Invisible Brand

Has the credit crunch been the greatest disaster ever in the history of brands and branding, Lucian Camp wonders? Discuss.

What’s to discuss? There is, quite clearly, absolutely no comparison.

The effects of the credit crunch have probably been more disastrous for brands and branding than all other disasters put together. Case histories that we’ve talked about for years – the famous temporary withdrawal of Perrier because it contained traces of benzene, the collapse of Arthur Andersen because it contained traces of Enron hanky-panky and cover-up – are dwarfed alongside it, like rowing boats alongside a supertanker.

The annual ranking of the world’s 100 most valuable brands produced by the design agency Interbrand is, admittedly, about as statistically reliable as a British Airways timetable. But in this year’s ranking, 10 out of the 13 financial brands in the top 100 have lost value, compared to just nine out of 87 in other industries. And when you consider that the survey was produced around the mid-year point and shows, for example, a single-digit percentage fall in the value of the AIG brand, I think we can safely say there will be very much worse to come next year.

In the UK and internationally, it’s still not clear which of the bailed-out brands will survive under new ownership. Lloyds TSB are said to be planning to maintain the Halifax and Bank of Scotland brands, for example; and Northern Rock and Bradford & Bingley seem to be entering new eras as government-owned brands which, phoenix-like, now stand for unrivalled levels of security and trust (perhaps the only two brands to have increased in value, against all the odds, over the last year). But it’s difficult to imagine that Santander will keep the Alliance & Leicester brand any longer than they have to; the sub-prime specialist lenders like GMAC-RFC, Paragon, Southern Pacific, Edeus and dozens of other small players have completely vaporised; and in the hugely much higher-testosterone world of international investment banking, the damage ranges from sunk-without-trace (Lehman Brothers, Bear Sterns) to hit-below-the-waterline (Merrill Lynch, Goldman Sachs, Morgan Stanley, UBS).

Altogether, using a formula about as scientific as Interbrand’s, I come up with a total brand write-down figure of more than $200 billion – probably a great deal more. And even when viewed alongside other crazy credit crunch figures – losses, for example, on toxic lending estimated at up to $1.5 trillion – $200 billion is a fairly breathtaking number.

I must say, all in all, it’s the kind of episode which makes one wonder whether this whole brand-building thing may not be a complete waste of time and effort. It’s not just that our brand sandcastles are demolished so totally and so easily by the rolling waves of reality. Worse, it all makes us look so silly and dishonest, spouting stupid and now often horribly ironic slogans (maybe Halifax would have got into a bit less trouble if it hadn’t been quite so keen to keep on “giving us extra”).

The key test may be whether those organisations which kept their hands completely or mostly clean do now reap a huge brand benefit. The early signs are reasonably encouraging: our clients at Nationwide are now achieving an all-time record share of the savings market, while Lloyds TSB, after years of vociferous criticism for their timid and spineless lending policies, are now receiving equally vociferous praise for their common sense and restraint.

And yet…

Having said all of this, I also have to recognise that brands work in funny ways in financial services. In the past, protected by their shield of consumer ignorance and detachment, many have tended to sail largely unharmed through scandals that would have certainly sunk a mineral water or an accounting firm.  Several years after the appalling collapse of the pension provider Equitable Life, for example, a major market research study established that it still ranked fifth among the country’s most admired pension brands: and there’s very little evidence that lighter firepower, from FSA namings and shamings to regular hammerings from Mr Prestridge and his colleagues in the media, does anything much to penetrate the consumer’s consciousness.

What’s more, in a very odd kind of way, you can argue that even the trauma of recent events doesn’t really make any major difference to the way people tend to think and feel about financial brands.  At one level, the experience has tended to confirm the view that no matter how dodgy and badly-run the institution, your money is always safe because the Government can’t let it go down. And at another level, the revelation that the people in charge of many of these institutions are cynical, greedy and incompetent in more or less equal measure comes as no great surprise: that’s exactly what we already thought they were. 

Big picture, it’s seemed to me for some years that the strength of the giant financial brands is fading. It’s true that without economies of scale, small, start-up, greenfield financial businesses from First Direct to Intelligent Finance and Egg have found it hard to make the kind of margins that big legacy institutions can achieve. But in terms of brand strength, the combination of much tighter targeting, more focused propositions and low toxicity is a winning one. Our experience of the direct insurance brand MORE TH>N was that on every measure in the brand tracking study, it overtook its 290-year-old parent Royal SunAlliance within five years.

They say that many millions of years ago, dinosaurs ruled the earth for much longer than we imagine. So far from being badly-adapted creatures that soon became vulnerable to smaller, faster, fiercer animals, they actually survived for tens of millions of years, until environmental changes – mostly to do with climate – turned against them: even then, they took several more millions of years to disappear.

When I calm down and stop thinking like a hysterical adman, I don’t suppose that even the huge cataclysm of the credit crunch will really lead to the extermination of the giant dinosaur financial brands anytime soon. 

But I do think it might just mark the moment when their fate became inevitable.