What is authentic? The question seems to pop up in many areas. If a company or corporation claims authenticity, I am sure several folks I know would have a reflexive reaction that such a claim is absurd. Nonetheless, the Economist notes that “Authenticity” is being peddled as a cure for drooping brands. One part of the article notes that despite the ongoing difficulties in valuing brands, “when brands are sold as part of corporate takeovers, what price do investors put on them? They found that these prices, as a percentage of deals’ total value, have dropped since 2003. So, at least for those firms being taken over, the strength of their brands is becoming a smaller share of their overall worth.” That is interesting insofar as it suggests that 1) Brand value (and goodwill in that sense) can be measured and 2) That is has gone down.
What is driving the change? A key thing I have tried to show is that the issue of information or search costs is not as high as it used to be and that change brings into question many aspects of trademark law and policy. The Economist seems to agree and puts it this way
It is not hard to see why the old marketing magic is fading, in an age in which people can instantly learn truths (and indeed untruths) about the things they are contemplating buying. Online reviews and friends’ comments on social media help consumers see a product’s underlying merits and demerits, not the image that its makers are trying to build around it. The ease of accessing information makes consumers more likely to abandon their habitual brands because they have heard about something new, or learned that retailers’ own-label products are much the same, except cheaper. Depending on your perspective, people are either increasingly fickle or ever more impermeable to marketing bullshit. For brands that lack any truly distinguishing features, that is bad news.
Better information and new sources of it change the legal and brand landscape. Plus an old problem–trying to sell essentially the same goods–has returned. As Spencer Waller and I noted, “From the end of the nineteenth century to the middle of the twentieth century to today, companies have had to find ways to compete over selling essentially the same goods and manage excess production capacity.” So it is not surprising that the sectors most hit by the change The Economist discusses are consumer goods and imported goods that no longer offer difference from other, lower-cost options of the same or close to same quality.
So can a corporation be authentic? If a corporation is slinging its authenticity with Keebler Elves and Santa Claus in Coke Red, that is a harder sell. Those plays will be claiming authenticity based on cultural history and maybe a done deal in that sense (as Spencer and I discussed, the history of firms using events and education to build a sense of community and identity is old). But insofar as craft brewing, locally-made goods, and customized offerings are claiming authenticity, those may fit the authenticity claim; as long as that claim is that the item is not from a firm of a certain size or somehow to be distrusted because of size, for Scalia was correct in Citizens United that many firms of many sizes can be corporations. Assuming small and personal is a sort of authenticity, where I am not sure The Economist is correct is its example of Apple. The newspaper offers
for those firms that get the product right and have a genuine story to tell, the rewards can still be huge. The textbook example of this is Apple, whose devices’ superior design and ease of use make it a powerful brand in a commoditised market. Last year it had only 6% of the revenues in the personal-computer market, but 28% of the profits. That’s real authenticity.
If getting the product “right” is the key, then the competition is about old school “my goods and services are better quality than yours.” If the story is also key, then we have to start asking whether Apple’s claims are accurate or myth-making “bullshit” as the Economist might say. I like Apple products as they fit my needs. I buy them despite the over-claimed genius we are all tech saviors rubbish they sling. It is authentic as long as it authentic here means 100% Silicon Valley hubris. So pure it …