Lucian Camp is a financial services brand consultant, copywriter, author and blogger. He co-presents the On The Other Hand podcast.
Speaking as a completely unreformed and unrepentant believer in brand marketing – that is, one who believes that building brands is by far the most important and valuable thing marketing people can do – I enjoyed the comments on the subject by Matthew Heath of Invesco in a recent FSF newsletter.
Matthew predicts that 2024 will be a year of brand-building in asset management, and as Invesco’s CMO in EMEA and the Americas he’s well-placed to put his prediction into practice. He’s clearly determined to do so, and he spends much of his article rightly demolishing many of the myths which could cast doubt over his intention.
However, he says one thing which, while a little ambiguous, may reflect an important misunderstanding about what brands are and how they work. He says he disagrees with the idea that in asset management performance is all that matters, and developing a brand which can help build deeper relationships matters too.
This seems to me to reflect a common misperception that a brand is a kind of soft and attractive outer covering that’s wrapped around the hard inner reality of the actual product or service and its performance. Whether it’s a restaurant brand that’s wrapped around the actuality of the food and the service, or an automotive brand that’s wrapped around the specification of the car, or an airline brand overlaid onto planes, prices, routes and cabin service that are basically the same as everyone else’s, the principle is that brand is an outer layer, which differentiates by generating an emotional response separately from the inner, rational layer.
This is not how it works. The brand – or people’s perceptions of the brand, which means same thing since brands only exist in perception – consists indivisibly of the “outer” layer, inextricably integrated with the “inner” layer (or more often “layers”, since there are usually lots of them). In investment, performance (or rather perceptions of performance) is a great big central chunk of overall brand perceptions.
To emphasise this point, let’s talk about cars. Let’s start by comparing brand perceptions of, say, a Ferrari and a VW Beetle. There are lots of external, “outer-layer” differences – the Ferrari is probably red, definitely Italian, low, sleek, exotic-looking, makes a fantastic growling noise when you put your foot down, has a fantastic Formula 1 racing heritage, etc etc. But the central, core difference is the performance – the Ferrari does 200mph and, as Clarkson puts it, makes you feel like your trousers are on fire, and the Beetle doesn’t. To Ferrari, performance mostly means speed, and speed-related qualities like acceleration and roadholding – and these attributes are absolutely part of the brand. I’d say, in Ferrari’s case, the biggest part.
“Performance,” in the broadest sense of the word, is important for all strong automotive brands. It means many different things: if for Ferrari it mainly means high speed, then for Volvo it’s safety, for Land Rover it’s rugged off-roadishness, for Tesla it’s sustainability, for Toyota probably reliability, for Rolls-Royce luxury and expense. But what’s important is that in every case, the messages delivered by the outer layer – the ads, the design, the comms, even the showrooms – are seamlessly integrated with the engineering in the inner layer. And the result is a brand which makes sense as a whole.
This places obligations on the engineers to come up with cars that are well aligned with that core brand promise. Ferrari can’t build sluggish family hatchbacks. Tesla can’t launch a fume-emitting diesel. There can never be a cheap and cheerful Rolls-Royce.
For big car makers, with massive market share targets, being trapped in a niche like this makes life very difficult. Fortunately there is a solution, which is to adopt some kind of sub-brand or multi-brand strategy. It’s worth remembering that for many years Ferrari was owned by Fiat. Volvo is owned by the Chinese firm Geely, makers of the electric London taxi. And Toyota, taking the view that their sensible, reliable, mid-market brand wasn’t ideal for luxury cars positioned to compete with Mercedes, went to all the trouble and expense of creating Lexus for precisely that purpose.
On the whole, all of this brand voodoo continues to elude asset managers. In my experience few if any big firms are willing to stick to any kind of clear “performance” positioning: on the contrary, if they have one, perhaps dating back to a time when they were a smaller and more focused business, their aim is usually to try as hard as they can to get rid of it. (Vanguard is a case in point, doing whatever they can to move on from their perceived strength in passive funds and taking every opportunity to promote their active capabilities as well.)
This is because this central focus of the brand – the way it aims to perform – is not under the control of the marketers. It’s still, as it’s always been, under the control of the fund managers. And if there’s someone important in that department who wants to launch a fund that will blur the brand’s positioning, no marketer has a cat in hell’s chance of discouraging them.
Which takes us back to Invesco, and the exciting prospect that for them 2024 will be the year of the brand. I’m sure they’ll very likely increase their ad budget, and produce an attractive new website. But unless and until they start showing some signs of distinctiveness in their investment proposition and the particular kind of “performance” they’re seeking to achieve, I suspect they won’t get very far.