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What’s The Half Life Of A Digitally-Built Brand?


What’s The Half Life Of A Digitally-Built Brand?

There’s some evidence to suggest that brands globally can expect to have shorter and shorter half lives. But do the same dynamics apply to digitally-based brands that have applied to the brands that were built “physically” in the past?

Physically-built brands have been around long enough for us to get some sense of how long they survive. “A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces”, according to Bloomberg. That’s a scary level of drop-off. What we don’t know yet is how long brands that have been birthed and have grown up in a digital age will survive. We also don’t know, of course, whether they have a different life expectancy than their analogue counterparts. And before you ask, no I don’t know either.

But the Black Swan reminder is that because the fade time on analogue brands has been a certain period, one can draw no assumptions as to whether those same timeframes apply to digitally-built brands.

I certainly don’t think we’re anywhere near close to a post-brand age. Jens Martin Skibsted and Rasmus Bech Hansen wrote an article in which they refuted the prediction that brands were finished. (Thanks Felipe Schmitt-Fleischer for the point). “The role of a brand is—and never was—just about solving an information problem. It’s about providing meaning and satisfying emotional needs. These fundamental human needs have not changed. To the contrary as consumers experience information overload, there might be a tendency to gravitate toward what’s known and comforting.”

But in the same article they also say this: “Sure, disruptive digital services explode and take over the world in an instant, but to go from being a popular service like Pinterest and Whatsapp to a brand that commands a proper price premium is still a long road.” I agree. The profile of digitally-built brands – their size, their speed of growth, the number of users they have etc – has intrinsic headline appeal, but there’s still much about their lifecycle characteristics that we simply don’t know.

The precipitous rise of the unicorns must invite the question: are they a phenomenon or a bubble? If ‘digital brands’ grow faster, go faster, connect faster…do they also die faster? And to pick up on Tom Goodwin’s wonderful and often misquoted point that companies like Uber, Facebook, Alibaba and Airbnb own no assets and yet are now highly valued – does not owning anything make you nimble or unsubstantial in the long term, or both?<

Who would have thought that Twitter would be in the trouble that it’s in? And when you look at companies like Airbnb, while their presence in cities like New York is a force to be reckoned with, further investigation suggests that their impact dissipates significantly compared to their mainstream counterparts.

I’ll be the first to put up my hand and say that Facebook has defied my expectations. And Google and Amazon are certainly forces to be reckoned with. But, to return to the attrition stats at the top, many others have gone. So that long road that Skibsted and Hansen refer to remains uncharted. A key reason for that, or at least one that remains unresolved for me, is the growth path for more and more of the global digitally-built brands. As LinkedIn has discovered, the markets can be highly judgmental about earnings and expectations. It’s probably enough to put many off going IPO, but it invites the question, what other avenues are open long-term for these brands to continue expanding? And what happens when they stop expanding? If there are fewer and fewer assets to show investors what you’re worth, can a digitally-built brand plateau comfortably? Time will tell.

Hilton Barbour’s recent post on the power of digital versus the power of human was as probing as ever. And he raised a fascinating question about the cultures of digitally powered environments that I think warrants a lot more investigation: “Avant-garde companies like Zappos are going all out on Holocracy and a flatter more collaborative environment, but these new environments are harder in practice to execute than they are in theory … it takes a tremendous amount of patience and dexterity to change how people work together in this new world.”

So digitally-built brands are under pressure from without and within. I think many will need to find ways to show greater substance to the market and sustained humanity and structure to their culture if they are to prosper. But how they do that, and within what timeframes remains unresolved. It may be very different across sectors, geographies, technologies. It may not.

The judgment call of when the established rules and timeframes apply, and when they no longer apply, must be made by each brand and there will be significant and passionate difference of opinion over that. Equally, one might expect that some will be right and many more will be wrong. One thing we can be sure of. Digital done brilliantly is not a guarantee. Of anything. Except perhaps speed and mass connectivity. But…what is the value of that, especially when everyone expects it?

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Felipe Schmitt-Fleischer
Twitter: fsf11
on February 15th, 2016 said

Nice article, Mark. Thanks!

Derrick Rozdeba
Twitter: rozdebabrand
on February 16th, 2016 said

Thanks Mark for the article.

I think the 15 minutes of fame might apply for many new digital ventures unless they hit the big payload (like change a business paradigm).

Brands (including digital) continually get destroyed by mergers, acquisitions, bankruptcies or break-ups. There is a healthy churn in brands coming and going. Steven Denning reported in Forbes that fifty years ago, the life expectancy of a firm in the Fortune 500 was around 75 years. Today, it’s less than 15 years and declining all the time.

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