I’m currently rewriting the chapter on branding and marketing for a second edition of The Leader’s Guide to Storytelling (Jossey-Bass, 2005), which will be issued in February 2011. It’s amazing how different the scene looks today.
In the 20th Century, a key role of marketing was to craft and deliver messages that communicated the brand. In the 21st Century, the more important role of marketing is to ensure that customer stories enhance the brand.
Consider the following examples.
In 2008, when United Airlines broke Dave Carroll’s guitar, he made a singing YouTube video that told the story of the incident; the video has now been viewed by more than 8 million people.
In 2008, when a mother took offence at a commercial for the pain reliever Motrin that implied, in her eyes, that mothers were wearing baby slings simply to be fashionable, she was able to launch a “Motrin Moms” protest movement, that within two days became the most popular subject on Twitter.
In 2008, when Howard Schultz came back to be CEO of Starbucks, he woke up one morning to find around a hundred emails in his inbox. It turned out that this was the result of a sensational story in the Sun newspaper in London about something Schultz had never heard of: “the dipper well”. When his phone rang and a reporter asked him to comment, Schultz replied that he had no idea what it was. The reporter advised him, “Google Starbucks real fast!” Schultz recalls: “We had a real problem. The lesson was that the world had changed. Something that happened in London had created a world-wide story that positioned Starbucks with venom and disrespect.”
These are just a couple of eye-opening illustrations of the revolution generated by sites like Twitter, Facebook and YouTube. As a result, stories told by customers can instantly trump the marketing stories being told by organizations about their products and services. The scale and rapidity of the ensuing public relations crises are astonishing.
At the same time, the positive opportunities for organizations to use the power of social media for telling the story of their products and services are equally dramatic:
Procter & Gamble has used social media to reach otherwise unreachable customers when they helped create a community for teenage girls (beinggirl.com) that provide a friendly and helpful environment for them to converse and share stories, where the girls also learn about P&G’s feminine care products.
Ford has used social marketing to launch a new car—the Fiesta—without traditional advertizing by generating a massive “Fiesta Movement,” involving stories reflected in 6 million YouTube views, 740,000 views of Flickr photos and 3.7 million Twitter impressions.
Since 2005, when the first edition of The Leader’s Guide to Storytelling (Jossey-Bass) was published, the dynamic of branding and marketing has been transformed. In 2005, the examples cited above could not have happened. Facebook and YouTube had only just been created and Twitter did not exist. Now in 2010, these three websites have hundreds of million of participants, who can and do tell stories about the products and services that they use.
The ability to understand and use the power of story to defend against threats and to take advantage of opportunities offered by social media has now become a core organizational competence.
Marketing in the 20th century
For much of the 20th Century, branding and marketing operated very differently. They consisted mainly of crafting and communicating one-way messages to a mass audience. By mass-marketing the same product in roughly the same way to all consumers, companies could reach the largest potential market at the lowest cost. Moreover organizations could interrupt whomever they wanted with any message they cared to transmit. And buyers were forced to watch it because there were only three television channels.
Four fundamental changes help explain why this model is no longer operative.
One is the fundamental shift in the balance of power in the marketplace from sellers to buyers. By and large, the established twentieth-century firm was in control of the marketplace. But the situation changed. A few sellers turned into many sellers. Buyers acquired instant access to reliable information. As a result, unless customers are receiving a continuously added value from the firm, they can—and will—go elsewhere.
A second change is technological. Word of mouth was relevant but not important. The accepted maxim was that every unhappy customer told ten friends. Social media make it wonderfully—and frighteningly—easy for anyone to communicate instantly with anyone else in the world about anything. Now a dissatisfied customer can reach millions of interested fellow-customers. Employee stories about a firm are publicly available on sites like www.glassdoor.com. Customers can band together and use stories to rapidly form alliances that can work powerfully either for—or against—an organization.
A third change is social. Customers are no longer docile pawns that can be manipulated at will with one-way messages sent by oligopolies. Customers are skeptical about the stories they are being told. Now customers are able to exploit the power of the new technology to obtain information, address problems and tell stories so as to get what they want. The 21st Century customer is a very different—and more elusive—animal than the customer of fifty years ago.
A fourth big change is the consequence of the other changes: the diminished effectiveness of corporate storytelling through advertising. “Advertising has no credibility with consumers, who are increasingly skeptical of its claims and whenever possible are inclined to reject its messages.”
These changes require a revolution in how branding and marketing are conducted. They raise issues, not just about particular management practices, but with the very notion of how should an organization should be run.
Thus traditional management theory holds that communications from the firm with the outside world are made through official channels. The firm operates through a system of barriers, clearances and controls that ensure that only the right messages are sent. Communications are essentially conceived as one-way.
The thinking is linear and abstract. The firm creates a brand idea, through selecting the right name, the right logo, the right packaging and deploys the right advertising to communicate the firm’s messages. The brand idea thus communicated leads to certain customer perceptions about the brand. These perceptions in turn lead to customer behavior, i.e. the customer buys the firms products or services. This in turn generates satisfactory business performance.
The most frequently cited success story for this way of thinking is Coca-Cola. Through the use of an unusually shaped bottle, consistent deployment of a certain shade of the color red, and clever marketing to communicate the implausible stories that Coca-Cola’s beverage is based on “a secret formula” kept in a locked vault, and that it constitutes “the real thing”, the firm has created a brand worth tens of billions of dollars, despite the fact the underlying product—a brown carbonated beverage—is not outstanding, even in the firm’s own blind tasting tests.
In the 21st Century, Coca-Cola found difficulty duplicating the success.
In the spring of 2004, Coca-Cola decided to launch a brand of water called Dasani in the United Kingdom with a £7 million marketing push that told the story how Dasani comprised “pure water” having been cleansed by a “highly sophisticated purification process, based on NASA spacecraft technology.”
The launch ran into some snags. First, it emerged that the water used in Dasani came from ordinary tap water, piped into its U.K. factory by Thames Water, leading to widespread public derision.
This was then compounded by news that the firm’s “highly sophisticated purification process,” was in fact the same reverse osmosis used in many modest domestic water purification units.
Then the story took an even worse turn: it emerged that the entire U.K. supply of Dasani was being pulled off the shelves because it had been contaminated with bromate, a cancer-causing chemical.
The Drinking Water Inspectorate confirmed that the water supplied to the factory by Thames Water was free of bromate. In other words, Dasani was less healthy than regular tap water, despite being sold at more than thirty times the price. As a result, the company shelved plans to launch a natural mineral water version of Dasani in Europe.
In the 20th Century, Coca-Cola might have gotten away with this implausible storytelling and might have successfully launched the brand to a docile consumer base. In 2004, the stories were quickly identified as deceptive and the brand launch failed.
21st Century marketing
The new world of social media not only demands greater honesty from organizations but also more openness. Customers prefer to do business with organizations that understand and anticipate their needs, are willing to interact with them and consistently delight them. And they have the wherewithal to obtain the information needed to achieve that.
Apple is an example of an organization that is largely operating in this manner:
The most powerful aspects of the customers’ experience with Apple are not confined to the logo, the name, the packaging or or the advertising. Stories are generated by the products themselves—iMac, iPod, iPhone and iPad—and by the environment of the Apple stores that encourages you to stay, explore and interact with its products and by the ingenuity of its offerings and their simplicity of use. The helpfulness of their sales people both in person and on-line reinforces the impression, as do the enthusiastic stories that potential customers hear from other Apple users. The whole experience generates a seamless set of stories that spread virally conveying the central idea: Apple products are cool.
A radical change in how firms are managed
Marketing in the 21st Century is thus less about crafting a set of messages that communicate the brand, as it is about creating products and services that themselves generate authentic stories by delighted customers, who share the stories with other potential customers.
In the 20th Century, branding and marketing comprised linear one-way messaging aimed at manipulating customers into buying the firm’s products. Many established firms are still run in this fashion.
Branding and marketing in the 21st Century are complex, interactive and multi-directional. Firms being run in a traditional, command-and-control manner will not be sufficiently agile to cope.
Thus social media won’t by itself change management. But social media will make it difficult to run organizations successfully with traditional management. Organizations that don’t change will tend to fall by the wayside.
Business leaders now face the challenge of orchestrating a shift from one way messaging that seeks to manipulate customers to communications that create interactive relationships with thinking, feeling, caring human beings. In many cases, this will require new processes, new structures, new systems and new managerial skills. In effect, it will require radically different management.
To learn more about the nuts and bolts of making an organization more open, an excellent guide is Charlene Li's new book, Open Leadership: How Social Technology Can Transform the Way You Lead (San Francisco: Jossey-Bass, 2010).
To learn more about radical management,
 Charlene Li.: Open Leadership: How Social Technology Can Transform the Way You Lead (San Francisco: Jossey-Bass, 2010), p.1.
 Open Leadership, pp. 231-233)
 Howard Schultz: “We Had To Own The Mistakes,” Harvard Business Review, July-August 2010. Pp. 180-115.
 YouTube was created in February 2005 and now now has around 120 million users, around a third of the US population. 20 hours of video are uploaded to YouTube every minute.
Facebook is a social networking website launched in February 2004 with more than 500 million active users in July 2010. Facebook has more than 6 million pageviews per minute.
Twitter was created in 2006 and now has around 105 million users. In mid 2010, there are around 65 million tweets per day.
 Charlene Li, and Josh Bernoff, J.: Marketing In The Groundswell (Boston: Harvard Business Press, 2009), pp. 70-79.
 Open Leadership, p. 85.
 Al Ries and Laura Ries: The Fall of Advertising and the Rise of PR. New York: HarperBusiness, 2002, p. xvi
 Landor Associates: “The Essentials of Branding” from Bennett, A.G. The Big Book of Marketing, (NY: McGraw-Hill, 2009), pp. 57-76.
 Johnson, J., and Jones, A. “Coca-Cola Shelves Dasani Launch in Europe.” Financial Times, Mar. 24, 2004.