Byron Sharp on 'How Brands Grow', five years on
Joseph Clift
Warc
'How Brands Grow', by Australian academic Professor Byron Sharp, is one of the most influential marketing books of the past decade. Since its publication in 2010, it has been mentioned countless times in agency and client presentations.
Sharp himself was on hand at Unlearning, an event organised by the Institute of Practitioners in Advertising (IPA), a UK professional body for the ad industry, to give his views of the book's reception – and reveal what he has learned as a result of this response.
The book's context
'How Brands Grow' is jointly authored by Sharp and the researchers of the Ehrenberg-Bass Institute, of which he is director, at the University of South Australia. This institute is sponsored by large clients who are, as Sharp put it, "on a journey towards evidence-based marketing". The aim behind writing the book was to allow the CMOs of these sponsors to take to the CEO hard evidence of what works in marketing. "It was to show there's some substance behind what we are saying and hopefully raise the credibility of marketing," Sharp said.
Byron Sharp: Image IPA/Nadine Read
The guiding idea behind the book was offering scientific rigour for marketing effectiveness; this would, Sharp argued, bring evidential standards in the sector closer to other evidence-based disciplines. "In medicine they bled people for 2,000 years, until they worked out a better way," he told the audience. "It would be incredible arrogance for marketers to assume they got everything right first time (…) Marketers are subject to incorrect assumptions, like doctors. But doctors killed people due to these mistaken assumptions!"
Marketers often still rely on single studies – Google says this, McKinsey says that – as a basis for strategy. "Imagine if pharma companies did the same," Sharp said. "It wouldn't be acceptable."
'How Brands Grow', on the other hand, was imagined as an open text, featuring data sets over decades that everyone can seek out to check for themselves.
Sharp set out three evidence-based conclusions in 'How Brands Grow' that flew in the face of conventional marketing wisdom.
- Growth in market share comes by increasing popularity: gaining buyers of all types, many of whom will be only light buyers of the brand.
- Brands mainly compete as "mere lookalikes", with consumers not really distinguishing one from another.
- Brand growth is, therefore, largely about building physical and mental availability.
This came as a shock to marketers brought up on texts such as Philip Kotler's Marketing Management, which argued for brand differentiation above all. But, Sharp argued: "If it's the most important thing, then why are leading brands not really differentiated, but keep making profits?"
Release and reaction
Ironically for a book about marketing more effectively, 'How Brands Grow' launched with "no marketing plan whatsoever". It was published by the Oxford University Press, which, as a serious academic shop, was unaccustomed to the hard sell. "We thought, it's not a bookstore publisher," said Sharp. "They're totally academic. They sell textbooks. They have no sales team. It's a case study in what not to do to sell something. And it still sells a lot less than some other marketing books that I won't name!"
Image source: marketinglawsofgrowth.com
But whatever the sales figures, 'How Brands Grow' has been an enormously influential text – in part due to the shock value of its evidence-based conclusions.
Sharp shared results of a survey of Ehrenberg-Bass Institute students on the book. When asked which of the "laws" it shared was most surprising, the "double jeopardy law" – that brands with less market share have far fewer buyers, but that actual loyalty rates between brands did not vary much – came near the top of the list.
Put simply, the evidence shows that brands' customer bases are strikingly similar. Further, customers seem reluctant to say that brands are differentiated, even if they are familiar with them. "It's not just that the scores are low, but they're pretty much the same for every brand. They're all differentiated a bit, but that's it."
Since publication, there have been a lot of counter-arguments; market research giant Millward Brown, for one, was "a little bit hostile" to the book. It subsequently released a report based on its BrandZ database, of 6,000 brands tracked over 10 years, which aimed to suggest that brands were indeed significantly differentiated in shoppers' minds.
"Among those that consider a brand acceptable," the report stated, "an average of 18% agreed that it was different from others." Sharp's response? "That means that 82% of these heavier users of the brand… didn't! I think that's a replication. I think that's what we said in the book."
The double jeopardy law also "blew out of the water the myth of the niche brand – the small but very loyal user base." Loyalty rates, in reality, do not change much. "We are loyal switchers. We don't feel disloyal to Kellogg's if we buy another cereal."
It also has big implications for the capacity of individual ad campaigns to shift the needle for brands. "So you think of doing something on Facebook, on Instagram," Sharp says. "You might get an award. But you're not going to get five times the customers."
What happened next
While the loyalty findings were the most surprising, Sharp also said that the "natural monopoly law" has been the most-ignored.
This law is about the crucial question of whether to target the heaviest category buyers or the lightest. It suggests that larger brands draw a greater proportion of their customer base from light category buyers.
This is a salutary lesson for innovation- and novelty-obsessed marketers. The people who buy a new brand first are the heavier category buyers. "But for it to grow, it must reach out to lighter buyers," Sharp stated. "Innovation is about staying competitive. It's about increasing mental and physical availability, not about building a better mousetrap and people beating a path to your door."
For example, you might expect the audience for a "niche" TV show – about fly-fishing, rock-climbing or other esoteric pursuit – to be small, but passionately engaged in the subject. But the evidence does not back this up. One notorious example, cited by Sharp, is the BBC's launch of a show about advanced guitar playing, only to find that the majority of the audience did not play guitar.
"People who watch these shows are people who watch a lot of TV – older people, unemployed people, people with a lot of time," Sharp added. "Teenagers don't watch much TV, not because they're on Instagram, but because they don't have much time. Their grandparents didn't watch much either when they were their age."
What 'How Brands Grow' got wrong
Recent years have seen many memorable examples of spectacular failures of branding. In the UK, this hall of infamy includes the Royal Mail changing its name to Consignia; across the Atlantic, and a couple of decades earlier, was the New Coke fiasco.
'How Brands Grow' was written under the assumption that "dumb" brand decisions of this order of magnitude were rare. But, since release, Sharp said: "I found I was wrong about that. It's much easier than you'd think to watch some substantial things going wrong because of what marketers learned at business school."
One example of these surprisingly common mistakes was Tropicana's rebrand that removed its iconic orange-with-a-straw logo. (So disastrous was this relaunch that the Omnicom shop that devised the campaign subsequently closed, Tropicana sales having fallen 20%.)
Image source: canny-creative.com
"How could they stuff this up so much?" Sharp asked. "Somebody didn't come up with this in a drunken fit. The strategy was well thought-out. But if you'd had an idea to sabotage Tropicana, you'd have taken the orange with the straw off the pack!"
The lesson from this is clear. "We are human and we make lots of mistakes, incorrect assumptions," Sharp said. "We need to unlearn them."
The other surprise is a creative one. From the evidence, Sharp said, "interesting creativity is not optional. [But] if you watched Cannes, you're thinking, 'where is the big creativity'? We now give the awards to marketers being clever by making some new technological whizz-bang thing, but not for resonating with consumers."
What readers got wrong
Sharp also suggested that some of the book's conclusions have been misinterpreted. "I didn't say there was no such thing as loyalty, I said that loyalty is everywhere. And it's not the sort of loyalty that we thought."
This requires a shift in mindset for marketers that, to Sharp, are still stuck in "Kotler 101" thinking. "Marketing is hard. Now you need to sell to millions of people. It's a foreign thing. We often revert to thinking about selling – relationship marketing, selling directly to groups – not mass marketing."
Of course, this calls into question techniques such as segmentation and behavioural targeting. "Segmentation should be horses for courses," Sharp declared. "Studies that say 'we came up with six target segments' are very dangerous'. That's super-dumb target marketing."
But, above all, 'How Brands Grow' has a hopeful message for marketers – at least for its author. Evidence, for practitioners, should be a good thing.
"It focuses the mind," Sharp said. "And that's good for strategy."
Joseph Clift is a Product Manager for Warc.
