Is brand preference being usurped by algorithms?
For the better part of my advertising career I worked with commodity and specialty brands. This was especially true in the chemical industry. Consumer brands such as M&M’s or Revlon would prefer that their customers not know too much about what really goes into the making of their favorite snack, nail polish color, or fragrance. We referred to these brands as the name behind the name you know.
While this may seem a little confusing, it makes sense when dealing with community products that are bought and sold based on specification and security of supply.
Now, fast forward to 2018 and the onslaught of online shopping behemoths such as Amazon. The recent holiday shopping season was a banner quarter. While Amazon is reluctant to release exact sales figures, below is a quote from their press release.
December 26, 2017:
Customers shopped from hundreds of millions of products, including a vast selection from small businesses and entrepreneurs. More than one billion items were ordered from small businesses and entrepreneurs worldwide this season – and over just five days, from Thanksgiving through Cyber Monday, nearly 140 million items were ordered from small businesses and entrepreneurs.
Wow, one billion items ordered. Pondering this statement for a moment could lead one to believe that the day of the dominant brand could be numbered.
With online shopping searches directed by algorithms and purchasing decisions influenced by ratings and reviews, why would someone pay more for a premium brand if the specification and delivery are met and a substantial savings is realized from purchasing unfamiliar brands?
Has online shopping ushered in the age of commodification of branding? If so, how do you determine which brand to trust from the manufacturer or online retailer? Technology has cut a wide swath of disruption by taking once-specialty items and reducing them to commodities.
Is this the paradigm shift? As long as the product meets specifications and can be ordered with a short waiting period, by default it becomes the preferred brand. Say good bye to emotional brand connection, brand loyalty, and brand preference, and hello to the algorithms-preferred SKU.