Not every “brand” is really a brand. Some are simply products that have achieved product channel fit. Here is how to distinguish the two.
Note: This piece was originally published in my newsletter as “Brands vs Growth Loops”. I re-termed growth loops as product-channel fit because I feel it is more descriptive.
There are two topics that come up frequently in DTC Twitter land. At first glance they’re not related, but in reality they are incredibly related. The topics:
- Media buyers and performance marketers trying to push brands out of their creative comfort zone to achieve better advertising performance.
- Hand wringing about brands getting wrecked by the iOS 14 update; some brands are no longer able to make the numbers work.
What do these two things have in common? The tension between achieving product channel fit and building a brand. Every brand starts with product channel fit, but only some products break through to become brands.
This framework will save you a lot of tactical hand-wringing and make strategic planning much, much easier. And for those of you offering professional services, it will help you define your offering, vet clients and avoid frustration.
Why Product Channel Fit Doesn’t Mean You Have A Brand
When a product launches it typically achieves success in a single customer acquisition channel, like Facebook Ads. That doesn’t mean the product find success in other marketing channels like email. But if management isn’t careful every aspect of the business–from product to aesthetics to unit economics–is based on what works in the primary acquisition channel. This makes it harder to scale in other channels.
On the other hand, brands are built around a narrative and (ideally) a target customer. To achieve consistent messaging and presentation, brands may not achieve optimal performance in a single digital channel. There are moves a brand won’t make, even if those moves would greatly improve channel performance.
There is a simple litmus test that determines if a brand is really a brand: if the company started an editorial-only email newsletter tomorrow, could you imagine the contents in under five seconds?
Here are some other key differences:
Companies that achieve Product Channel Fit but have not progressed to becoming a brand:
- Hone in on a single product/market/channel fit combination. This could be Facebook advertising or wholesale. But the business’ most pressing question is “how do we optimize into this channel?”
- Develop core competencies around the product channel fit combo of choice. The org chart is biased towards the needs of the brand’s biggest customer acquisition channel.
- Make decisions about branding and creative direction based on what tactics work in their key acquisition channel.
- Frame products as the solution to a very tangible problem. Features and benefits are the focus of most product narratives.
- Pursue category expansion in a linear, functional way: product ad-ons and accessories, or new colorways or flavors.
- Probably start with traction in a single acquisition channel, but use brand narrative as a platform to expand into additional channels. The most pressing question is “how do we transcend any single channel?”
- Develop core competencies around product development and/or storytelling.
- Make decisions about branding and creative direction based on the narrative. Depending on the distance between the brand vision and a given channel’s “best practices”, brands may decide to forgo certain channels entirely.
- Frame products as the method for fulfilling an unmet psychological need. Buying into the brand is about buying into a state of mind.
- Have the option to pursue category expansion in a more flexible way. Customers are buying into a way of life, and that can extend into seemingly unrelated categories.
Real Life Example: Feat Clothing and Outdoor Voices
Honing in on the activewear space: Feat Clothing has achieved product channel fit and Outdoor Voices is a brand. Let’s compare the About pages of both companies.
Feat’s About Page is light on storytelling. The primary differentiator is the brand’s focus on comfort and the use of custom fabrics. This is a “features and benefits” focus. There are some pictures of the founders, but no tieback between the founders and the focus on comfort.
Outdoor Voices has a more fleshed-out About Page. There are three subsections, which include Mission and Values. And there is almost no mention of specific product features or production techniques. The brand positions itself in opposition to an outdated way of thinking about working out: “We’re freeing fitness from performance and bringing back Doing Things For Fun”.
I’m not saying that one of these approaches is better than the other. Both can be incredibly successful. But the decision to pursue either approach is typically a financial one.
Organizations that are focused on product channel fit are optimized towards near-term returns: how do we get the most profit out of a given channel today? Brands are optimized towards sustainable returns over time: how do we create something that works regardless of the channels available, even if it means giving up some of today’s upside?
Pursuing product channel fit is the lower-risk strategy, assuming that management are experts on the channel of choice. And that’s why this approach is often favored by bootstrapped brands and independent entrepreneurs. It doesn’t mean that a company focused on product channel fit can’t evolve into a brand over time.
How Marketers And Agencies Should Think About Product Channel Fit
A lot of the friction and frustration you’ll experience as a marketer comes from misalignment between a business’ operating reality, management’s self-concept, and the tactics you’re being asked to pursue.
Two common issues:
1. A lot of brands want to have their cake and eat it too
This is the genesis of the classic “it’s not on brand” trope that many marketers have to deal with. Performance marketing has a language of its own, especially on highly competitive platforms like Facebook. If a brand’s narrative and positioning are in ideological conflict with a platform’s visual language, finding success in the channel is going to be difficult. To put it simply: if UGC-style product testimonials aren’t “on brand”, you’re gonna have a bad time in the paid social advertising world.
Some brands really are powerful enough to overcome these hurdles. Their logo can drive clickthrough rate better than any direct response marketing tactic. Or the brand commands such a high margin that they can take a minor hit on CAC.
But a lot of brands aren’t quite there yet. They want to drive growth by tapping into new channels, so they rush into the process without realizing what it will require to succeed in the channel. This is where marketers get frustrated, especially if they assume that their partners will be willing to adopt the new platform’s language without objection.
2. A lot of companies that focus on product channel fit struggle to diversify into other channels
Sometimes a company does too good a job of achieving product channel fit. They do such a good job that the business can’t survive outside its primary channel.
Some savvy entrepreneurs have observed the types of products that tend to “work” in Facebook ads. They’ll develop one of these products, and the unit economics are designed to support typical customer acquisition costs on Facebook. The features of the product lend themselves to scroll-stopping creative. The business chugs along successfully for years, and profits are reinvested into activities that optimize for growth via Facebook ads.
Then a rug pull moment like iOS 14 occurs, and the economics of the business no longer work quite so well. Continued success probably means channel diversification. But the ship has been cruising towards Facebook island for so long that it’s hard and time consuming to turn around.
To survive, the company must pivot into a brand. This requires a new set of core competencies and some potentially painful decision making. Not everyone is up to the challenge.
How You Can Use This Framework
Here are some steps you can take as an agency, consultant or in-house performance marketer to reduce frustration and create stronger relationships:
- Work on building a clear understanding of your own skillset and offering. Are you a channel expert? A holistic brand builder? Someone who connects the dots between both worlds?
- Define what you’ll need from clients to be successful, and articulate those needs during the sales or interview process. If you’ll need a certain number of creative assets per week, or a certain type of assets, be up front about that. Show some of your top-performing creatives from other clients in similar verticals and gauge the potential client’s reaction.
- Do as much diligence as possible on the client’s business model. What channel is driving the majority of their sales? What are their key sources of customer acquisition? What is your budget going to be? How is the marketing org structured, and how might that help or hinder you?
- Sketch out the full roadmap to success. Share this with the potential client, being sure to tactfully call out any anticipated points of friction. Use this conversation to determine if you have a reasonable chance of success.
- Anticipate that you will not be able to make major changes for the first three to six months of the relationship. The frustrating reality: you’ll probably be expected to “prove yourself” with “quick wins” before the organization is comfortable with major change. Even if you’re being hired as an employee. And even if the current situation is dire. Plan for this.