Brand Purpose : Virtuous brand signaling

I have been bombarded again and again with the statement that brand must have purpose and I have mostly stayed quiet. Businesses do have a purpose and that is to make money- be profitable for the risk taker (entrepreneur/shareholder) as well as the employees. Given their families run on the salaries doled out by business. Only profitable business can afford to pay good. As for Brand, yup it must have a purpose and that purpose is to build a moat around business that enables..

a. Consumers ignoring few mistakes and giving it a chance

b. Willing to take a price rise (minimum above inflation)

c. Sometimes paying a premium

As for addressing the question, "Does brand purpose genuinely drive profit?" My brief response was: "Yes, it can; however, it's likely that it often doesn't."

A more detailed perspective would be: It largely depends on the context. In general, the concept of brand purpose is over-applied in marketing today, and its influence is frequently exaggerated. It works best as a strategic tool for companies truly dedicated to conscious capitalism, rather than as an add-on implemented by marketing teams seeking immediate sales results.

I believe that no extensive data analysis will ever definitively establish whether being "purposeful" is more beneficial for brands than being non-purposeful. By selectively highlighting case studies, one can construct arguments in favor of or against it, showcasing examples where purpose appears to enhance profit or where brands fail in their attempts to be purposeful. Additionally, one could undermine the entire notion of brand purpose by pointing to brands that are merely pretending to be purposeful or referencing many highly successful brands that lack a purpose.

It's quite simple to selectively choose examples to support any viewpoint. For instance, Jim Stengel, the former Global Marketing Officer at P&G, popularized the purpose-driven approach in business. His book "Grow" was essentially built on selectively chosen top-performing brands, claiming their common thread was a commitment to a brand ideal aimed at improving the world. Richard Shotton's critiques of Stengel’s findings are enlightening, and I highly recommend exploring his work for a deeper understanding.

The first problem with Stengel’s theory was his cherry-picked data. 

By only selecting the top 50 highest performing brands, Stengel ignored poor-performing brands that also had “brand ideals.” The second problem was that Stengel’s theory couldn’t predict the future growth of his top 50 based on market performance. 

Of the 50 companies in “The Stengel 50,” only 26 had measurable stock performance listings. Moreover, of those 26 measurable brands, only 9 outperformed average market expectations in the 5 years since the original study. The final problem is how Stengel classified his top 50’s “brand ideals.” Many of these ideals were generic to their respective brand categories. Also most of these were too small in size and thus a small base.

For example, Moët & Chandon champaign’s “brand ideal” was “to transform occasions into celebrations,” Mercedes Benz’s ideal was “to epitomize a life of achievement,” and Blackberry’s ideal was “to connect people.” 

Those are just vague descriptions for champaign, luxury vehicles, and phones. 

One study by Richard Shotton found that, by surveying 1,000 consumers,* consumers weren’t any better than chance at matching the correct brands with their “brand ideals.” 

*This study was not publicly available.

To illustrate my balanced stance on this issue, I’ll share two examples that resonate with me, showcasing brands that embrace purpose without resorting to marketing gimmicks. Timpsons, a UK shoe repair company known for employing ex-prisoners, consistently ranks as one of the best companies to work for. They don’t overtly promote their purpose and avoid ostentatious advertisements about their positive contributions, yet by most definitions, they exhibit a strong sense of purpose.

Now this whole point of Gen Z being more moralistic and connected than ever before (thanks to social media), we are more aware of dishonesty in the market. For this reason, “Gen-Z” is seen as a unique generation. This new, virtuous generation will finally change the world, armed with transparency! This whole idea that each generation differs from the next is a common fallacy. In reality, no one can agree on the age range for any generation, and no evidence proves one generation is universally different from the next.

There are more differences within generations than there are between generations.

This becomes obvious when you look at the characteristics of these alleged generations.

The rates of depression and suicide have soared, with experts identifying social media as the primary suspect. This rise in mental health issues indicates that any potential correlation between “Gen-Z” and virtue is likely negative, as individuals do not tend to gravitate towards positivity when experiencing depression.

Therefore, I am skeptical when people claim that today’s consumers are more principled in their brand choices compared to previous generations, which had significantly lower rates of depression and suicide. Currently, there is no evidence to support the idea that promoting Brand Purpose—whether through advertising or investment—will effectively boost your market share.

In summary, I categorize three distinct types of brands that define their purpose in today’s marketing landscape:

1. Born Purposeful Brands: Typically founded by individuals with a mission-driven ethos, these brands integrate their purpose throughout their operations. Notable examples include Toms and Patagonia, which are widely accepted as brands with clear and authentic purposes.
2. Corporate Converts: Larger companies that have adopted purpose more recently show genuine attempts to make a positive impact alongside profitability, though they often face complexities that lead to compromises. For these brands, purpose becomes a guiding vision that may also lead to conflicting interests.
3. Pseudo-Purposeful Brands: Characterized by marketing campaigns that superficially claim to address trending societal issues without embedding real purpose. This type is less likely to yield lasting benefits or drive profitability.

While brand purpose exists along a spectrum, discussions surrounding it often become polarizing. Industry leaders such as Keith Weed from Unilever and Dave Lewis from Tesco advocated for brand purpose, while professors Byron Sharp and Mark Ritson remain skeptical, asserting that this fixation reflects a loss of confidence in marketing’s fundamental goal: selling.

As David Ogilvy said, a man in dire need of resurrection, consumers don’t think how they feel. They don’t say what they think and they don’t do what they say. Humans have a propensity toward virtue signaling, answering when questioned what they believe to be “correct” regardless of whether or not they actually hold those values in practice. When it is their own money on the line, purchase patterns show it’s a different matter entirely; survey radicals turn into economic conservatives.

According to Jenni Romaniuk of the Ehrenberg-Bass Institute, the core purpose of a brand is simply to sell products. Mark Ritson echoes this sentiment, suggesting that brand purpose is often trivialized and lacks differentiation. He argues that most brands, particularly those in sectors like banking and telecommunications, cannot rely on noble purposes to stand out, as these intentions often fail to resonate with consumers.

Both Sharp and Ritson call attention to a level of self-deception within marketing, indicating that the industry's emphasis on purpose may stem from an apology for being perceived as deceptive, rather than affirming the value of marketing itself. They caution that instead of focusing on purported social value through advertising, marketers should take pride in their role in driving economic and societal progress.

As we reflect on the evolution of brand purpose, it's evident that the marketing landscape has been significantly influenced by a longstanding cultural narrative questioning the honesty and utility of advertising. For instance, a 2018 Ipsos-Mori poll revealed that only 18% of respondents in the UK trusted advertising executives, identifying them as the least trusted profession, trailing even politicians and estate agents.

Over decades, public perception has associated advertising with dishonesty, as captured in cultural narratives such as Naomi Klein’s "No Logo," which critiques brands leveraging social values while engaging in ethical transgressions. This book catalyzed the drive for brands to refine their practices.

The emergence of brand purpose can be understood as a reaction to the longstanding criticism of the advertising industry. Marketers may feel a compulsion to showcase their value to society through purpose-driven messaging, yet such efforts could inadvertently reinforce suspicions about the sincerity of their messages.

Ultimately, as we navigate the complex and often contradictory relationship between truth, deception, and brand purpose, we would benefit from emphasizing our primary responsibilities: creating value and driving economic growth. Only by doing so can we effectively demonstrate our contributions to society. Pepsi failed so miserably with its purpose-wank campaign with Kendal Jenner was not only campaign execution being crap. It was also because the brand, the consumers, the situation were entirely unsuited to a purpose-led approach.

In closing, the series finale of “Mad Men” poignantly illustrates this tension. In a meditative moment, Don Draper envisions the iconic 1971 Coca-Cola advertisement, “I’d like to teach the world to sing.” This scene encapsulates the dual nature of advertising: it captures authentic ideals while simultaneously commercializing them. This perfect blend represents the advertising industry’s complex journey through the realms of truth and falsehood in its ongoing relationship with brand purpose.

For more insights on the subject, you can explore articles like Richard Shotton's critiques and various industry analyses that explore the efficacy of brand purpose in modern marketing. For me as long as the purpose of creating a brand purpose is the purpose itself & not the economic advantage, I am fine with this virtue signalling exercise.

Anything not central to making money is always vulnerable. This is the Achilles’ heel of purpose layered onto brands.