Source: Harvard Business Review

n the era of Facebook and YouTube, brand building has become a vexing challenge. This is not how things were supposed to turn out. A decade ago most companies were heralding the arrival of a new golden age of branding. They hired creative agencies and armies of technologists to insert brands throughout the digital universe. Viral, buzz, memes, stickiness, and form factor became the lingua franca of branding. But despite all the hoopla, such efforts have had very little payoff.

As a central feature of their digital strategy, companies made huge bets on what is often called branded content. The thinking went like this: Social media would allow your company to leapfrog traditional media and forge relationships directly with customers. If you told them great stories and connected with them in real time, your brand would become a hub for a community of consumers. Businesses have invested billions pursuing this vision. Yet few brands have generated meaningful consumer interest online. In fact, social media seems to have made brands less significant. What has gone wrong?

To solve this puzzle, we need to remember that brands succeed when they break through in culture. And branding is a set of techniques designed to generate cultural relevance. Digital technologies have not only created potent new social networks but also dramatically altered how culture works. Digital crowds now serve as very effective and prolific innovators of culture—a phenomenon I call crowdculture. Crowdculture changes the rules of branding—which techniques work and which do not. If we understand crowdculture, then, we can figure out why branded-content strategies have fallen flat—and what alternative branding methods are empowered by social media.

Why Branded Content and Sponsorships Used to Work

While promoters insist that branded content is a hot new thing, it’s actually a relic of the mass media age that has been repackaged as a digital concept. In the early days of that era, companies borrowed approaches from popular entertainment to make their brands famous, using short-form storytelling, cinematic tricks, songs, and empathetic characters to win over audiences. Classic ads like Alka-Seltzer’s “I Can’t Believe I Ate the Whole Thing,” Frito-Lay’s “Frito Bandito,” and Farrah Fawcett “creaming” Joe Namath with Noxema all snuck into popular culture by amusing audiences.

This early form of branded content worked well because the entertainment media were oligopolies, so cultural competition was limited. In the United States, three networks produced television programming for 30 weeks or so every year and then went into reruns. Films were distributed only through local movie theaters; similarly, magazine competition was restricted to what fit on the shelves at drugstores. Consumer marketing companies could buy their way to fame by paying to place their brands in this tightly controlled cultural arena.

 

 

Brands also infiltrated culture by sponsoring TV shows and events, attaching themselves to successful content. Since fans had limited access to their favorite entertainers, brands could act as intermediaries. For decades, we were accustomed to fast food chains’ sponsoring new blockbuster films, luxury autos’ bringing us golf and tennis competitions, and youth brands’ underwriting bands and festivals.

The rise of new technologies that allowed audiences to opt out of ads—from cable networks to DVRs and then the internet—made it much harder for brands to buy fame. Now they had to compete directly with real entertainment. So companies upped the ante. BMW pioneered the practice of creating short films for the internet. Soon corporations were hiring top film directors (Michael Bay, Spike Jonze, Michel Gondry, Wes Anderson, David Lynch) and pushing for ever-more-spectacular special effects and production values.

These early (pre-social-media) digital efforts led companies to believe that if they delivered Hollywood-level creative at internet speed, they could gather huge engaged audiences around their brands. Thus was born the great push toward branded content. But its champions weren’t counting on new competition. And this time it came not from big media companies but from the crowd.

The Rise of Crowdculture

Historically, cultural innovation flowed from the margins of society—from fringe groups, social movements, and artistic circles that challenged mainstream norms and conventions. Companies and the mass media acted as intermediaries, diffusing these new ideas into the mass market. But social media has changed everything.

Social media binds together communities that once were geographically isolated, greatly increasing the pace and intensity of collaboration. Now that these once-remote communities are densely networked, their cultural influence has become direct and substantial. These new crowdcultures come in two flavors: subcultures, which incubate new ideologies and practices, and art worlds, which break new ground in entertainment.

Amplified subcultures.

Today you’ll find a flourishing crowdculture around almost any topic: espresso, the demise of the American Dream, Victorian novels, arts-and-crafts furniture, libertarianism, new urbanism, 3-D printing, anime, bird-watching, homeschooling, barbecue. Back in the day, these subculturalists had to gather physically and had very limited ways to communicate collectively: magazines and, later, primitive Usenet groups and meet-ups.

Social media has expanded and democratized these subcultures. With a few clicks, you can jump into the center of any subculture, and participants’ intensive interactions move seamlessly among the web, physical spaces, and traditional media. Together members are pushing forward new ideas, products, practices, and aesthetics—bypassing mass-culture gatekeepers. With the rise of crowdculture, cultural innovators and their early adopter markets have become one and the same.

Turbocharged art worlds.

Producing innovative popular entertainment requires a distinctive mode of organization—what sociologists call an art world. In art worlds, artists (musicians, filmmakers, writers, designers, cartoonists, and so on) gather in inspired collaborative competition: They work together, learn from one another, play off ideas, and push one another. The collective efforts of participants in these “scenes” often generate major creative breakthroughs. Before the rise of social media, the mass-culture industries (film, television, print media, fashion) thrived by pilfering and repurposing their innovations.

Crowdculture has turbocharged art worlds, vastly increasing the number of participants and the speed and quality of their interactions. No longer do you need to be part of a local scene; no longer do you need to work for a year to get funding and distribution for your short film. Now millions of nimble cultural entrepreneurs come together online to hone their craft, exchange ideas, fine-tune their content, and compete to produce hits. The net effect is a new mode of rapid cultural prototyping, in which you can get instant data on the market’s reception of ideas, have them critiqued, and then rework them so that the most resonant content quickly surfaces. In the process, new talent emerges and new genres form. Squeezing into every nook and cranny of pop culture, the new content is highly attuned to audiences and produced on the cheap. These art-world crowdcultures are the main reason why branded content has failed.

Beyond Branded Content

While companies have put their faith in branded content for the past decade, brute empirical evidence is now forcing them to reconsider. In YouTube or Instagram rankings of channels by number of subscribers, corporate brands barely appear. Only three have cracked the YouTube Top 500. Instead you’ll find entertainers you’ve never heard of, appearing as if from nowhere.

YouTube’s greatest success by far is PewDiePie, a Swede who posts barely edited films with snarky voice-over commentary on the video games he plays. By January 2016 he had racked up nearly 11 billion views, and his YouTube channel had more than 41 million subscribers.

How did this happen? The story begins with the youth subcultures that formed around video games. When they landed on social media, they became a force. The once-oddball video-gaming-as-entertainment subculture of South Korea went global, producing a massive spectator sport, now known as E-Sports, with a fan base approaching 100 million people. (Amazon recently bought the E-Sports network Twitch for $970 million.)

In E-Sports, broadcasters provide play-by-play narration of video games. PewDiePie and his comrades riffed on this commentary, turning it into a potty-mouthed new form of sophomoric comedy. Other gamers who film themselves, such as VanossGaming (YouTube rank #19, 15.6 million subscribers), elrubiusOMG (#20, 15.6 million), CaptainSparklez (#60, 9 million), and Ali-A (#94, 7.4 million), are also influential members of this tribe. The crowdculture was initially organized by specialized media platforms that disseminated this content and by insider fans who gathered around and critiqued it, hyping some efforts and dissing others. PewDiePie became the star of this digital art world—just as Jean-Michel Basquiat and Patti Smith had done in urban art worlds back in the analog days. The main difference is that the power of crowdculture propelled him to global fame and influence in record time.

Gaming comedy is just one of hundreds of new genres that crowdculture has created. Those genres fill every imaginable entertainment gap in popular culture, from girls’ fashion advice to gross-out indulgent foods to fanboy sports criticism. Brands can’t compete, despite their investments. Compare PewDiePie, who cranks out inexpensive videos in his house, to McDonald’s, one of the world’s biggest spenders on social media. The McDonald’s channel (#9,414) has 204,000 YouTube subscribers. PewDiePie is 200 times as popular, for a minuscule fraction of the cost.

Or consider Red Bull, the most lauded branded-content success story. It has become a new-media hub producing extreme- and alternative-sports content. While Red Bull spends much of its $2 billion annual marketing budget on branded content, its YouTube channel (rank #184, 4.9 million subscribers) is lapped by dozens of crowdculture start-ups with production budgets under $100,000. Indeed, Dude Perfect (#81, 8 million subscribers), the brainchild of five college jocks from Texas who make videos of trick shots and goofy improvised athletic feats, does far better.

Coca-Cola offers another cautionary tale. In 2011 the company announced a new marketing strategy—called Liquid & Linked—with great fanfare. Going all in, it shifted its emphasis from “creative excellence” (the old mass-media approach) to “content excellence” (branded content in social media). Coke’s Jonathan Mildenhall claimed that Coke would continually produce “the world’s most compelling content,” which would capture “a disproportionate share of popular culture,” doubling sales by 2020.

The following year, Coca-Cola launched its first big bet, transforming the static corporate website into a digital magazine, Coca-Cola Journey. It runs stories on virtually every pop culture topic—from sports and food to sustainability and travel. It’s the epitome of a branded-content strategy.

Journey has now been live for over three years, and it barely registers views. It hasn’t cracked the top 10,000 sites in the United States or the top 20,000 worldwide. Likewise, the company’s YouTube channel (ranked #2,749) has only 676,000 subscribers.

It turns out that consumers have little interest in the content that brands churn out. Very few people want it in their feed. Most view it as clutter—as brand spam. When Facebook realized this, it began charging companies to get “sponsored” content into the feeds of people who were supposed to be their fans.

 

 

The problem companies face is structural, not creative. Big companies organize their marketing efforts as the antithesis of art worlds, in what I have termed brand bureaucracies. They excel at coordinating and executing complex marketing programs across multiple markets around the world. But this organizational model leads to mediocrity when it comes to cultural innovation.

Brand Sponsors Are Disintermediated

Entertainment “properties”—performers, athletes, sports teams, films, television programs, and video games—are also hugely popular on social media. Across all the big platforms you’ll find the usual A-list of celebrities dominating. On YouTube musicians Rihanna, One Direction, Katy Perry, Eminem, Justin Bieber, and Taylor Swift have built massive audiences. On Twitter you’ll find a similar cast of singers, along with media stars like Ellen DeGeneres, Jimmy Fallon, Oprah, Bill Gates, and the pope. Fans gather around the tweets of sports stars Cristiano Ronaldo, LeBron James, Neymar, and Kaká, and teams such as FC Barcelona and Real Madrid (which are far more popular than the two dominant sports brands, Nike and Adidas). On Instagram you’ll find more of the same.

These celebrities are all garnering the superengaged community that pundits have long promised social media would deliver. But it’s not available to companies and their branded goods and services. In retrospect, that shouldn’t be surprising: Interacting with a favored entertainer is different from interacting with a brand of rental car or orange juice. What works for Shakira backfires for Crest and Clorox. The idea that consumers could possibly want to talk about Corona or Coors in the same way that they debate the talents of Ronaldo and Messi is silly.

How One Brand Uses Celebrities to Break Through

 

Social media allows fans to create rich communities around entertainers, who interact directly with them in a barrage of tweets, pins, and posts. Sports teams now hire social media ambassadors to reach out to fans in real time during games, and once the game is over, the players send along insider photos and hold locker-room chats. Beyond the major platforms, new media sites like Vevo, SoundCloud, and Apple Music are spurring even more direct digital connections.

Of course, entertainers are still more than happy to take sponsors’ money, but the cultural value that’s supposed to rub off on the brand is fading.

Cultural Branding

While the rise of crowdculture diminishes the impact of branded content and sponsorships, it has greased the wheels for an alternative approach that I call cultural branding. The dramatic breakthrough of the fast-casual Mexican food chain Chipotle from 2011 to 2013 (before recent outbreaks of foodborne illness) demonstrates the power of this approach.

Chipotle took advantage of an enormous cultural opportunity created when the once-marginal movements that had challenged America’s dominant industrial food culture became a force to be reckoned with on social media. The chain jumped into the fray as a champion of this crowdculture’s ideology. By applying cultural branding, Chipotle became one of America’s most compelling and talked-about brands (though recent food-safety difficulties have dented its image). Specifically, Chipotle succeeded by following these five principles:

1. Map the cultural orthodoxy.

In cultural branding, the brand promotes an innovative ideology that breaks with category conventions. To do that, it first needs to identify which conventions to leapfrog—what I call the cultural orthodoxy. America’s industrial food ideology was invented in the early 20th century by food-marketing companies. Americans had come to believe that, through dazzling scientific discoveries (margarine, instant coffee, Tang) and standardized production processes, big companies, overseen by the Food and Drug Administration, would ensure bountiful, healthful, and tasty food. Those assumptions have undergirded the fast food category since McDonald’s took off in the 1960s.

2. Locate the cultural opportunity.

As time passes, disruptions in society cause an orthodoxy to lose traction. Consumers begin searching for alternatives, which opens up an opportunity for innovative brands to push forward a new ideology in their categories.

How Cultural Branding Builds Icons

 

For industrial food, the tipping point came in 2001, when Eric Schlosser’s book Fast Food Nation powerfully challenged it. This was followed in 2004 by Morgan Spurlock’s film Super Size Me and in 2006 by Michael Pollan’s influential book The Omnivore’s Dilemma. These critiques dramatically affected the upper middle class, quickly spreading concerns about industrial food and providing huge momentum to Whole Foods Market, Trader Joe’s, and a host of other upmarket food purveyors. The same transformation is unfolding in other countries dominated by industrial food ideology. For instance, in the United Kingdom the celebrity chefs Jamie Oliver and Hugh Fearnley-Whittingstall have played a similar role.

Before social media, the influence of these works would have remained locked within this small fraction of society. Instead, crowdcultures grabbed the critiques and blew them up, pushing industrial food anxiety into the mainstream. News about every major problem linked to industrial food production—processed foods loaded with sugar, carcinogenic preservatives, rBGH in milk, bisphenol A leaching from plastics, GMOs, and so on—began to circulate at internet speed. Videos of the meatlike substance “pink slime” went viral. Parents worried endlessly about what they were feeding their kids. Crowdculture converted an elite concern into a national social trauma that galvanized a broad public challenge.

3. Target the crowdculture.

Challengers to the industrial food ideology had lurked at the margins for more than 40 years but had been easily pushed aside as crazy Luddites. Small subcultures had evolved around organic farming and pastured livestock, eking out a living at the fringes of the market in community-supported agriculture and farmers’ markets. But as social media took off, an influential and diverse cluster of overlapping subcultures pushed hard for food innovations. They included advocates of evolutionary nutrition and paleo diets, sustainable ranchers, a new generation of environmental activists, urban gardeners, and farm-to-table restaurants. In short order, a massive cultural movement had organized around the revival of preindustrial foods. Chipotle succeeded because it jumped into this crowdculture and took on its cause.

4. Diffuse the new ideology.

Chipotle promoted preindustrial food ideology with two films. In 2011 the company launched Back to the Start, an animated film with simple wooden figures. In it, an old-fashioned farm is transformed into a parody of a hyper-rationalized industrial farm: The pigs are stuffed together inside a concrete barn, then enter an assembly line where they are injected with chemicals that fatten them into blimps, and then are pressed into cubes and deposited in a fleet of semis. The farmer is haunted by this transformation and decides to convert his farm back to its original pastoral version.

 

 

The second film, The Scarecrow, parodied an industrial food company that branded its products using natural farm imagery. The company is actually a factory in which animals are injected with drugs and treated inhumanely. It cranks out premade meals stamped “100% beef-ish” that kids, oblivious to the real process, eagerly gobble up. A scarecrow who works at the factory is depressed by what he witnesses until he gets an idea. He picks a bunch of produce from his garden, takes it to the city, and opens up a little taqueria—a facsimile of a Chipotle.

The films were launched with tiny media buys and then seeded out on social media platforms. Both were extremely influential, were watched by tens of millions, generated huge media hits, and helped drive impressive sales and profit gains. Each won the Grand Prix at the Cannes advertising festival.

Chipotle’s films are wrongly understood simply as great examples of branded content. They worked because they went beyond mere entertainment. The films were artful, but so are many thousands of films that don’t cut through. Their stories weren’t particularly original; they had been repeated over and over with creative vigor for the previous decade or so. But they exploded on social media because they were myths that passionately captured the ideology of the burgeoning preindustrial food crowdculture. Chipotle painted an inspired vision of America returning to bucolic agricultural and food production traditions and reversing many problems in the dominant food system.

The bête noire of the preindustrial food movement is fast food, so the idea that a major fast food company would promote that story was particularly potent with the crowd. Chipotle was taking on pink slime! Moreover, boutique locavore food was expensive, but at Chipotle people could now assuage their worries with a $7 burrito. Because they tapped into anxieties percolating in the crowdculture, Chipotle’s films never had to compete as great entertainment.

5. Innovate continually, using cultural flashpoints.

A brand can sustain its cultural relevance by playing off particularly intriguing or contentious issues that dominate the media discourse related to an ideology. That’s what Ben & Jerry’s did so well in championing its sustainable business philosophy. The company used new-product introductions to playfully spar with the Reagan administration on timely issues such as nuclear weapons, the destruction of the rain forests, and the war on drugs.

To thrive, Chipotle must continue to lead on flashpoint issues with products and communiqués. The company has been less successful in this respect: It followed up with a Hulu series that had little social media impact because it simply mimicked the prior films rather than staking out new flashpoints. Then Chipotle moved on to a new issue, championing food without GMOs. Aside from the fact that this claim challenged its credibility (after all, Chipotle still sold meat fed by GMO grain and soft drinks made with GMO sweeteners), GMO was a relatively weak flashpoint, a contentious issue only among the most activist consumers and already touted by many hundreds of products. These efforts failed to rally the crowdculture. A number of other flashpoints, such as sugary drinks and industrial vegetable oils, generate far more controversy and have yet to be tackled by a major food business.

Of course, leading with ideology in the mass market can be a double-edged sword. The brand has to walk the walk or it will be called out. Chipotle is a large and growing business with many industrial-scale processes, not a small farm-to-table taqueria. Delivering perishable fresh food, which the company is committed to as a preindustrial food champion, is a huge operational challenge. Chipotle’s reputation has taken a painful hit with highly publicized outbreaks of E. coli and norovirus contamination. Chipotle won’t win back consumer trust through ads or public relations efforts. Rather, the company has to convince the crowdculture that it’s doubling down on its commitment to get preindustrial food right, and then the crowd will advocate for its brand once again.

Competing for Crowdcultures

To brand effectively with social media, companies should target crowdcultures. Today, in pursuit of relevance, most brands chase after trends. But this is a commodity approach to branding: Hundreds of companies are doing exactly the same thing with the same generic list of trends. It’s no wonder consumers don’t pay attention. By targeting novel ideologies flowing out of crowdcultures, brands can assert a point of view that stands out in the overstuffed media environment.

Take the personal care category. Three brands—Dove, Axe, and Old Spice—have generated tremendous consumer interest and identification in a historically low-involvement category, one you would never expect to get attention on social media. They succeeded by championing distinctive gender ideologies around which crowdcultures had formed.

Axe mines the lad crowd. In the 1990s feminist critiques of patriarchal culture were promulgated by academics in American universities. These attacks whipped up a conservative backlash mocking “politically correct” gender politics. It held that men were under siege and needed to rekindle their traditional masculinity. In the UK and then the United States, this rebellion gave rise to a tongue-in-cheek form of sexism called “lad culture.” New magazines like Maxim, FHM, and Loaded harked back to the Playboy era, featuring lewd stories with soft-porn photos. This ideology struck a chord with many young men. By the early 2000s lad culture was migrating onto the web as a vital crowdculture.

Axe (sold as Lynx in the UK and Ireland) had been marketed in Europe and Latin America since the 1980s but had become a dated, also-ran brand. That is, until the company jumped onto the lad bandwagon with “The Axe Effect,” a campaign that pushed to bombastic extremes politically incorrect sexual fantasies. It spread like wildfire on the internet and instantly established Axe as the over-the-top cheerleader for the lad crowd.

 

 

Dove leads the body-positive crowd. Axe’s aggressive stand set up a perfect opportunity for another brand to champion the feminist side of this “gender war.” Dove was a mundane, old-fashioned brand in a category in which marketing usually rode the coattails of the beauty trends set by fashion houses and media. By the 2000s the ideal of the woman’s body had been pushed to ridiculous extremes. Feminist critiques of the use of starved size 0 models began to circulate in traditional and social media. Instead of presenting an aspiration, beauty marketing had become inaccessible and alienating to many women.

Dove’s “Campaign for Real Beauty” tapped into this emerging crowdculture by celebrating real women’s physiques in all their normal diversity—old, young, curvy, skinny, short, tall, wrinkled, smooth. Women all over the world pitched in to produce, circulate, and cheer for images of bodies that didn’t conform to the beauty myth. Throughout the past decade, Dove has continued to target cultural flashpoints—such as the use of heavily Photoshopped images in fashion magazines—to keep the brand at the center of this gender discourse.

Old Spice taps the hipster crowd. The ideological battle between the laddish view and body-positive feminism left untouched one other cultural opportunity in the personal care market. In the 2000s, a new “hipster” ideology arose in urban subcultures to define sophistication among young cosmopolitan adults. They embraced the historical bohemian ideal with gusto but also with self-referential irony. Ironic white-trash wardrobes (foam trucker hats, ugly Salvation Army sweaters) and facial hair (waxed handlebar mustaches, bushy beards) became pervasive. Brooklyn was chock-full of lumberjacks. Amplified by crowdculture, this sensibility rapidly spread across the country.

Old Spice branding piggybacked on hipster sophistication with a parody of Axe and masculine clichés. The campaign featured a chiseled, bare-chested former football player, Isaiah Mustafa, as a huckster for Old Spice—“the man your man could smell like.” The films hit the hipster bull’s-eye, serving up an extremely “hot” guy whose shtick is to make fun of the conventions of male attractiveness. You too can be hot if you offer your woman amazing adventures, diamonds and gold, and studly body poses, all with aggressive spraying of Old Spice.

These three brands broke through in social media because they used cultural branding—a strategy that works differently from the conventional branded-content model. Each engaged a cultural discourse about gender and sexuality in wide circulation in social media—a crowdculture—which espoused a distinctive ideology. Each acted as a proselytizer, promoting this ideology to a mass audience. Such opportunities come into view only if we use the prism of cultural branding—doing research to identify ideologies that are relevant to the category and gaining traction in crowdcultures. Companies that rely on traditional segmentation models and trend reports will always have trouble identifying those opportunities.

A decade in, companies are still struggling to come up with a branding model that works in the chaotic world of social media. The big platforms—the Facebooks and YouTubes and Instagrams—seem to call the shots, while the vast majority of brands are cultural mutes, despite investing billions. Companies need to shift their focus away from the platforms themselves and toward the real locus of digital power—crowdcultures. They are creating more opportunities than ever for brands. Old Spice succeeded not with a Facebook strategy but with a strategy that leveraged the ironic hipster aesthetic. Chipotle succeeded not with a YouTube strategy but with products and communications that spoke to the preindustrial food movement. Companies can once again win the battle for cultural relevance with cultural branding, which will allow them to tap into the power of the crowd.