Myth: you need advertising budget to build a brand

For most people, when thinking about successful branding, examples such as Nike or Coca-Cola come to mind.  People think about expensive tv advertising, and the first immediate thought is that they don’t have millions in their advertising budget.  People often think that they need lots of money to successfully build a brand – and that’s a myth.  Here are a couple of examples:

  • Facebook released its first commercial in winter 2012, celebrating its 1 billion active monthly users.  By this time, Facebook was a $5 billion company, and after it already went public with a stock price that would put the company at a $104 billion valuation.
  • Google ran its first commercial in February 2010, during the SuperBowl.  That commercial would have costs as much as $2.9 million dollars, according to Associated Press.  However, to put that into perspective, by end of 2009, Google was already a $23billion company, according to its financial records.  And Google would have already celebrated its eleventh birthday.
  • Starbucks ran its first commercial in winter 2007.  By end of 2007, Starbucks was a $9billion company.  And it was the first commercial in the company’s 36 years history, with over 15,000 stores in 43 countries.

As these examples illustrated, expensive advertising is not necessary to build a multibillion-dollar brand.  These brands created a unique and memorable experience to their consumers.  This in turn brought these brands significant fan-followings.  These fans generated a high degree of word-of-mouth marketing that was more effective than any expensive advertising.

  • In the case of Facebook, it created a new category.  Being first always has its advantages regarding publicity.  Nothing quite equals being first.  Facebook created the category of social networking.  The category itself generates a network of fans, and these networks grew.  As these networks grew, the Facebook brand was born.  Now, to be fair, networking always happened.  Facebook just redefined networking and enabled this social interaction to take place digitally.
  • In the case of Google, Google wasn’t the first search engine.  Google launched at a time where there were numerous choices of search portals.  However, Google redefined the search experience.  At the time Google launched, search was done via search portals.  The screen was cluttered with various categories, links, and advertising.  While all the information may be readily available at the search portal, users were overwhelmed by the information.  The page sometimes loaded slowly.  The overall user experience was confusing.  Google eliminated all that clutter and presented a simplified search experience.  Google, at launch, did one thing and one thing only – search.  There was no mail.  There was no weather.  There was no news.  There was nothing that was commonly found on search portals, except search.  This made Google endearing to the many frustrated internet users, and they shared Google with the world.
  • Likewise for Starbucks, Starbucks redefined what a coffee shop should be.  A coffee shop wasn’t just a place that sells coffee.  Starbucks placed strong emphasis of making its coffee shops serve as a “third place” to its consumers.  A third place is a place outside work and home, and it’s a place for social gathering.  Starbucks focused on making its coffee shop a place for people to share a cup of coffee, and maybe chat about the day.  Starbucks wasn’t just selling coffee.  Starbucks was selling an experience.

All these brands spent money, don’t get me wrong.  But these brands didn’t spend millions on advertising when they were starting.  They built their brands based on delivering a remarkable product.  These brands redefined what their category was supposed to be about.  In doing so, they created unique experiences that were differentiated, memorable, and worth sharing.

This Ted Talk by Seth Godin is a great reminder on why creating ideas that are worth sharing is in fact the best marketing tactic there is, regardless of budget.

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