loss of nearly 1/3 of the brands total value in just a day and a half. The financial damage already has been horrific.

When looking at other global brands that have faced a similar, large-scale crisis, both BP and Toyota come to mind. In what ways is this situation to Volkswagen unique and lessons can brands learn from their response and efforts to engage audiences?

Toyota followed this similar crisis pattern where Familiarity briefly was elevated by increased media attention and then returned to previous levels. Favorability though was damaged and continues to decay. The company once had exemplary brand scores with Familiarity above 90 and Favorability around 85, they were well known and highly regarded. Today, they are still widely known, but their sterling reputation has been tarnished. Favorability is just above 70, and continuing to decline across all three attributes. The best news for Toyota is that the rate of decline has slowed considerably so they might be nearing bottom. For them, the focus needs to be on rehabilitating their brand.

Similarly, BP followed the same crisis pattern as Toyota. Interestingly, BP retained its Familiarity gains which were modest, about 6-points. And while Favorability dropped even more than Toyota, from 83 to 67, BP has restored some of its lost Favorability and now resides just above 75. BP’s Favorability bottomed out at the end of 2011. Therefore indicating that their rapid response, community outreach and efforts to rehabilitate their image and be seen as doing right have kept this crisis somewhat contained and lessened what could have turned into an even bigger financial disaster for the company.

This is just the beginning of the crisis for VW. The company’s CEO, Martin Winterkorn, just announced that he would be stepping down, and I expect other management shuffles to take place as a result. While only days into this scandal, the $7.3Bil that they have set aside is about 11% of what the BP crisis cost the company. I believe by the time VW is hit with fines, penalties, lawsuits and who knows what next, this crisis will have caused more damage to the brand and will be even more expensive for them.

When it comes to uniquely American success stories Fred DeLuca’s story of building the Subway brand is one of the best. Fred had an amazingly prescient vision for a 17 year-old kid in 1965. His idea started from just a deli in Bridgeport, CT and became one of the largest fast-casual franchise restaurants in the world. It was a visionary concept that pioneered the idea of providing a healthier, less fattening meal option at a significant value price point. When asked if that was his strategy all along? His smiling response was, “You’re assuming I had a strategy.”

He borrowed $1,000 from Dr. Peter Buck, a family friend, and began to make that vision a reality. He instinctively understood and learned through trial and error that visibility and marketing were essential to growing his brand and the company.

Fred’s success cannot be denied – he grew that one store originally known as “Pete’s Submarine” to a chain of over 44,000 franchised Subway stores around the world. The company just reached its 50th anniversary on August 28th 2015. The company’s annual convention, which also celebrated its 50th anniversary this year, was held in July and despite Fred being in ill health, he insisted on attending – a true testament to his passion and love of a company that he built from the ground up.

Fred’s net worth went from the “$0” starting line to a Forbes estimated worth of $3.5 Billion. Fred established a legacy of wealth creation for others to emulate. The average franchise costs only $150,000 to build making it one of the more affordable franchise opportunities. Franchise owners came from every class and built their business and inspired others to grow their wealth the way Fred did it and many other millionaires and multi-millionaires were created in the process.

Fred also gave back to the community without fanfare. For example, he partnered with Pete Buck to create Franchise Brands, a company that invests in and helps other entrepreneurs find success in the franchise industry. Fred believed in entrepreneurism as a key component of the American Dream. He believed it is the quickest way to improve the financial wellbeing of the most people in our country, or any country.

The world needs more business leaders like Fred DeLuca.

2015 has been a banner year for corporate mergers and acquisitions, Driven by low interest rates and easy access to money, corporations have been scooping up companies to grow, eliminate competition and expand their markets.

CVS’ purchase of Omnicare gives the pharmacy healthcare chain access to an older demographic. Charter Communications merged with Time Warner to create one of the largest cable television and broadband Internet providers in existence. And fast paced ACE insurance just purchased the venerable, yet conservative Chubb Group of Insurance companies.

Unfortunately, mergers aren’t always successful. Some fail because one company overestimates the worth of the other—and overpay. Other times, failure can be linked to a lack of synergy in services, products, resources or markets. But history—and research from the Society for Human Resources Management—has proven that over 30% of mergers fail because of simple culture incompatibility. For example, in 2003, the America Online and Time Warner merger could be considered one of the most epic failures in business attributable in large part to huge cultural divides. The 2005 merger of Sprint and Nextel Communications was also a cultural disaster. Within 3 years, Sprint wrote off $30 billion, almost the $35 billion they paid for Nextel in the first place. And the infamous Daimler Chrysler merger imploded due to a myriad of reasons, but primarily because of cultural differences in management and operational style.

Culture drives employee behavior
When two companies with their own distinctive cultures combine, there’s a huge potential for failure. Even with integration consultants working to forge a new synthesized culture, there are bound to be issues.

All institutions and companies have their own cultures. Some are shaped by strong beliefs of their founders, such as Steve Jobs and Apple; others by a sense of social responsibility evidenced by Toms Shoes; still others consciously create a culture that reflects their customer-focused business model like Zappos.com.

Corporate culture influences how employees behave and shapes what is expected of them. It is seen in the large and small decisions of every day business. In a merger, the acquired company must adopt and adapt to a new set of cultural norms and make new behavioral choices. Which isn’t always easy.

Behaving is believing.
After all the stock shares have been divided, the payouts made and the organizational structure solidified, it can be the employees who will make or break the ultimate success of the deal.

That means, all the employees of the newly formed company—from management on down, and especially those who were acquired—need well defined, specific examples of what behaviors are the new norm. If the old value of slow, thoughtful conservativism is being replaced by a value of speed, risk-taking and aggressiveness, there’s a huge need for employee re-education.

Measuring employees’ awareness and expression of a new brand through their behaviors and actions—along with helping employees self-define and integrate on-brand behavior through brand workshops—can bridge merged cultures and aid in more successful brand integration.

Cultural values—and their demonstrated behaviors—need clear definitions. Even from one person to another, cultural values such as integrity, collaboration and innovation need to be defined by each person in terms of their job, tile, function or role. “Tell me what you want me to do? How should I behave? How should I be living the new brand’s culture?” These are the questions that must be addressed or a merger runs the risk of the failures of the past.

It’s that time of year again, where The Hess Truck is back for its 51st year. This is after Marathon Petroleum purchased all Hess stations and rebranded them as Speedway stations. With only 10 mall kiosks and a website to share their latest model with, how will the Hess Truck be received? Will the customer experience be just as enjoyable? Will their Hess Truck jingle return for yet another year? I certainly hope so.

Since 1964, The Hess Truck has focused on several key values. They’ve consistently offered a well-built toy, with various bells, whistles, lights and accessories each year. As a sign of goodwill, batteries have consistently been included with every truck since its inception. At the time, it was a significant move and fit in with their concept of goodwill. Nowadays, included batteries are a point of entry for toys.

While the Hess Truck is different each year, they’ve kept within themes of fire, rescue and safety vehicles. Early on, they were primarily tankers, and service trucks, with an occasional helicopter, space shuttle or racecar added into the mix. And with a few red-colored exceptions, all models have retained the Hess green color scheme.

And since 1988, they’ve annually created adaptations of the song “My Boyfriend’s Back.” While I’ve never received a Hess Truck for the holidays, I’m very familiar with the jingle (A majority of their past jingles can be found on their YouTube channel) and could recite it from memory if ever needed to. Most friends I asked remember Hess Trucks fondly from childhood and are familiar with the jingle as well.

While not to the same scale of prestige as last year’s 50th anniversary model, this year’s model is also selling a Silver Edition amidst the regular models, making it a bit of a lottery as to who will obtain one. For those nostalgic of past years’ models, there is a full breakdown of each model on a dedicated website.

Perusing their website, they show a clear dedication to consistent quality in their models. That consistency has definitely made an impact, as articles cite that the Hess Truck accounts for 10 percent of toy truck sales each year. (Presumably, just the US)

The biggest takeaway I’ve gotten while researching the history of Hess has been: Putting value in your customers creates long-lasting brand value.

From focusing on a goodwill item to offer customers, to moving their release date from Thanksgiving to early November to discourage holiday shopping on a holiday (a very contrary action to today’s “Gray Thursday/Black Friday” retail mindset), to creating a very memorable audio brand through their jingle, Hess has held up their tradition of giving value to their customers.

What other brands out there have focused on the customer experience, and customer value?

As with humans, it is important for brands to know what behaviors are socially acceptable.

Another day, another social media blunder seems to be cropping up in my Facebook newsfeed. It’s become almost second nature for me to wonder, “which brand will it be today?” with so many brands overstepping their boundaries and issuing apologies for their mistakes.

However, the more I think about it, the more it makes sense that we’re seeing these social missteps on a recurring basis. As brands work to become more social – more human – they are being held accountable for being just that: human.

As a millennial working in the social media and branding space, I’m well attuned to the notion that when it comes to brands and social media, almost anything goes. A brand’s ability to react and engage quickly with their audience is not only lauded, but also expected of fans. Also, given its real-time nature, some of the most successful posts and tweets on social media are those that a brand posts on the fly. But unfortunately, this spur of the moment thinking often results in borderline offensive and inappropriate posts and tweets.

One incident that caught my attention comes from IHOP, the International House of Pancakes restaurant chain. The company recently posted a particularly controversial tweet (that has since been deleted), alluding to the flat yet great personality of their pancakes. The tweet was quickly shot down by fans citing its overtly sexist and off-brand tone, especially given the fact that IHOP refers to itself as a family restaurant.

Many commentators have been quick to note that IHOP is likely trailing on the success of its competitor Denny’s, who has been pushing the proverbial envelope across all of their social media platforms with witty comments and snarky responses. Denny’s has developed a particular knack for catering to a fan base of intelligent and socially active millennials, who have conversely grown to love the brand’s surprisingly youthful marketing tactics. A quick glance at Denny’s Tumblr page shows just how fun and engaging the brand has evolved to become in order to keep pace with millennials. It should come as no surprise then that IHOP would hope to take back a share of this market that they lost by attempting similar tactics.

I see countless posts and comments on Facebook with claims that our generation is becoming overly sensitive and that people don’t know how to laugh anymore – but in my opinion, we’re becoming wiser, whether it be through protesting cultural appropriation in Halloween costumes like the use of blackface and Native American feather headdresses, or through understanding why #BlackLivesMatter, and why those advocating #AllLivesMatter contradict this effort.

Brands seeking to appeal to millennials should know that, while we are impressed by brands that can make us laugh, we aren’t willing to overlook political correctness for it. The growth in cultural sensitivity and awareness of sexism in recent years – which in my opinion, has been fueled in large part by millennials – is shaping how we react to the media around us, and no amount of brand loyalty will ever outweigh this scrutiny.

As millennials continue to eclipse older generations in terms of buying power and consumption, it will be interesting to see how brands continue to hone and refine their online practices to avoid future incidents like this. Looking for a suggestion from a millennial? Stay relevant, but mindful of the expectation that this generation wants to get it right the first time.

In the last few years, one of the brands that we have long tracked in our CoreBrand^® Index, General Electric (GE), has been working to change its brand image from that of a large, industrial manufacturer, to being a brand that is (along with being a large industrial manufacturer) at the forefront of innovation and technology.

As one of the most powerful brands in the index (they finished 17th overall in 2015), for GE to intentionally move away from their brand legacy towards a new and different brand persona might be considered risky. However, GE has taken an interesting approach by trying to show the benefits of applying innovative solutions and technology to what GE is best known for; large scale equipment that drives businesses and industries.

Throughout 2014, much of that effort was based on advertising and marketing directed at B2B audiences (investors, partners, industrial buyers, etc.) and consumers that was centered on stories about GE providing better solutions for businesses and industries, whether it means greater efficiencies, higher performance or in being more environmentally friendly. An example can be seen in this ad, where a little girl talks about what her mother does at GE:

Now, in 2015, GE has added to this effort with very clever advertising and marketing campaign that not only speaks B2B and consumer audiences investing in, or purchasing from GE, but also to the TALENT GE will need to attract in order to sustain a leadership position in innovation and technology.

Called ‘What’s the Matter with Owen’, it is built around a nerdy computer programmer who has been hired by GE to write code that, as he put’s it, ‘will change the world’. However, friends, family and acquaintances, upon hearing of Owen’s new job, have difficulty reconciling GE’s brand image as a manufacturer, with Owen’ being a programmer. Perhaps the best example is ‘The Hammer.’:

Obviously, it remains to be seen how this new messaging will impact the GE brand, and whether or not it contributes to GE ranking high in the CoreBrand^® Index in 2016. But what this new messaging does do, in my opinion, is show GE to be a brand with exceptional self awareness in knowing that success is not just about convincing people that you offer a better solution, but also knowing that in order to build that solution, you need talented and capable people to help you get there.

Activision Blizzard’s acquisition of King Digital is worthy of discussion in regards to how they’ll blend their complementary brand strengths. Activision Blizzard has a strong player community and genre-defining content, while King Digital provides a wider audience through all-ages and bite-sized content. An important facet of this joining of brands is their respective user experience styles; actively engaging their audiences through quality content.

Defining Genre Experiences
While Activision Blizzard has a solid handle on community building through expansive multiplayer and online games such as Call of Duty and World of WarCraft, there’s more to their products than just playing with others. Most of their products have games within games. These non-required quests, challenges and mini games are opportunities for players to do more than just button mash to the next level.

Their games have “replayability”; there is more content than can be consumed in just following the primary missions or story lines. It’s encouraged to explore the worlds they’ve coded, seek out various achievements (challenges that provide a digital trophy for accomplishments).

The Activision Blizzard experience is about long-play engagement with others. Unlike Candy Crush, these games can take several hours to progress through campaigns, challenges, story arcs or quests. Their content provides a lasting experience for players, while allowing for on-the-go bursts of playing time. King Digital’s games are a more focused user experience, providing quick hit entertainment for the masses. A round of Candy Crush or similar game can take minutes, not hours. How many rounds and minutes users spend at any given time varies. As most of those games have infinite rounds (although not necessarily infinite lives/turns), the potential entertainment value is limitless.

Bite-Sized, On the Go Experiences
King Digital is responsible for the slightly addicting matching game Candy Crush. They’ve created other games like Pet Rescue, Diamond Digger, Farm Heroes, Papa Pear, Bubble Witch and Alpha Betty. These games don’t have the story or character depth when compared to Activision Blizzard’s offerings. There’s little of that needed when the game mechanics are simplified to matching, grouping and organizing.

They’ve been responsible for bringing casual gaming to the masses through Facebook and mobile devices. Their games help show that gaming isn’t just for “gamers” but for everyone. You don’t need to invest in gaming specific hardware or software, beyond the games themselves. They’re all-ages and more intuitive than role-playing, real-time strategy, or first person shooter games. King Digital has made a very quick impact on making “gaming” mainstream.

Will it Blend
Today’s games are becoming increasingly multifaceted, to accommodate the multiple playing styles, skills, and interests of gamers. With games like Witcher 3, Fallout: New Vegas, Battlefront, Grand Theft Auto: V and the Fable franchise, there are several integrated card, dice and board games within the overall games, providing an example of what Activision Blizzard could best take advantage of with its purchase of King Digital.

Leveraging King Digital’s focus on “creating moments of bite-size brilliance” and Activision Blizzard’s roster of “pure-play interactive” entertainment, there’s incredible potential for integrating more quick-play games and community building aspects in current and future long-play games. By utilizing the depth of user behavior data both companies have, there’s great potential for finding the right balance between accessible, engaging, and replayable content.

I’d love to see mini-games integrated into the lore-rich and character-strong games in development. It’d also be great to see it go the other direction, bringing more depth to the casual gaming with characters or story lines to progress through at your own pace. As an avid fan of Activision Blizzard’s products, and a previous player of Candy Crush, it’ll be fun to see just where this acquisition takes both companies.

Chipotle, once a darling of Wall Street, continues to face serious reputation issues tied to the outbreak of strains of salmonella and E. coli. In an interesting twist, it is Chipotle’s differentiating commitment to sourcing and carefully preparing the very best natural ingredients to offer “Food with Integrity” that may have led to the outbreak. Apparently, sourcing and preparing food using high-quality, raw ingredients without additives can be a risky proposition.

Chipotle’s stock has been pummeled, leading the decline during a tough first week of trading in 2016. This is despite the efforts of Steve Ellis, Chipotle’s Chairman and co-CEO, to institute stepped-up safety protocols. Nevertheless, over the past 20 years, Chipotle has earned a reputation of being a step above the Fast Food category, creating a unique Fast Casual dining experience. While Chipotle is responsibly taking a closer look at its ingredients and preparation, there are a few reputational ingredients the company must adhere to in order to rebound:

• Leadership must be unwavering in its message about its 20+ year commitment to creating a better dining experience through natural, healthier and better tasting options. This value proposition remains a valuable point of differentiation.
• Transparency is key – Chipotle must “lean in” with a higher profile about the steps the company is taking to address recent health issues and speak to the results of its improved efforts. Witness what Dominos Pizza did in its food tampering scandal, how it owned up to it in high profile TV commercials and was clear about rededicating itself to its customers.
• Engage all key stakeholders in Chipotle’s ecosystem to serve as advocates in restoring its reputation. Consider the role of employees, farmers, ranchers, suppliers and loyal customers as advocates. It’s one thing for the company to communicate, it’s quite another to have support from other constituents.

It is uncertain whether Chipotle will fully bounce back, but they certainly should not be counted out. Many other companies have faced far more serious issues and have demonstrated their resilience by following these simple reputational ingredients.

With the New Year upon us, many have taken the time to reflect upon the changes of the past year. Given just how quickly the worlds of advertising and marketing move, it’s important to take stock of the drivers that continue to shape and influence the way brands create value, both for their organizations and their customers.

‘Innovation’ and ‘disruption’ seemed to be the buzzwords of 2015, but for all the noise these catchphrases have created, it’s worth asking: Is brand innovation and disruption simply a trend or part of something bigger? My vote is for something bigger that is fundamentally shifting our relationship with brands and the experiences they create. In the spirit of reflection, here are five major ways the branding landscape evolved in 2015, and what these changes will mean for marketers as they seek to create new and ‘disruptive’ brand experiences in the year ahead.

The shift from the connected consumer to the connected product
The rise of the Internet of Things (IoT), coupled with the growing spotlight on Design Thinking – a form of customer-centric design – has resulted in products never before seen. In the race to build the first truly connected smart home, Apple’s HomeKit will be going head-to-head with Amazon’s Echo – and despite being at the center of a few April Fool’s jokes when it was introduced, Amazon’s Dash Button illustrated, if anything, that the IoT is poised to create profound changes to the way consumers shop both online and off. In 2016, the biggest challenge for brands won’t necessarily be in creating a new suite of connected products, but in transforming them from novelties to true utilities, offering a functional as well as an emotional benefit to the end user.

Apparel stands out as a category prepared to make transformative shifts on this front. While clothing with sensor technology is still in its infancy, major brands including Under Armour, Ralph Lauren and Levi’s have been working to develop their offerings. Ralph Lauren revealed its smart shirt, PoloTech, at last year’s US Open tennis tournament, made with a “second-skin” fabric that tracks biometric stats like heart rate, steps taken, breathing depth and energy exertion. Many leading brands, from Apple to Google and Nike, are also investing in artificial-intelligence technology that reads people’s emotions by analyzing facial expressions – expect major things on this front from hyper-targeted advertisements to virtual dressing rooms and virtual personal shoppers as part of the in-store experience.

Brands as content creators – and social media’s growing foray into e-commerce
2015 was a banner year for content marketing. While continuing to disrupt the hotel industry, Airbnb’s one-off print magazine, Pineapple, made headlines and the company is now in talks with Hearst to launch a new magazine as a joint venture.

On the traditional hospitality front, Marriott’s in-house content studio expanded to take on film. In March, the company launched its first original short “Two Bellmen,” a 17-minute action-comedy starring Henry Simmons from Marvel’s “Agents of S.H.I.E.L.D” and Miles Brown from ABC’s “Black-ish.” David Beebe, Mariott’s VP of creative content and global marketing who leads the 65-person studio, explains Marriott’s approach with three Cs: “Scaling content, then building a community around that content, and driving commerce.”

Driving commerce with content marketing will be high on marketer’s to-do list in 2016. According to the Content Marketing Institute, approximately 80% of B2C marketers plan to produce more content in 2016 compared to 2015. In the B2B space, 51% of marketers plan to increase their content budget in the next 12 months.

On the social media front, brands will be increasingly turning to Instagram, Facebook and Pinterest to help boost consumer loyalty and drive sales. Across channels, these sites are getting smarter about offering ad space and tools that allow businesses to integrate their content with images and inspirational posts, giving consumers the opportunity to purchase the products seen directly within these social pages. As social media sites grow to become micro e-commerce platforms, marketers will need to focus on four crucial components to establish their footing and keep consumers coming back for more: the quality of the content; user experience and functionality; customer engagement and community building; and lastly, brand narrative and messaging. Companies need to ensure that their brand’s personality, values and voice are “on-brand” and complement the host of experiences through which customers are already engaging with their brand – both online and off.

Design Thinking and its movement to the C-suite
While the concept of Design Thinking isn’t new, in 2015 we saw it become more fully embraced by the C-suite. No longer just revered by product and service designers, C-level executives are now applying the principles of design to better manage change and help solve some of their most pressing challenges. As Indra Nooyi, PepsiCo’s CEO aptly said in an interview with *Harvard Business Review*, “Design leads to innovation and innovation demands design.”

Nooyi stepped into her role as CEO in 2006 and in 2012 she hired Mauro Porcini, the company’s first-ever chief design officer, to oversee design-led innovation across all of PepsiCo’s brands. Porcini has been instrumental in launching the first output of Pepsi’s design-thinking approach, the Spire family of vending equipment that allows customers to customize their choice of beverage, adding flavors and suggesting new ones with every purchase.

Tech giant IBM is also on a mission to transform its corporate culture and service offerings by instilling a Design Thinking mentality throughout the entire organization. “There’s no longer any real distinction between business strategy and the design of the user experience,” said Bridget van Kralingen, the senior vice president of IBM Global Business Services, in a statement to the press. By the end of 2015, the company brought on nearly 1,110 new designers, recruiting from top schools including Stanford, Carnegie Mellon, the Rhode Island School of Design and Parsons School of Design and is continuing to train employees across functions on how to apply design thinking to business strategy.

Innovation by Collaboration – the growing importance of brand partnerships and its impact on business success
As Tenet Partners examined in its 2015 Top 100 Most Powerful Brands report, some of the fastest-rising brands invested heavily in R&D, strategic acquisitions and collaborative brand partnerships. As technology continues to blur industry lines, companies will increasingly turn to sectors and categories outside of their immediate category, not only seeking inspiration, but also to forge more meaningful connections with audiences by driving innovation to generate business results.

Take Google, for example. Before it announced a restructuring effort to become Alphabet, the company acquired smart home product manufacturer Nest. In March, Google announced plans to partner with Johnson & Johnson to create a robotic-assisted surgical platform. Both moves crossed category boundaries in an effort to generate new value. In another teaming of two very different organizations, IBM and the Institute of Culinary Education (ICE) teamed up and launched a cookbook, *Cognitive Cooking with Chef Watson*. It was the result of a three-year partnership that brought ICE chefs and IBM researchers together to explore data’s effect on creating the perfect recipe.

Collaborations such as these illustrate that in order to thrive, brands cannot go it alone. Strategic partnerships that reach new audiences and enter into new categories while unlocking value for businesses, customers and shareholders will serve brands well now and well into the future.

Brands responding to political and social events – finding support, not backlash
As brands continue to engage in the places where their customers are, most notably online, it’s become second nature for brands to respond in real time to the most hot-button political and social news stories of the day – a bold new idea for the brand marketers of yesteryear.

In June, when the Supreme Court announced a historic ruling legalizing gay marriage across the country, brands hailing from the technology sector, financial services, retail and consumer packaged goods industries were quick to voice their support, meeting the admiration and “liking” of their customer base. The tragic terrorist attacks in Paris last November also resulted in a quick response, with brands adopting the #peaceforparis hash tag and logo created by French graphic designer Jean Jullian along with other expressions of solidarity.

However, not all brands that jumped into political and cultural dialogues received positive reactions. Starbucks’ “Race Together” initiative was met with a wave a criticism when it was launched. The campaign – which aimed to spark a national conversation about race relations by having baristas write the phrase “Race Together” on Starbucks’ cup – was seen as an ill-conceived attempt at engagement, incapable of bringing about meaningful or lasting change.

As brands continue to take on political and socially charged issues, whether in the form of 140-character tweets or as a comprehensive corporate citizenship program, my predication is that they’ll be more attuned to incorporating their unique brand DNA and positioning into the experience. Execution will be everything and the right balance of authenticity, engagement, and responsiveness will go a long way in creating memorable engagements that win the hearts and minds of consumers, whether it’s through clever and emphatic alterations of their logo or homepage, or inviting consumers to participate in their effort through user-generated content.