What makes a consumer brand marketable?

It seems like every day I see an ad online or on the subway for a new consumer product — from shoes, to vitamins, or even blue-light glasses. As discussed by others, there is a great un-bundling of the old conglomerates occurring where each and every brand you can think of now has a hip, new, millennial-focused counterpart.

These new brands have increasingly become a focus area for me, and at Great Oaks we’re happy to have invested in some amazing companies such as Allbirds, Away, Sugarfina and many others.

Whenever I see a new consumer brand, one of the first things I think about is, “How will they market this product profitably?” With the ever-increasing number of new brands (over 400 startups according to an article from Inc) marketing through the same channels — it is inevitable that customer acquisition costs will rise. These costs, if not kept in check, will eat up all the companies cash reserves and leave them dead in the water.

In order to be successful — the best brands have to find ways to market themselves cheaply and in such a way that they can continue to do so for years. Because of this — the brands I see with the most potential have at least one (and ideally all) of the following traits:

1) They are inherently visible:

If someone can be seen using a product, they are effectively recommending it to everyone nearby — whether its a famous athlete touting the Nike swoosh, your co-worker with their morning cup of Starbucks, or the sea of glowing Apple logos in a university lecture.

Inherent product visibility is important for several reasons, one of which is something called “First Follower Theory”. The theory goes that before an idea can take off — it must attract an initial follower or ambassador to lend credibility to the movement. Once a person is seen using a product it immediately becomes more credible and trustworthy. After a brand is able to attract an initial group of users to their product, those users will become ambassadors to everyone in their own networks just by virtue of being seen.

Inherent visibility can be built into almost any product, although it comes more naturally to some verticals such as apparel. A brand has a much better chance of taking off if they approach the visual aspects of their product from the get-go.

Some examples of start-up brands that have achieved this are:

· Allbirds — seen being worn by Obama and Leonardo Di Caprio

· Away — photographed with various celebrities

· S’well — seen with Julia Roberts

2) They can generate a lot of free press:

Earned media and free press are as “good-as-gold” when it comes to the success of a brand. Any advantage the product, team or first users can provide that allow the brand to create arbitrage opportunities in marketing is a strong signal that the brand will be successful.

These “arbitrage opportunities” can come from celebrity founders/early adopters (Jessica Alba with the Honest Co or Kylie Jenner with Kylie Cosmetics), being a part of a larger trend (S’well bottle and Humankind with reduction of single-use plastics), or from leveraging a founder’s existing network & following.

If an up-and-coming consumer brand is successfully able to find these opportunities, they will be able to get in front of a large number of customers at a cost way below that of a brand without these advantages. As not everyone can be a celebrity or extremely well connected — the best chance for most brands will be to become a front-runner in a larger trend.

Some example trends I’ve been seeing lately:

· Reduction of single-use plastics & the use of sustainable materials

· Pet brands focused on the millennial “pet parents”

· All things beverage (Bev, Dirty Lemon, Soylent)

3) They’re just better:

The final, and hardest, trait for a new consumer brand to pull off is to make their product vastly better or more convenient than the next best alternative. If the brand can blow people away with their product’s quality or experience, customers will support and discuss the brand even if they would have never spoken about that type of product in past.

One brand I think has done well in pulling this off is Hims. Their products are ones that, in the past, would be heavily stigmatized — such as hair regrowth solutions and erectile dysfunction medication. Buying either of these products traditionally could be an embarrassing event — especially if the local pharmacy doesn’t have self-checkout. What Him’s has done well is both work to de-stigmatize their products as well as sell them discreetly to customers.

Another brand that appears to be doing this is Impossible Foods, with their Impossible Burgers. Veggie burgers have been around since the 1980’s, but the taste wasn’t good enough for them to really take off. By focusing on quality and food science innovation, Impossible Food’s products are now so much better than the last generation of non-meat burgers, that they are seeing tremendous backing from investors.

A brand that succeeds in being above-and-beyond better than its competition in terms of quality or purchase experience will be able to create an army of devotees who will sell their product for them.

All three of the above-mentioned characteristics — inherent visibility, ability to generate free press, being better than incumbents — boil down to one key idea: how likely is it that your customers will share your brand with others? Visible products are shared with others by being worn or used; Celebrity founders & trend leaders can freely share their brands with their followers; Exceptional quality or experience brands are shared by their delighted customers.

Marketing channels such as Instagram, Facebook, Google AdWords or even subway ads are great for getting that initial awareness of a product or a brand, but as a company scales their marketing, their cost per acquisition will continue to go up. Unless a brand can find a way for their product to be shared freely or cheaply, their margins will disappear, and their growth will too.