What do you find at the Intersection of Design, Business and the Space-Time Continuum? The Physics of Brand.

Q&A with Aaron Keller, Founder and CEO, Capsule and coauthor of Physics of Brand

Over the last two decades, the Internet has ushered in massive changes in marketing and communications in the context of building companies and brands. Companies can now grow from nothing to something, seemingly overnight, with little investment in traditional advertising or brand building. Likewise, one misstep by a brand can do significant harm with the same speed and ruthless efficiency. The digital world demands new ways for thinking about brands and what they mean to consumers who place their trust in them. As a designer, Aaron Keller has always been interested in these issues. But when he met a physicist and a marketing professor, he discovered a new way for thinking about brands and formulating strategy in the digital world. Mix in some premium Minnesota craft beer and you get The Physics of Brand, the new book that is part brand, part science, part sociology.

First of all, tell us a little bit about Capsule

Capsule is a design firm. We started off as a design firm with a big D, with design as a philosophy — a way of approaching problems and connecting with people. Design thinking is the latest way of talking about it.

Aaron Keller

It is connecting people with a brand and it’s something we’ve been doing since the beginning. We see opportunity and we help our clients go there.

We focus on the moments when people are deciding what to buy and design to those moments, making all the connections to marketing. You should at least be aware that brands are assets and that you’re either contributing to that asset or you’re detracting from it. On any given day you’re making that asset more powerful and more valuable, or you’re not. And we as a firm have interest in that, but to actually write a book about it was a daunting thought and a daunting concept.

Let’s jump in right in with your new book. Why did you write it? Why now?

I kept having conversations with Dan Wallace about these ideas and our business and all the changes that have happened in communications and marketing over the last decade. There have been dramatic shifts that are rather fascinating for us. For some people these shifts have been very painful, both financially and for that matter socially. But we talked about it, had beers over it, and theorized about what was going to happen next.

Timing is a fascinating thing. I don’t think anyone can perfect it, but time is a fascinating concept to explore and a big facet of our book. We had talked about this 10 years earlier and then we ran into Renee Marino, who is a physicist and our third author. So we talked about looking at brands through the lens of physics. Neither Dan nor I had any background in physics, so it was really just us theorizing and pontificating about it. And when we met Renee, she looked at us and said you actually could apply these concepts — things like brownie in motion, hot plate effect and things like that that were coming out of the world of physics and were already being applied in financial markets. If they’re being applied in financial markets, we can go backward or forward and we can connect them back to brands.

We started having long discussions with her — like 2 or 3 years of discussions — about these concepts. We would essentially throw out a marketing concept to her, something that became a fable. These things that became fables but have their origin in patterns that people in industry have figured out. The best tool for interpreting big data is the mind. We’re interpreting big data every moment of our lives. That’s what our brain does. And so it informs these patterns and these patterns have been formed in the cultural norm.

One of these fables that you more than likely know is the adage, “I’m wasting 50 percent of my advertising spend, I just don’t know which 50 percent.” It was one of the many that we talked about and theorized about. We said okay, we’re getting to the point where people can show you which 50 percent you’re wasting and how to remedy that. That’s math that’s happening right now. We’re not way out in front of that at all. But, it seemed to us that we could get to a better evaluation of brands and that we could move that ball forward with the stuff that we were thinking about. And we could do all that by looking at it through the lens of physics, which is essentially the science of everything. That exploration is what we got excited about. It bridges business and design which is a big movement right now.

You examine brands in the context of space and time, or in other words, the experiences we have with them. Why is this concept important to marketers today?

It’s one of the things that we talked about a lot and no one had explored. Stepping back to say that brands and people interact in space and time, giving all four of those things equal part of the conversation, and understanding what that means. And we went deep — really deep — on these things using models and structures from physics but also understanding through the current cultural stuff that’s happening with the Internet and what that means. What has that done and why and all the components that relate to that.

The experience we have today with brands is important because people don’t just consume brands through advertising. Today we all know and say that advertising doesn’t build brands. But if you talked to advertisers just five years ago, they would contend that ads do build brands. Brands, however, are built when memories are made. If you can remember a brand, if a brand has made an impression, that impression happens in a moment in time. That interaction you have with a brand is not necessarily only through the product or only through the advertising or only through the digital experience, but any one of those — or all of those — can create the moment that makes you remember that brand. They all work together. We know this intuitively but we don’t really think about it that way. We don’t step back and think that the product makes a memory in itself and we’re in a place now with transparency and authenticity.

It’s fascinating that we’re in a place now with the movements of transparency and authenticity at the same time. The two tightly tie together. We don’t delve deeply into this in the book but if you watch movements, you’ll see it in how they ebb and flow as it relates to brands and where brands go. And if you look at them through the things we’ve put into this book, you get so much clarity as to why these things are going on.

Consider, for example, the cultural movement of socially responsible brands. Take Toms shoes. You look at Toms shoes and say it’s simple, it’s appealing to Millennials. Why is that? People say it’s because Millennials are different, they’re unusual and causes are more important to them. But there’s also a bigger movement out there, specifically a significant distrust in brands and corporations, and big corporations as brand owners, which is one of our models. We have this veil between the corporation and human beings. That veil allows people to do things. It legally needs to be there because if someone does something bad at your company you need to be protected, but behind that veil people do things like what Volkswagen did. This is the largest employer in Europe. And you watch that and you ask yourself, how does that happen? It’s not like one guy in the basement coding was saying we have to break that US system and then reprogramming the systems within the diesel vehicles. It’s systemic. Someone justified wrongdoing and criminal behavior. This veil, and how corporations behave behind it, leads to massive distrust. That gives you a better explanation of why brands need to be socially responsible or have something else to grab onto or people don’t trust them. They either have to have history and heritage — Red Wing Shoes, New Era Cap, or Toms in the case of Millennials — or they have to in some way connect with a socially responsible mission.

How has branding changed since the world went digital? Is it more or less important?

I don’t know that branding has changed necessarily because of digital other than that people see brands more. And there definitely was a seismic shift when people realized it wasn’t just Coca Cola on the shelf. When you start to go down this little rabbit hole of when is a brand a brand and when is it alive — that’s a fun debate to have. When was Instagram a brand? Some people would say a brand is real when it has revenue. But Instagram was sold to Facebook for $1B before it had revenue. So what does that mean? You can bet when it sold to Facebook, it had a line item there that was called goodwill and it was for all of the intangible assets. Now some of those intangible assets would be their audience base, meaning the people that were fans of Instagram already, but you can bet there was also something attributed to the asset that was more relatable to the brand. So it isn’t a revenue thing.

Other people have tried to find some arbitrary thing in time like when you hit a certain scale. So what scale? What point do you pick? We refer to the fact that a brand is a brand when you tell your mom you’ve started a brand; When someone else is aware of this thing that you’re doing. You could also say that it’s when you get trademark protection, but that loses ground because you could be selling something before you have trademark protection. So that doesn’t hold water either. To a certain degree everything is a brand, but some things are brands that you’ll invest in and others are not.

As far as digital changing things, it made people more aware of brands and that they are everywhere and they’re more valuable than they’ve ever been. And it initiated the seismic shift of how brands are built, and how they can be built in different ways. In the past it was very much about traditional media or the only media we had available to us. And now, all of a sudden, it’s been this flood of all kinds of other ways you can build a brand, and that it can happen overnight. It is amazing how quickly a brand can go from nothing to having a significant following without a significant spend.

So to answer your question, branding is more important, but it’s more important to those that get it. It’s less important to those that don’t really care. We run into those people on a number of occasions. The ones who say, we’re just gonna be a sales driven culture and we’re gonna sell more and we don’t care when we get to sell this entity because we don’t care if we don’t have any intangible assets. That’s a commodity driven mentality. You can do that, and there’s viable businesses in commodities, but it doesn’t identify upside potential. In many cases, it’s an incremental, tiny spend to have a brand versus not having a brand. It’s so minuscule to spend a little bit of energy on it and you get so much more out of it, but it’s hard for people to see it. You just have to break out of the old constructs, especially this idea that in order to have a brand you have to do advertising. It still comes up.

Design is such an important aspect of conveying your brand. Why do so many companies get it wrong?

The biggest thing holding back design is the aesthetic conversation. Specifically, that it is only about an aesthetic. Aesthetics are important and aesthetics are incredibly valuable. Design in many ways is the study of making things beautiful and people are attracted to beauty. If you can make something more beautiful, that’s not a bad thing at all. The challenge is that aesthetics ebb and flow with fashion. What you see right now in Silicon Valley and other places is an Apple aesthetic. Everyone wants that look and they say “we want to adopt design like Apple does.” That, in turn, is interpreted as “we want to look like Apple does, aesthetically.” Which isn’t the same thing. Apple uses design as a philosophy. They have an approach to design that happens to manifests itself with a very clean, minimalist aesthetic and in a physical nature of things in which they are more human. Apple has humanized a technical category. That misinterpretation is probably the biggest thing that’s holding back design. It happens by designers and with owners of companies. They look at Apple and say they want to be the Apple of my industry. Which is wrong. You shouldn’t. You should be your own person. It’s frightening how often it shows up.

Many of my readers are entrepreneurs. How could they apply the thinking in your book?

We have three primary models in the book. One is a space model, one is a time model and one is Jacob’s ladder. The time model, I think, is the most valuable of the three. You think of time as your most valuable resource and people give you their time by interacting with your product, by interacting with your brand, by spending time with you. What did Instagram have as a valuable asset? They had the time, not only the eyeballs, but the time that people were spending with that brand. They were in it. They were doing that instead of Facebook, or doing that instead of some other thing. So time and people delivering their time is an incredibly valuable thing. Within that model, we have first moments or the moment that a memory is made, that designed moment. We have the aggregate of all the moments that people spend with something, which gets to the value of a brand. If a million people are spending a minute with a brand, that’s a really valuable brand because they have all of that aggregate time, daily perhaps, that people are spending with the brand or the product or whatever it is.

And then there’s velocity, which gets to relevance, which is a hot topic in digital. But I think velocity is more relatable. When you look at the velocity of a brand, it is the movement of it and how it’s increasing over time. And we can see those things.

I would contend that there’s no such thing as a “New York Thing” anymore. I don’t know if you’ve heard the story about Chobani and General Mills, but they had the opportunity to buy them and chose not to.

The phrase at the time describing Chobani was that it was kind of a New York Thing. There’s no such thing as only a New York Thing. That doesn’t exist anymore. If there is a thing somewhere, it can easily go from a New York Thing to a National Thing to an International Thing overnight. That’s because we have this thing scale-free degree distribution environment known as the Internet. So there’s no such thing as a New York Thing. That’s old thinking to believe something stays in a region and never leaves that region. If enough heat is applied it will spread. I would bet you could’ve looked at, just using social media as your model, all the heat coming from social media as it relates to Chobani, in New York alone, and compared it to the heat on social media as it relates to Yoplait. And I would bet that those numbers would’ve been so vastly different, because, who tweets about their Yoplait yogurt? No one cares. Think about it. So I am certain if they had just done the analytics with the numbers or tools we have today, or even back then, that they could’ve seen the heat that was applied and coming from Chobani. That’s a definite application of this idea, and it would’ve been a “we need to acquire this” situation. Because after that, they’ve gone on, and continue to go on, an acquisition spree because they see it now.

Several brands have famously changed their logos recently. Why are they doing this?

There’s a lot of controversy around logo change. The first company that got tagged in a really nasty way was the Gap. They tried to crowdsource their logo and they stepped in a big pile. It was a mess. People didn’t like the crowdsourcing and said they never should’ve changed it. Then JC Penney did something and they got in trouble for it. And now all the social brands like Airbnb, Uber and Instagram have all made some changes. Netflix made some minor changes to theirs but didn’t get any flack for it. You have to understand that in these three cases, these three brands, people have spent a gargantuan amount of time with these brands. And they have said to you as a brand owner, we love you and we’re going to spend a lot of time with you. What do they have to interact with? They have a little icon on the screen of their phones. They love what it means and what it manifests as, but you change that icon and it has to symbolize that something else has changed.

Of the three of those, I am least impressed with the Uber change. I was profoundly disappointed in the Uber change on a number of levels. One, as much as I absolutely love Uber, and we wrote and raved about them a lot in the book, that change was spoken about in really weird language. All you have to say is, we evolved, our business is evolving and our brand evolves, so this is the visual manifestation of that. You don’t have to use those words, but you’re changing, you’re adapting to the marketplace and this is a good thing. If you use good business language, you don’t have to get into all the ethereal stuff that they were talking about that people just don’t understand. The design world goes, what? The consumer goes, what? And then the few people who actually worked on it say, you don’t get it? You get what we’re doing? It’s a fascinating thing to see that happen.

The Instagram thing, the only disappointment there is that they gave up on the color brown, which not many people seek to own. UPS has done a nice job of really owning brown. It’s a distinctive color and I thought it was impressive that they did that. At some point in time, my daughter organized all the apps on my phone by color, so I have to think of the color of the app before I go find the app, and Instagram used to be in a very select group of brown apps. So I don’t know that that was a good thing to give up. When you look at all of things that you have as assets around your brand, color can be profoundly valuable — just ask Tiffany & Co. And to pick a really distinctive color like brown and to make that commitment and then to pull away from it? I can’t imagine that someone’s not going to use Instagram because it’s brown. I would’ve doubled down on brown if I were them. But they didn’t. They went weird and colorful. So I can see from a design perspective why people ripped into it.

Now Airbnb, I thought they did it the best even though they got tagged with a lot of controversy. But I think the controversy comes from the fact that people love the brand, and you’re changing the face of the brand and you’re not giving them a good reason. It’s like your spouse going out and getting a facelift and a haircut and a whole bunch of other stuff done without telling you. This is an important person in your life. And you say, what did you do? Why did you do that? Your first reaction is more than likely not going to be positive. That is, unless you give them a good reason and present that to them earlier. As far as swank or jenk, the only one of the three of those which is jenk from a change perspective is Uber. The others are swank. In the end, I think Uber will probably change theirs again. It’s visually awkward and doesn’t do a lot.

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