Zeus Jones is a new agency in Minneapolis started by a bunch of ex-Fallon guys including Adrian Ho.  Their blog is excellent, and Adrian is one of the primary authors.

From his entries, I’m seeing a pattern.

Only July 8th, Adrian wrote an entry entitled the Abstracted Economy.  In it, he made note of the fact we “have transitioned from a world of things to a world of services.”

Service now makes up 90% of the US economy. 

To put it another way - doing things for people, not selling (or telling) things to people is the vast majority of enterprise in the world’s largest economy. 

Then, on August 21st, he posted this data from Financial Times.  It shows the increasing role of brand as a percentage of corporate value:

Although I’m sure this data has Baudrillard and McLuhan smiling in their respective graves, Adrian noted “there are some signs that the reverse [of this trend towards brands playing a dominant role in corporate value] appears to be happening.”

Increasingly creating brand value is not about occupying mindspace or deepening symbolic value, instead it is about doing tangible things that create value. I found this latest story about Etsy (via: Influxideas) quite telling in that regard. [Etsy] clearly saw as the logical next step for the development of its business the need for an old-fashioned retail experience. To build greater extrinsic value in their brand they have chosen to build intrinsic value. Further, they have chosen to take a step that makes little business sense from one perspective; they have taken a fully virtual business and tied it to the world of atoms. I think there is something very important happening here because our models of branding are based on the notion that a brand exists in the minds of customers. That they are entirely symbolic. Those of us with classic brand training are ingrained with the notion that brands exist entirely divorced from any physical or tangible manifestation.It is ironic that as our lives and worlds become increasingly virtual, some of the concepts that were entirely virtual are migrating towards the physical.

Amen, brother.  I like your thinking, and I’m seeing it everywhere.  Just recently one of my favorite business models, Threadless, announced they were opening a store for the very same reaons as Etsy. 

But I digress.

Stepping back for a minute, what is the pattern?  In my opinion, the shift from a tangible- to service-based economy (from industrialism to post-industrialism) is directly tied to society’s changing views on brand value. In fact, if you look back at the three primary eras of recorded civilization - agriculturalism, industrialism, and post-industrialism - you will note that there is a theory of brand value synonymous with each.  Therefore, in the age of post-industrialism (e.g., service-based economy) we need a new theory of brand value: 

Argriculturalism = Intrinsic Brand Value

The Intrinsic Theory of Value follows the history of a theory that began with Aristotle. It holds that “the good” or value is inherent in certain things regardless of their context and consequences, and regardless of any benefit or injury they may cause to the person involved. In other words, value is in the object and the object alone. The person who values such an object has no value inherently; thus, value is impersonal. The quintessential example is the intrinsic value placed on a pocket watch - the value is in the artistry and sweat equity of the craftsman, not the man who wears it on his wrist.

Industrialism = Subjective Brand Value

The Subjective Theory of Value follows how the theory of value swung to the opposite pole with the dawn of industrialization. Formalized by Carl Mengerand the Austrian School of economics, the subjective theory of value holds that, to possess value, an object must be useful in satisfying wants of an individual and scarce in terms of availability. In other words, value is in the eye of the beholder, is personal, and is a human characteristic. Therefore, brand value is based on customer beliefs and those beliefs must be measured and reinforced to ensure a brand remains relevant and healthy. Using the watch analogy, one individual is a Tag-man and another a Rolex-man.  Both Tag and Rolex rely on a specific audience with specific desires as these end-users hold the value that can ultimately be applied to their brands.

Post-Industrialism = Objective Brand Value

The Objective Theory of Value was first posed by Ayn Rand and Alan Greenspan in the 1960s. They rejected the intrinsic and subjective theories of value on the grounds that both polarize and paralyze man’s judgment (e.g., the evaluation is muddy at best because value is an attribute of only one party). They saw the “objective” theory of value – a value theory separate from their controversial theory of objectivism - as one where value is seen as the relationship between both parties rather than an attribute of one. Unfortunately, their theory was tabled as it was ahead of its time. Companies would continue to use the subjective theory of value (what Adrian referred to as extrinsic value) well into the 21^st century, masking purchase decisions behind a veil of product personality and emotional connections that were/are shallow at best.

However, at the dawn of post-industrialization, a new form of customer has emerged that is rejecting the subjective and intrinsic forms of value. They evaluate their purchases through objective lenses (this is where Adrian was headed when he saw the merger of intrinsic and extrinsic values). For this new audience, one that marketing fails to yet fully understand, the watch and the wearer are irrelevant. Instead, it is the relationship between the two, promoted by the service of companies on one end and consumer action (co-creation, consumer-generated media) on the other. 

This new audience, using a new method of evaluation, wants an honest and open relationship with the company (what GSD&M’s Idea City calls “Purpose” and what Zeus Jones calls “Marketing as a Service”). Companies must incorporate the objective theory of value in their marketing if they hope to sell their wares in the post-industrial/information/Web 2.0 age. 

If you’d like to read more on how the Objective Theory of Value will impact advertising (and planning) you can check out this chapter from my book.  Its a bit dated as I wrote it a little over a year ago, but I think it still holds water:

chapter-2.pdf