No brand, no glory

We are going through a rough ride these days in the stock and crypto markets. Interesting how this wave of negativity is impacting the so-called DTC brands — the performance of some of them is not where expected and what seemed to be a no brainer for lots of brands (the nirvana of directly reaching their consumers and eliminating greedy intermediaries) may not be a great idea after all.

Tom Goodwin and Dare Obasanjo posted interesting reflections about it here and here.

“Did anyone really think we’d sit at home, managing 50 different subscriptions to get 100 products delivered to our homes in 75 different boxes“ says Goodwin, who asks the industry to be much more empathic.

Obasanjo tackles what seems to be one of the key reasons for the poor results most of these companies presented recently (with Shopify, the darling of DTC, suffering a sharp decline in its valuation of +60%): the decision by Apple of making Facebook ads much less effective due to its privacy changes.

He is mentioning this article that talks about the terrible consequences of those changes in the Apple platform, initially for Facebook – as their previous quarterly results already showcased -, afterwards for DTC brands, who are seeing their paid media efforts to acquire customers being more expensive and less effective, therefore eating their already thin margins.

And beware, because Google seems to be ready to do a similar move.

Loyal audiences are a treasure

Brands with loyal audiences, such as those in Sports & Entertainment, have a really valuable treasure.

They seem to be the ones having the recipe for succeeding under these increasingly complex DTC dynamics. Their CAC (Cost of Acquisition) will always be much more efficient than those of the brands who need the steroids of Facebook or Google ads to get customers into their funnels.

But are they making the most out of it?

To begin with, these brands face two main challenges:

  • Their TAM (Total Addressable Market) is limited. Either you are a fan or you are not. And in some categories, such as football clubs, acquiring new fans/customers is a difficult and long-term task.
  • Secondly, they have not developed a well established set of products and services even their loyal fans can purchase, besides merchandising (most of the time poorly executed) or ticketing (what about if I can make it to the game or live show?).

There is actually a third issue, but it’s so transversal and strategic that it requires we go deeper into it.

The BRAND.

Let’s talk about the Sports & Entertainment brands. Because too often they are the origin of the two challenges mentioned above (lack of growth and poor business/product development).

The branding stuff is a complex topic in this industry because, to begin with, some people hate that a football club, an athlete or an artist are called “brands“. They find it commercially driven, instead of passion driven, breaking the purity of the hero-fan relation.

Totally get that. Because we have to consider these brands have been generated by spontaneous combustion — so in the beginning no proactive effort has been made to both shape the brand or acquire fans/customers. It just happened, because passion was the fuel that ignited this relationship.

But let’s assume it, they end up being socio-cultural icons with values attached to them – therefore, BRANDS. Wether fans like it or not. Even more, managing a brand properly is putting the user at the center, which we assume it’s exactly what a fan would expect from the brands they love, right?

A no-branding approach is a growth limitator

At the end pf the day, when talking about brands, there is only one important thing: there are two types of brands, those who matter and those who don’t.

And these brands matter! At least to their community of fans/audience.

But what happens when the brand wants to grow its TAM and matter to a bigger number of people? Or when it wants to explore all the potential the brand has to generate revenues or conquer new territories? Or when they simply want the brand to be consistent with the experience it provides or with a set of values that are critical to its spirit?

That we have to distill all that spontaneity and make sure it has some method behind. In other words: develop the brand — it’s architecture, narrative, visual identity, etc.

All must be based on that original spark that ignited the brand, but better defined and structured.

Otherwise, brand and business development will be chaotic and lead to inconsistent and non effective decisions. Which new products / initiatives / markets should I move to or explore? And how? providing which experiences? To whom?

Steve Jobs knew this very well. “Marketing is about values“ he said in this keynote. Also that even the most beloved brands in the world need to be taken care of not to fall into irrelevance. Quick note: he said that in the 70s, when competition for the attention was a joke compared to what it is today.

The burger delivery and restaurant Vicio, born in Barcelona, is a masterclass on branding. They knew this was a key Moat (competitive advantage that is hard to replicate) and worked on that with almost the same passion they did with their (really great) burgers.

This is how they are building a love brand with the potential of going beyond a simple burger. The founder Aleix Puig, a Masterchef TV show winner, shares that vision in this Itnig podcast (in Spanish).

Too often in the Sports & Entertainment industry, there is an over-confidence on that spontaneous combustion and, therefore, not a great effort or investment in branding. That’s a mistake that limits the brand potential. If computers and burgers are doing this, how on earth a business driven by passion can ignore it?


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Read editions #1 and #2 here and here.