How does a brand succeed in an environment when scale is no longer a key to success? We’re all living in a very different environment, and it asks for a different look at how brands are built. Enter Dentsu’s Dynamo Brand Index.
It’s the brainchild of the global chief executive of Dentsu Aegis Network (DAN), Creative Agencies and global president of Dentsu Brand Agencies (DBA) Dick van Motman and Dentsu APAC’s chief strategy officer Michael Chadwick, who wanted a new model for measuring brand value in the new economy. The resultant Index was developed with The Effectiveness Partnership, represented at the event by founding partner Gurdeep Puri.
To compile the Index, more than 22,000 consumers were surveyed across 10 markets – Australia, Brazil, China, Germany, India, Indonesia, Japan, Thailand, the UK and US.
"For most of the 20th century, scale was enough to win because [it] meant you could dominate media, routes to market and supply chain," said Chadwick. "We know now that brands are being built to huge valuations completely outside of that traditional ecosystem. Scale is no longer enough to win, and indeed, some recent evidence suggests scale may have a less positive correlation with growth. We think it’s more important to value momentum. It’s not how big you are, but how you’re moving."
So what kind of qualities might that mean we now examine and evaluate? Is it a case of out with the old, in with the new? Not so fast, according to Chadwick.
"We used to look at equity, scale, presence, control, personality and channel dominance," he said. "There are six corollary qualities that are really important to have these days. It’s not about getting rid of the old ones, but how do you converge them."
Dentsu found brands that thrive in the new economy move by converging equity with energy, scale with agility, presence with connectivity, control with openness, form and personality with value and values, and channels with customer experience. And that moving this way requires two key qualities: energy and direction – energy to maximise engagements and connections, and direction to ensure consistency, clarity and relevance.
"At the heart of the model is this matrix: energy and direction," said Puri. "Brands with both are considered ‘Dynamo Brands’. And our analysis shows that Dynamo Brands outperformed the S&P 500 by 12% over the past six months.
So what are the Dynamo Brands of today? The top global rankings – predominantly tech-led businesses, but also encompassing sportwear, accessories and apparel, finance, and automotive – can be seen at the top of the opposite page.
There was some surprise that it’s not just new-economy brands occupying the Top 10, and that old-economy brands often showed high levels of energy. And, you might ask: "Where’s Apple?"
Chadwick said the Index looks at where brands are moving, not their current size or status. "It’s easier to become a Dynamo Brand than to stay a Dynamo Brand. It’s hard to keep the momentum going."
He added: "It’s important to keep in mind that this is in the eyes of consumers also. Just because you’re doing a lot [as a brand] doesn’t mean you have energy."
So how can you build a dynamo brand?
"We found that direction is what unlocks energy and turns it into impact," said Chadwick. "But it’s a double-edged sword. Brands with low direction turn their energy into negative impact, brands with high direction turn their energy into positive impact."
This was measured using Digimind’s global social listening data and correlated against the Index score. For example, Adidas has high direction scores, which have turned the high energy it has gained in India from associations with Bollywood, cricket and street culture into positive impact.
Can you just buy energy through adspend?
"We found that you can buy a little energy, but you can’t buy enough to win," said Chadwick. "And you certainly can’t buy dynamism. This means you can’t rely on media and comms to drive energy to achieve dynamism – it requires brand behaviours and brand actions."
He cites Nestlé’s Kit Kat, which has recorded high direction thanks to a consistent value proposition, including one of the oldest taglines around at 60-plus years. However, it is considered dynamic in Japan through constant and unexpected innovations, particularly with its many limited-edition flavour variants.
So is this just about old economy brands adapting to the new economy? Not according to Chadwick.
"What’s going to happen over the next 12-18 months is the time when the old economy and new economy start to converge," he says. "Whichever end of the spectrum you’re coming from you need something different from this kind of thinking.
"When you look at a brand like Nike, it’s landed a set of values and maybe that can be a template for some of the new-economy brands. How can we build our company around authentic values? Nike’s been living those values for 40-plus years."
Once you’re a Dynamo Brand, how do you stay there? Dynamo Brands exhibit four key behaviours: continuous improvement, they’re clear rather than consistent, defined by their values not their form, and have trust with consumers at a brand level.
"Sustainability is baked into the model," says Chadwick. "If you don’t have a clear direction or high energy, it’s unsustainable."
Download the full report .