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Jul 17, 201808:05 AMOpen Mic

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The freemium model — A death knell for brands?

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We are exposed to 4,000 to 10,000 ad messages everyday. There’s no doubt we’re all assaulted by brand messages that scream to us on billboards and screens, from within TV shows and movies, and even on Post-It notes and refrigerator magnets. Most of us live in a state of sensory overload. We are exposed to far more information than we can process. That means the fight for your attention — or what some marketers refer to as an eyeball economy — gets tougher all the time.

That’s essentially the statement that one version of the popular freemium (“free” and “premium”) business strategy makes to marketers. Sure, a freemium often delivers additional functionality for a fee compared to what the free version does. But for many, the real attraction of an upgrade is the chance to shop, play, or work in an ad-free environment. When consumers are willing to pony up to avoid seeing your ads, you know there’s trouble in paradise.

Is this bombardment contributing to a sense of logo fatigue? Luxury brands think so. Big players like Louis Vuitton, Gucci, and Prada are struggling as wealthy customers favor less ostentatious products. Those “in the know” often can recognize a subtle status marker when another member of their elite group displays it, such as the distinctive design of a bag or watch — these are “quiet signals.” In contrast, some people may feel the need to almost hit others over the head with their bling; they use “loud signals.” The level of brand prominence people prefer tends to vary by social class, but regardless, brands that hit you over the head may be history (at least for now).

Small wonder that many of us resent ad intrusions. Almost half of consumers say they don’t trust brands, and this figure skyrockets among millennials. Edelman’s Trust Barometer reported in 2016 that just 45% of respondents said they trusted business. That number dropped to 33% in 2017.

We appear to be entering a period of (mild) rebellion against brands. Consider these related developments in our culture:

  • The popular mindfulness movement encourages followers to slow down, tune out distractions (like advertising), and focus on what they’re feeling at the moment (meditation-related businesses in the United States alone generate almost $1 billion in revenue per year — perhaps you see the irony in that).
  • Decluttering has become an obsession for many, an art form that followers revere for its Zen-like flavor.
  • As our attachment to social media grows, so, too, do earnest conversations about the value of a social media detox to restore life balance. I assign one of these (for 72 hours) to my students — they all suffer mightily, and then thank me at the end for forcing them to step away from their devices at least for a few days.
  • The startup consumer packaged goods company Brandless sells plainly packaged, high-end staples for $3 apiece.
  • The global anti-branding movement protests against corporate marketing campaigns. The “culture jamming” organization Adbusters advocates an annual Buy Nothing Day.   

So, what’s the future of branding? Maybe we can glimpse it at — of all places — the stodgy Masters golf tournament. The event allows only five sponsors: AT&T, IBM, Mercedes-Benz, UPS, and Rolex. Each pays more than $6 million for the privilege of having absolutely no signage at the course and sharing a total of four minutes of ads per broadcast hour. Now that’s “branding lite,” but it doesn’t seem to deter these companies.

(Continued)

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