Last week I introduced the first shift of the connected consumer in the blog movement from exclusive to inclusive consumers

Today we are going to look at the shift from vertical to horizontal branding.

Globalization creates a level playing field. The competitiveness of companies will no longer be determined by their size, country of origin, or past advantage. Smaller, younger, and locally based companies will have a chance to compete against bigger, older, and global companies. Eventually, there will be no company that overly dominates the others. Instead, a company can be more competitive if it can connect with communities of customers and partners for co-creation and with competitors for ‘co-opetition’.

The flow of innovation that was once vertical (from companies to the market) has become horizontal. In the past, companies believed that innovation should come from within; thus, they built a strong research and development infrastructure. Eventually, they realized that the rate of internal innovation was never fast enough for them to be competitive in the ever-changing market.

Procter & Gamble (P&G), for example, learned this early in 2000, when its sales from new products flattened. It later transformed its research and develop model into a connect and develop model. The more horizontal model relies on outside sources for ideas that in turn will be commercialized using internal P&G capabilities. Its rival Unilever has been moving in the same direction by capitalizing on its vast external innovation ecosystem.

Today, innovation is horizontal; the market supplies the ideas, and companies commercialize the ideas.

Similarly, the concept of competition is changing from vertical to horizontal. Technology is the main cause. Chris Anderson’s long tail hypothesis could not be truer today. The market is shifting away from high-volume mainstream brands into low-volume niche ones. With the Internet, physical logistical constraints no longer exist for smaller companies and brands.

This inclusivity now enables companies to enter industries that they would not otherwise have entered in the past. This provides opportunities for companies to grow but poses significant competitive threats. Because distinctions between industries are blurring, it will be highly challenging for companies to keep track of their competitors. Competitors in the future will come from the same industry as well as from other relevant and connected industries. A few years ago, taxi companies and hotel chains would not imagine competing for passengers and guests with technology start-ups such as Uber and Airbnb, which provide private transportation and lodging. To spot latent competitors, companies should start with the consumer’s objectives and consider potential alternatives that consumers might accept to achieve their objectives.

The concept of consumer trust is no longer vertical; it is now horizontal. Consumers in the past were easily influenced by marketing campaigns. They also sought for and listened to authority and expertise. But recent research across industries show that most consumers believe more in the f-factor (friends, families, Facebook fans, Twitter followers) than in marketing communications. Most ask strangers on social media for advice and trust them more than they do advertising and expert opinions.

In such a context, a brand should no longer view consumers as mere targets.

In the past, it was common for companies to broadcast their message through various advertisement media. Some companies even invented a not so authentic differentiation to be able to stand out from the crowd and support their brand image. Consequently, the brand is often treated as outer-shell packaging, which allows for a fake representation of its true value. This approach will no longer be effective because with the help of their communities, consumers guard themselves against bad brands that target them.

A relationship between brands and consumers should no longer be vertical but instead it should be horizontal. Consumers should be considered peers and friends of the brand. The brand should reveal its authentic character and be honest of its true value. Only then will the brand be trustworthy.

In recent years, the trend has spurred the growth of communal rating systems such as TripAdvisor and Yelp.

The challenge moving forward with horizontal branding is maintaining trust in an open-sourced world. I was speaking with a friend last night (who so happens to be a Global Publicis executive) and we talked about the dilemma brands face in getting scale with their amplification. Whilst Facebook and You Tube deliver on reach, is it responsible for a Media partner to put your brand’s reputation at risk? Niche platforms provide the security, yet are dwarfed in the impact stakes. As the threat of data privacy regulation looms across the world, Facebook has hired former UK Deputy Prime Minister Nick Clegg as its Global Affairs and Communications team head to restore the trust in consumer relationships. Whether this will be enough, only time will tell for this behemoth.

Next week we will delve into the shift from Individual to Social Branding.

CMO Perspective – Patrick Adams: Paypal

We do have access to a decent amount of data. All of it is guarded. We try to use what we know to improve the product experience and drive a much more relevant conversation. It’s our mission to surprise and delight as much as possible. That said, we do not collect for the sake of collecting data. I think many organisations spend so much time collecting data with no strategic use or intent. That is a waste of time and an ineffective use of resources

Security is a cost of entry. It’s expected to play in the space. PayPal has built it’s business on security and convenience. I believe the brand resonates that feature and sentiment quickly and easily, so we benefit from that. In financial services you have to exude that. You have to stand for it, or you can’t establish a basic relationship with a customer. It’s an expectation we don’t take lightly. We work very hard at it, but it’s an absolute expectation. Although you do want to remind customers how safe and secure you are, it’s not enough because you have to be so much more.

We are branching out and serving the underserved, helping consumers manage their money in ways they never thought possible.

Mobile is extremely important. A significant number of our consumers engage via the app and their mobile device. We are a mobile first organization and design first for that experience. We are committed to creating optimal and impactful mobile experiences because our customers require it.