In the globalized, consumption-fired 21st century, branding is the air we breathe.
It is the oxygen of modern culture nearly everywhere on the planet, in realms that extend far beyond consumer products. Google and Apple are self-evidently brands, as are such venerable icons as Mercedes-Benz and Coca-Cola. But so too are Obamacare, Generation X, and the ’Niners. Tony Blair, one of the longest-serving British prime ministers in the past two centuries, launched his career with a radical rebranding of the Labour Party, and made the rebranding of Britain itself his main promise in the 1997 campaign that brought him to power. The University of California, Berkeley and the city it spawned are both celebrated brands.
A few decades ago, a brand was often little more than a label, at worst an advertising gimmick used to pitch dubious medications and toxic hair gels. Today, it is the fulcrum of highly complex value systems—philosophical constellations in an edgy marketing cosmos, with its nerve centers in California, New York, and the major capitals of Western Europe, Asia, and Latin America.
The Plato and Newton of that volatile universe is David Aaker, a congenial professor emeritus of UC Berkeley’s Haas School of Business, born and raised in the placid calm of Fargo, North Dakota.
On a crisply sun-struck December morning, I spoke with Professor Aaker in the seventh floor headquarters of the Prophet marketing consultancy at One Bush Street in San Francisco, a landmark 1959 tower designed by Skidmore, Owings & Merrill. Faced by floor-to-ceiling glass walls, and accessible only by a single bridge over sunken gardens, the building mixes the metaphors of democratic transparency and fortress-like caution. But in the offices of Prophet the emphasis is unmistakably on egalitarian democracy. Activity hums nonstop along ranks of open, low-walled nooks, rather than conventional offices. The only doors lead to conference rooms that are themselves glass-walled.
In the short space of a dozen years, Prophet has become a key international player in branding and rebranding, with branches in New York, Chicago, Atlanta, Richmond (Virginia), Tokyo, Hong Kong, Zurich, Berlin, and London. Its client roster is a who’s who in global trade: Sony, Philips, Siemens, T-Mobile, GE, Cisco, and Deutsche Telekom in electronics; VW, GM, BMW, United Airlines, and Boeing in transportation; the finance and insurance behemoths UBS, Visa, Allianz, and Zurich.
Prophet’s own corporate identity is deeply rooted in the leafy east end of the Berkeley campus. Its co-founders, Scott Galloway and Ian Chaplin, were both Haas grads, as is its current chairman and CEO Michael Dunn. Aaker, whose reputation as a consultant to heavyweight overseas corporations was solidly established long before Prophet’s birth, serves as vice-chairman. Dunn calls the move to bring Aaker into the Prophet brain trust “the best corporate decision” he’s ever made.
We sat in one of the conference rooms for a scheduled 30-minute discussion that stretched into two hours. As was typical for Dave—as everyone calls him—the conversation was a verbal flight around the planet, touching down for brief visits to Singapore, Japan, Korea, MIT, and Stanford (where he earned, respectively, bachelor’s, master’s, and doctorate degrees in management, statistics, and business administration), and longer sojourns in Fargo and Berkeley, the two places he regards as equal homes to his heart. The subjects were as broad-ranging as the geography: baseball and football, Cal above all; business education; the Democrats, the Republicans, and the Tea Party; his wife and three daughters; his professional articles, which number over 100, and his 15 books, several of them bestsellers in their field; the impact of technology on marketing; and the successes and failures of Apple, Obamacare, GM, and Toshiba.
The comparisons to Plato and Newton are not facetious. Like Plato, Aaker is someone who probes incessantly for the essential qualities of diverse phenomena, whether they are manufacturing companies or football teams. And like Isaac Newton, he has a mathematical turn of mind that instinctively hones in on critical connections—components in a marketer’s version of unified theory that always looms beyond reach. “The fact is,” he concedes, “a complete and definitive model of consumer behavior will never happen because it is just too complex and varied.”
Even his evocation of childhood in Fargo is a survey of defining elements, a portrait of eccentrically distinctive Norwegian-American relatives and neighbors, set against an equally distinctive prairie backdrop. “The terrain was flat—there was no semblance of a hill for miles,” he writes in the working draft of an autobiography. “The only trees to be seen were by a river or those planted by the government during the Depression to provide windbreaks. The whole state of North Dakota was like a tabletop.”
As a candidate for attorney general in a mock state election for high school students, the 17-year-old Aaker led the prosecution of a hypothetical hit-and-run driver in a staged trial. “To discredit the defendant’s auto expert, I went to a gas station and asked a mechanic to give me two facts about a car that most people would not know,” he recalls. “The next day I got the defense expert to build himself up and then sprang the questions and made him look ridiculous.”
Ferret out the essential qualities, mold them into an identity, then build a sales campaign around it. The mindset of a branding genius was already recognizable in the ruminations of a closely observant boy on the Great Plains.
It is impossible to overstate the adult Aaker’s contribution to the theory and philosophy of marketing. Michael Dunn notes that his books, articles and blog posts “enjoy an almost cult-like following in the United States and abroad.”
“In the late nineties, Dave’s critical thinking on marketing theory and brand equity was just beginning to take the business world by storm. It was pretty exciting to watch it take hold back then. Out of the blue, the office phone would ring and it would be the Vice Chairman of Toyota or CMO of MasterCard looking for Dave to ask a branding question.”
In simplified terms, the thesis underlying what Aaker calls “the brand identity system”—more popularly known as “the Aaker Model”—asserts that a brand is a vital form of corporate equity, a measurable asset whose value is as important to a business as its capital infrastructure and staff. But there is nothing simple about Aaker’s elaboration on that thesis, which employs his mastery of statistical tools at Stanford and decades of academic research at Berkeley.
It is also infused with what Aaker describes as “educational” misadventures on the entrepreneurial frontlines of the 1960s, including a stillborn project to import baking pans from Germany, while exporting frisbees in the other direction, and the manufacturing of redwood plant containers. “We sold some, but they had quality issues,” he recalls. “The containers’ slates tended to fall off.” In 1962, Aaker and a partner acquired one-third interest and management responsibilities in a small Houston sheet metal plant for $5,000; after working for no pay over the next 18 months, they sold it for $1,000 and a $4,500 note to be paid off in $75 monthly installments. The next year he began the graduate studies that eventually carried him to Berkeley.
The sum result of these experiences, in academia and entrepreneurship alike, was Aaker’s seminal 1996 bestseller Building Strong Brands. One of its most insistent premises is that the quality assertions of a corporate image must play an active role in strategic planning, including product expansion and hiring. “A successful brand does not represent empty dreams,” he says, “but, rather, what the organization actually has the will and resources to deliver.”
Apple, Aaker observes, has built enormous brand equity through its constant emphasis on innovation, turning out a remarkable sequence of first-of-their-kind electronic devices that delivered on the brand’s promise. With a market value of roughly $500 billion, it is currently the world’s leading publicly traded firm. Forbes named it the world’s single most valuable brand in 2013. In Aaker’s scheme, these two achievements are inextricably related: The brand is as central to the firm’s operations as its research and development.
More than 20 years ago, that conviction led Aaker to question executives at 248 leading firms on what, in their opinion, most mattered to their sustainable competitive advantage. The results were published by the California Management Review in 1989. To a degree that even surprised Aaker, brand-related considerations finished at the top of 32 categories, well ahead of management and engineering staff, production costs, financial resources, and technical superiority.
It was a watershed moment in corporate strategy, following a long and tense period of frenzied downsizing aimed almost entirely at cost reduction. Eventually, says Aaker, “CEOs began to recognize that you can only restructure and downsize so much—you need to grow. The key is branding. But at that point no one really knew what brand equity was.”
Building Strong Brands was Aaker’s response. “The book set out to explain how it could be done,” he says. It was translated into 11 languages, and he soon found himself on an exhausting lecture circuit, outlining his theories in dozens of annual appearances per year before groups of executives, students, and journalists from Tokyo to Berlin. Aaker speaks of his enormous worldwide influence with the disarming “oh shucks” modesty characteristic of a Scandinavian-American upbringing. Few virtues are more important to Norwegians than “janteloven,” to be steadfastly humble in response to praise. “For me, branding was the right place to be at the right time,” he says.
But to his legion of admirers, he was manifestly the right man for that place and time. As Joseph V. Tripodi, the chief marketing officer of Coca-Cola, puts it, “Aaker is the brand name in brand management.”
Neither the man nor his theories have rested on their laurels. In the 17 years that followed Building Strong Brands, Aaker published seven more books. As it evolved, his Aaker Model was refined to accommodate the nuances of a globalized economy. Firms doing business in America, says Aaker, should visualize new products as individual “silos” rising from the marketing floor, much like grain elevators on a farm—each with a carefully developed “sub-brand.” One for corn, one for soy, a third for wheat, to complete the North Dakotan analogy.
“The Toshiba corporation has 110 products in 60 or 70 countries,” he says, by way of a counter-example. “In Japan they can all be marketed under the Toshiba name, because the Japanese place their trust in corporate giants. It doesn’t work that way in the United States, where ‘large’ isn’t as positive. From an American perspective, those ought to be 110 individual silos.”
Aaker notes that Procter and Gamble manages 85 individual subordinate brands for its collective output. It’s possible to “span these silos,” to establish links among them in an adroit advertising program for the corporate parent, he says. But in the U.S. market, the separate identities of sub-brands remain crucial.
If the cultural minefields of global trade pose one set of challenges to brand management, another, considerably more daunting, lies in the abrupt arrival of the Information Age. In a recent survey of 1,000 marketing executives at major corporations, 76 percent agreed that their profession has changed more in the past two years than it did over the previous half century.
“Why? The answer is ‘social media,’” says Aaker. “They don’t have a handle on it yet, and it complicates everything. Staggering sums of money, sometimes 25–50 percent of a total advertising budget, are now directed at digital platforms.”
Despite its uncertainties, he points out, the universe of digital marketing has the potential to be a marketer’s fantasy come true. “It is extraordinarily individualized and involving. It can reach people who don’t even watch television or read newspapers. If you can get all those people talking to each other, friends talking to friends, and motivate them, you hit a home run.”
What’s sure is that Aaker will be in the dugout, watching the game with the close, lifelong intensity of that curious kid back in Fargo. There is nothing in branding, says Haas dean Richard Lyons, “that Dave Aaker has not thought about deeply.”
Frank Viviano is a longtime foreign correspondent and the author of Blood Washes Blood. His article “The Empty Town Hall” appeared in the Fall 2012 issue of California.