Scott Galloway: This Technology Kills Brands

Scott Galloway: This Technology Kills Brands


Here at L2, we’re not afraid to talk about technologies that we think have been overhyped and are more fluff than substance, whether it’s VR, the Internet of Things or 3D printing. The technology that is probably in our view the most revolutionary and is going to shake brands to their core? Voice. Voice technology is getting tremendous
traction. Alexa is in 4% of US households, Siri handles over 2 billion commands a week and 20% of Google searches on Android handsets are input by voice. Who loses? Brands. Voice-based ordering eliminates the need for packaging, design and end caps – all the things brands have poured billions and decades into perfecting. The decline of brand began with the advent of Google and every day fewer people put a prefix of a brand name in a Google search. And the same is going to happen with voice commands. Our research reveals that over the past year, non-branded product searches have increased in every CPG category. Prediction: the decline is going to accelerate. The death of brand is here and it has a voice, specifically Alexa. Buy batteries. Amazon’s choice for batteries is Amazon Basics AA batteries 48-pack. It’s 13 dollars and 60 cents total including tax. Would you like to buy it? No. I also found a 20-pack of Amazon Basics AAA performance alkaline batteries. It’s seven dollars and 61 cents total, including tax. Would you like to buy it? No. That’s all I can find for batteries right now. All right. Check your Alexa app for more options. So there’s nothing that unusual about a retailer taking advantage of their custody of the consumer to trade them off to a private label brand – which is what Amazon is doing here because when you go on the site in fact you do find that Alexa has more options. There are several branded batteries. It’s just Alexa, without having to bother with the consumer seeing a brand or packaging, has decided to omit or let other brands
disappear from your selection. Also, the pricing is different on Alexa to
voice commands than it is on the main platform. It seems as if they’re taking advantage of this lack of transparency to charge more. We’ll see. I feel insignificant sitting in front of this. So just as the media was fascinated with the fight between Muhammad Ali and Antonio Inoki, the famous wrestler 40-plus years ago, the media is missing the point today and focused on the fight between Walmart and Amazon, who compete against each other, but not really directly as Walmart owns the rural customer and
Amazon is clearly going after the urban wealthy. The real victims here? The people hurt by Amazon? Likely brands – specifically CPG brands. Amazon’s algorithm finds the lowest unit price for a given product and then applies it. If Costco sells a 10-pack of toilet paper for $10, Amazon notes the price per roll is $1, forcing Walmart, which aims to have the
lowest price on 80% of its products, to do the same which in turn, Amazon and Walmart force their manufacturers to lower their price, telling them to stop marketing and start cutting prices which is the equivalent of a payday loan in the world of marketing: it works in the short run, but over the long term you end up broke. If you don’t play ball, Walmart will limit your distribution and create its own rival products and the Amazon algorithm will literally kick you off the platform in a nanosecond. A continued loser: TV networks. What best captures the vibe at the recent upfronts? A stunned and silent audience based on, no joke, the announcement that ABC was bringing back Roseanne. Desperation has a name. It’s TV. Fox registered a 2% gain in viewers this season – if you include sports. If you don’t, viewership fell 19%. ABC viewership declined 8%. The network boasts five of the top ten shows in the adult 18-to-49 category but only one of them is new. The rest are aging franchises, including Grey’s Anatomy and Modern Family. When ABC launches Modern Family they own it and it’s a point of differentiation. However the only thing keeping these guys from death’s door right now are assets they don’t own that go to the highest bidder – specifically the Super Bowl, March Madness and the Olympics. What happens when, and it will, one of the Big Four – Apple, Amazon, Facebook and Google – begin bidding on these assets because they can monetize it elsewhere with their infinitely cheap capital? You’re going to see an incredible decline in television. It’s surprising how long things take, then shocking how fast they can happen. TV is about to enter the shocking phase. The only people left watching broadcast
ad-supported TV are going to be the poor and the technologically illiterate. A few weeks ago we referenced a wonderful nonprofit, Lifeline Syria, that is helping resettle Syrian families in Canada. Unfortunately there are now more donors
than there are families, as Canada has suspended the exemption that allowed these families to immigrate. We have instead decided to focus some efforts and raise some money on a wonderful charity called Gather for Goats, a worldwide benefit for Syrian refugees living in the desert in Jordan to provide a sustainable source of nutrition and hydration for children in the area. Specifically we’re going to raise some money and buy some goats for some good people. It’s strange, it’s innovative and we’d like to think it’s generous. Not bad things to have on your tombstone. We’ll see you next week.

Danny Hutson

40 thoughts on “Scott Galloway: This Technology Kills Brands

  1. The difference is buy thru Alexis if quality doesn't matter, and yes even toilet paper has a lot of variance!

  2. I think this is true for commoditized goods like batteries and toilet paper but lifestyle brands may benefit. You would not ask Alexa to buy a phone but to buy and iPhone. However, if an algorithm takes into account consumer preferences or past purchases into account, maybe commoditized brands may fair better. What do you think?

  3. I think voice it just the tip of the Iceberg that is AI. At this point, I think we should be looking forward to the different ways that AI technology is going to drive the market.

  4. Scott, this latest episode plays like it’s five minutes off Slayer’s 1986 masterpiece album «Reign In Blood» — brutal, relentless, and without apology. Keep up the fine work.

  5. I don't think that major sporting events will ever disappear from TV. There are too many people that still watch sports via TV. I would hate to see the day that our ability to watch a major sporting event like the Super Bowl will be determined by our ability to have fast internet. Even those sporting events on cable/satellite TV don't require a very expensive package to view the majority of major sporting event. Going to an all internet model will alienate those that are not technologically literate and having the leagues say to those people "you don't matter. Only millennial hipsters that get the technological revolution matter to us". Sports via internet packages are great, but it will never overtake TV as the main viewing device for sports by the vast majority of people.

    Also, TV networks will never go away, they will evolve with the times.

  6. Thanks for pointing out Google's tricks, I'm staying away from voice ordering, I want a good deal not to be taken advantage of.

  7. Buy batteries… that wont last, shit batteries, batteries you'll hate. Rely on your brain for everything, not a voice or Alexa..

  8. How long till we get add-free sports content based in a subscriptions model? Certainly, some of the big guys are aiming at this.

  9. i watched this vid at my desk near alexa & she tried to order batteries for Scott -_- some times she ignores me :/

  10. I think It goes to like Gary V says marketers ruin everything. Building brand will be back to radio like advertising on these platforms. That's if platforms like amazon will allow it.

  11. Watching that Alexa battery search was like watching paint dry…..voice is TERRIBLE for search.

    Sorry but BS that 20% of google searches are voice.

    Scott…..voice has lots of potential but this isn't it.

  12. I actually think this is the best video you've ever made. I sent this to a bunch of people in my company.

  13. i admire the serious informative nature of this video. I like the humor but this one was dense and interesting.

  14. Just watched this at the same time as McDonald's announcee pulling out of the Olympics Something Coke have been desperate to do for years, so here's the end of brands.You want a Cola? Sure but nothing like the brand you think you loved

  15. Death of brand….? IOT loser….? hmmmmmm…..? Banding isnt labeling…. Brand losers….? isnt thats like saying the differences between Yugo and Lexus will be done away with?. IOT, its very very early days. IOT is gonna do for the "real" world what cookies did for the net…. and if thats ho-hum then i guess youre right. Aaaaah several other orgs boing the goat thing why not just help them and not try to be the center of attention or is it you dont want to be affliiated with those other orgs.

  16. I'd love to hear what Gary Vee has to say about this. His two favorite things Alexa and Brands. Dual to the death. Who will win!

  17. This is so true with TV! with youtube available, why would I pay insane amounts of money for TV. It not like comcast internet is cheap… also youtube is on demand which is what this generation is all about, stuff on demand, no more waiting.

  18. Giving goats or other "animal gifts" is a bad way to help people in need. This is well established. You can just google "why animal donation doesn't work".

  19. Voice command tech getting rid of branding is one of those things that I doubt will gain dominant traction, much like the prediction that car ownership will be gone by 2025. It just sounds like those estimations you give cause you're really invested in the idea. Although I could just be oblivious of the technology's "Hype Cycle Indicators" and we are simply undergoing the "Peak of Inflated Expectations" part of the cycle [Source: Gartner.com] [Look at: "Bold" by Peter H. Diamonds and Steven Kotler]

    Don't forget, 98% of people choose the branded options at grocery stores instead of the cheaper store brand (wal-mart, target, Kroger, etc.) [Source: "Positioning" by Al Ries and Jack Trout]. Brands are powerful. And so long as people are using Facebook (And the internet in general) and are frequently being exposed to brands through targeted Facebook ads, brands are going to dominate. Although I'm positive the dynamics have changed through Amazon. Gotta look into it deeper..

    Of course, never underestimate Amazon. So who knows?

  20. Absolutely love the reference to Woody Guthrie here… Not that he would have supported big brands, but definitely would be against the use of this technology to undercut small brands and mom-and-pop shops. Especially considering the fact that Jeff Bezos is the richest man in the world… very clever. Great video!

  21. WHy watch TV…it stinks; who need some idiot tv execs telling me what I want to see? Most raw video produced by people on YT is more entertaining and REAL!

  22. If you’re talking about companies who only care about squeezing the most margin possible regardless of the customer experience, then yes. Keep in mind Brand is more than visuals. It’s a collection of memories a customer has with your company. It’s the way the product feels in your hand or the speedy customer service rep. who went the extra mile, or not. Great companies that use design thinking to empathize with users and mold a process, product, or service so the least capable person in the room will survive.

  23. @3:02 Amazon algorithm finds lowest cost per unit

    This is NOT remarkable, only interesting that it's so difficult for retailers to do consistently and INSANE consumers to demand (e.g. I can find rc cola for $1/liter vs $1.39 a 16oz a few minutes walking distance among many other things a competitive capitalistic economy in close proximity shouldn't be possible to exist)

    This is something rosie riveter generation mothers had to learn as second nature.. look up depression era cooking (e.g. with hot dogs) which is where all these so called beloved CPG companies and zombie brands (e.g. Disney vs pixar… PixarGhibliland launched today…(we wish)

    And basically again every decade 70 etc with each new money crunch

    Anyway…..

    Having such numbers Amazon failed (and affiliates imho) never meeting the ground floor of

    On a perfect average day/ night
    I need just 2 ear plugs per say 2 weeks. They are sold by 20 ..40 ..100 which as a mobile nomad (fortunate/ unfortunate depending on what metrics you measure quality of life by)…I just don't live that way or want to love life defined by such semi precious having enough and hindered by excess duplicity/ redundancy

    Having less I take better care of them & more appreciative of them vs having a big box become indifferent and expectant of there always being more and unaware of opportunity costs of say $10 trapped &entrapped in a "best buy" (per Amazon algos.. via economies of scale many times over(t))

    Multiply this across every item/service you need/use/own (or vice versa lol) and this adds up to huge discretionary quality of life distinctions most miss as it's simply not an option (think bulk food at health store sold perfectly based on what you have actually consumed and then copy paste averaged and forward projected… trivial for AWS on lambda alone spare CPU cycles…. then aggregate the indexes do a group buy on brands worth keeping (some actual discernable remarkable trade secret e.g
    Justin's nut butters process) or if plastics like earplugs Amazon should WhiteLabel2.0++ and survey actual users about Actual problems push that into r&d (like they developed Alexa) and boom..a independent possible stock reportable) CPG in house competitor to also hold other brands accountable to a) customer role focus (Bezos an I bet most stock market tech darlings use/ love/ detest Amazon) b) ensure production teams and tech are happy vs a money game (and production teams shouldn't expect retirement or buying an island given automation DESTROYS WORK & ABILITY TO WORK (which currency/ stock are supposed to be SRT/KPI trend indicator of, which Alexa suitably integrated with deliveries and consumption of ( Alexa & Amazon button meets quantified self at point of consumption (Fitbit meets Google glass whatever etc))

    real life is simple
    .. hundreds of millions of years identifiable species have existed and thrived without more than the basics which with (society x technology x science x etc) cost less than nothing (WHAT IS SOCIETY FOR ?!? "BITCHES")

    Put simply everybody (pets (animal/ insect/ plants) & plants (agriculture n exotic) would get ALL basic needs for as long as they naturally live and then freed up have unlimitedish amounts of stuff to learn play etc ( vs startUp ⇒endD((own)ed) throwing it ALLL (((((TRUEself)family friends) healthy health) "My"self: respect peace of mind etc )etc) etc….)

    Amazon & dependent consumers completely missed the boat here instead of having everything they basically just made a better big box store without THEIR commute, finding stuff in vast aisles of mostly irrelevant (one size fits nobody) assuming it's in stock.. something (e.g. medium size out but seemingly all others ( xxl xl x s ) there for four months

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