In the sea of food pictures your friends post on Instagram, how many McDonald’s Big Macs have you seen? How many Starbucks cups, Sheraton Hotel lobbies or Budweiser beers?
Perhaps a few. But, in general, mainstream brands are dramatically under-represented in social media—a fact that illustrates a big challenge facing mass consumer brands.
People use consumer brands to express themselves and tell stories about who they are and what they are proud of. This self-expression via consumption is more true today than ever before thanks to social media, which thrives off people sharing what they’re doing, eating and wearing.
But big brands simply aren’t as suited to this new reality, and as a result, they’re increasingly vulnerable to competition from smaller companies. These smaller brands are more efficient at helping consumers define themselves for a few key reasons.
Identity
People associate with brands to communicate something about themselves and their interests. And in an information-scarce world, knowing someone liked some big brand was a good shortcut for making judgments about the person. But technology has created more tools for people to express their identity, and at the same time enabled already big brands to become even bigger. As a result, many big brands have found themselves in a place where affinity with them is meaningless.
Imagine asking someone: “Do you like Starbucks coffee?” That’s not a reasonable conversation starter in 2014. Everyone knows of Starbucks, has had it and thinks it’s fine. You learn nothing about someone by the fact that they “like” Starbucks on Facebook or follow it on Twitter. Starbucks has 40 million likes on Facebook and six million Twitter followers.
These brands are proud of their reach; however, perhaps they are missing the fact that if everyone likes them, they lose some real brand power.
On other side, consider SoulCycle, the fitness brand with 50,000 Facebook fans and 35,000 Twitter followers. A friend was explaining to me last week that SoulCycle was great for meeting women because if he found a girl who said she liked SoulCycle, there was a reasonable chance that she was really into fitness, which is important to him.
Storytelling
A second reason brands are losing their power is that it’s harder to find something unique to say and share about an experience with a big consumer brand than a niche one. Travel is a great example. If you stay in an Airbnb, the chances are higher that you will have something unique to say and share because of the non-standard nature of the room or experience.
This is not the case if you stay in an average, generic Sheraton Hotel. First, everyone knows what a Sheraton looks like, so if someone shared a picture of a Sheraton with me, it probably wouldn’t strike me as interesting. Hotel chains derive great value out of standardizing services and the fundamentals of design because that is at least a part of how they achieve efficiency. This may be good business, but it doesn’t lend itself to unique experiences consumers want to share.
Information
In a world of scarce information, if I don’t know what drink to buy, the Starbucks or Coca-Cola brands carry much context and significance. But as the world rapidly becomes very information-rich, this advantage is clearly eroding, and people can find “the best” regardless of how unknown it may be. That part is easy to understand.
What is perhaps less obvious—but even more significant—is the relative quality of the information available around niche versus mass brands.
The information available to a consumer about non-mass-brands is frequently better than the information about bigger brands. That’s because fans of small brands are more invested and more willing to spend the time sharing quality views and opinions.
For example, Blue Bottle Coffee in San Francisco’s SOMA district has more than 1,400 Yelp reviews, while the average Starbucks in the area has about 100. So, if I was within a few blocks and wanted to learn about my coffee options, there is actually a larger corpus of information about Blue Bottle than there is about one particular Starbucks despite their relative scales.
The number of Yelp reviews isn’t itself a relevant measure, but it does directionally illustrate the fact that because people want to tell stories and express themselves through non-mass brands, consumers can have more access to better information about smaller players than big ones.
Going Big and Small
Some big companies defy the dynamics of scale-as-liability. Nike seems to be thriving, while still being under pressure from relatively smaller brands like Under Armour and Lululemon. They seem to do this mostly by tying their umbrella brand to specific sports verticals and athletes, who have more niche appeal. Apple’s brand remains strong, and the company has somehow been able to maintain owning an iPhone as a meaningful part of one’s identity even at massive scale, at least for now. So, it is possible for big brands to still be valuable.
That said, if I were a big consumer company, I would take a long, hard look at how to deal with my brand as a liability versus an asset, and I’d work to create unique services that make today’s consumer want to identify with and perpetuate my brand. It isn’t going to be an easy change, and I think many big brands will disappear in the process.
But I do think it is possible for the consumer behemoths to evolve. I have heard some of the major hotel companies are considering new unbranded hotels and even becoming a management service layer for Airbnb hosts. That seems like a reasonable strategy—taking advantage of their scale on the back-end of their business, but still providing consumers with the unbundled experience they want on the front-end. Some beer companies are doing something similar, buying up micro-brands and figuring out how to couple their back-end distribution might with the valuable front-facing smaller brands.
In the end, however, it’s clear that the era of “cool” big company brands is structurally over.