I will declare an interest here: I have not only worked for and with law firms for the last two decades, I am currently researching in brand equity and have spent a lot of my free time reading around the area in the last year.
The legal profession is awash with talk about brands and branding. It is accepted wisdom that firms should “build their brand” or join in a “legal brand’.
My own view is that it is very difficult to build a professional service brand for an advisory service. The strongest service brands (eg KPMG) are “weak” compared with product brands (eg Coca Cola). Too much of the brand value depends on direct experience and too much “value” attaches to individuals, not firms: a bottle of Coke doesn’t have a “following”; your partners do. And who has sufficient funds to make the very substantial continued investment to advertise their way into the hearts and minds of the public and stay there? Success in this would, as far as I am aware, be the first time this has been done anywhere in the world for a “pure service” provider (ie not one which sells products as well).
It seems to me that current “brand thinking” is still based on articles circa 1970-80 which see brands as a bundled service proposition with an “identity” and which creates economic value. The “flow” of information is essentially from brand owner to consumer. More recent work sees the brand as a sort of dialogue between the brand owner and the consumer, whereby attributes of the brand are “negotiated” between them using the internet and global communication. These new ideas will be most relevant where the product is intangible, such as professional services, rather than physical, such as pizza. You will all have seen the “Lawyers from Hell” website. Have you ever asked why there is no “Pizzas from Hell” one? You don’t have a relationship with a pizza, nor is a bad pizza experience as painful!
Valuing the brand
The big question here is whether the whole idea of brand building is old hat. The last 30 years have seen the development of a “brand valuation” industry which has calculated the economic value of brands and used these calculations to pump up the balance sheets of their owners. The accountancy/audit profession has always liked things which make balance sheets look good, so it is no surprise that “intangibles” are now a very large proportion of the retained value of many large companies. This view of a brand is that it is something which adds extra profits to the owner.
However, there is ample evidence that these valuations are becoming less and less justifiable as the measured extra value added by brands is declining rapidly. The reason appears to be the Internet, through which control over brand messages rapidly ceases to lie with the brand owner as the consumer takes over the flow of communications. Economic research suggests that the ability of brands to deliver extra profit is waning rapidly as a result. One group has gone so far as to suggest that the next economic crash is likely to be as a result of companies having to write hundreds of millions off their capitalised brand values – which would leave hundreds of the world’s leading companies with very weak balance sheets.
If you accept this proposition, then the effects on a firm’s marketing strategy are profound, especially as regards advertising. Why spend heavily on brand building when the public will control the perception? A better marketing strategy will be to concentrate on social media, direct contact with consumers and so on: what we call relationship marketing.
Firms that create interactions, such as blogs, contribute content to other places where people “meet” online, provide useful information on websites, via email and through content sharing should, it is argued, have a highly cost-effective way to build “individual” brand value through interactions with customers/clients.
Analysing the marketing spend
Here is some rough data from our own business. We are assiduous in collecting and analysing the effectiveness of our marketing/advertising spend.
We spent approximately £30,000 on marketing last year, of which 20 per cent was spent on an SEO exercise. Once you take out the direct referral element of our new business, where did the rest come from?
- 80 per cent comes directly as a result of subscriptions to our (free) monthly Law Management and Marketing newsletter. We make a profit on this because it is sponsored.
- 10 per cent comes from LinkedIn. LinkedIn is free. The opportunity cost is high (about 3 hours a week is spent), but it is highly effective.
- 10 per cent comes from everything else. This includes SEO spend.
The vast majority of the ad spend creates brand awareness, but little else: its purpose is to “buy the right” to have serious conversations with bigger organisations than ours and achieve a position in the market, not to create new business.
The evidence we have is overwhelmingly that direct/interactive communication works far better than indirect communication (such as advertising) for driving new business. Building relationships and influence works. This is also the experience of our clients. They report a strong correlation between effort put into building relationships (including blogs, newsletters, social networking etc) with clients and prospects and economic success.
So ”¦ invest in brand building or relationship building? We’re betting on relationships. See you on LinkedIn.
Joe Reevy MSc FCA is the managing director of Words4Business, a key supplier of newsletters, articles, e-newsletters and web content for firms of solicitors. You can subscribe to his e-newsletter Law Management & Marketing on the site.
For further reading on the “brands are dead” idea, see The Brand Bubble – the Looming Crisis in Brand Value and How to Avoid It , John Gerzema and Ed Lebar, Jossey-Bass, 2008. His blog is at johngerzema.com.