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A new trend in building Internet brands

Leon Zhang

Senior Director, Kantar Vermeer

Brands 22.04.2016 / 11:30

Brand on Blackboard 2 col

With their rapidly increasing brand value, Internet brands are playing a crucial role in social development. This is driving a transformation of the relationship between brand and consumers.

Last year, for the first time, a technology brand – Tencent – seized the top spot in the Top 100 most valuable Chinese brands rankings. 2015 was also the first time that the overall brand value of technology brands surpassed that of financial services brands. Throughout the remainder of the year, Internet brands continued the growth trend, with leaders BAT (Baidu, Alibaba, Tencent) enjoying strong performances. Tencent even defended its top position in the 2016 Top 100 BrandZ China ranking report.

While "Internet +", "O2O" and "digital" have become the sweet spots for traditional industry brands trying to innovate and seize new opportunities in the Internet age, we have observed a new trend among Internet brands. That is, dotcom leaders are placing emphasis on rethinking the fundamentals of their brand and brand building efforts, as they aim to enhance their Internet brand influence in the “physical world”. We perceive three key areas of development:

Rethink the relationship between brand and consumer

Successful Internet brands are usually the pioneers of innovative solutions to address a specific untapped consumer need, regardless of whether it is as yet an unmet or unrealized need.  Previously, a superior product experience was seen as the most important aspect for the brand. However, with the gradual development of brand ecosystems, it has become increasingly difficult to define brands merely through a single product experience.

This has led leading Internet brands to shift from solely focusing on providing an innovative product experience and instead aim at the higher purpose of how to make a difference in consumers’ everyday life. In reality this has resulted in a shift of branding from “product + community” marketing to creating a deeper emotional connection with consumers. For example, Tencent has continually communicated emotional themes such as "human interaction” and, "Love is all around” to consumers since its 12th anniversary.

Rethink the relationship between brand and stakeholders in the ecosystem

In response to increasing competition and rapid business model iteration, leaders such as BAT and JD.com have been building their respective brand ecosystem through continuous direct investment, M&A, and collaboration. With this rapid evolution, stakeholders are looking beyond companies within the Internet category, extending their sights to traditional players, such as supermarket, restaurants, cinemas, hospitals, and education institutions. O2O is another term to describe what is happening.

While this change presents an even bigger opportunity for Internet brands, it is imperative that brands further clarify why their ecosystem exists rather than losing themselves in rapid business expansion. It is equally important that Internet brands strategically shift their perspectives towards the physical world, by rethinking how they can deepen their relationship with all stakeholders and thereby sustain the healthy growth of their brand ecosystem.  

Rethink the relationship between brand and social development

Internet brands will continue to drive social development in a unique and previously unseen way, more often than not causing disruption to an existing industry. For example, China’s Xiaomi is consistently challenging the traditional consumer electronics industry; Didi has significantly changed the way in which people approach travel; and both Taobao and Jingdong have served to replace the traditional retail industry by moving it from the high street to online. In this landscape of disruption, it is not surprising that we see a series of “Going back to Tangibles” initiatives from traditional brands such as Gree and TCL, and a few defensive moves from taxi drivers or taxi companies due to disturbance by Didi, which lead to stricter government regulation of the new methods.

In light of China’s unique cultural background and economic “rebalancing”, it is even more the case that building a successful brand requires not only commercial growth but also a societal purpose, and the Internet industry is no exception. Alibaba is a good example of a company that has been able to be both disruptive and also widely accepted by the general public, and it has been able to do this by always aiming and staying true to a higher purpose, that is, making business easy to do anywhere.

Even in the fast-changing ever-disruptive Internet industry, the essence of brand remains unshaken. For this reason, Internet brands that strive for excellence should further explore their brand purpose. By placing emphasis on the relationship between brand and consumer; brand and other stakeholders in the industry chain / ecosystem; as well as brand and social development, Internet brands can better build brand equity beyond the Internet, and in doing so, transform the world in a more effective way.

Source: Kantar Millward Brown

Editor's notes

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