What is Brand Architecture
Brand architecture is how a company determines the structure and names of its brands, and also what the relationship is between them. In other words, it is the logical and strategic structure of an organization’s product portfolio.
Alina Wheeler translates this very well and in a simple manner, in her book Designing Brand Identity:
“Brand architecture refers to the hierarchy of brands within a single company. It is the interrelationship of the parent company, subsidiary companies, products, and services, and should mirror the marketing strategy. It is important to bring consistency, visual and verbal order, thought, and intention to disparate elements to help a company grow and market more effectively.”
Brand Architecture is based on two fundamental pillars:
- Portfolio Synergy: the exchange of strength and consistent expansion of the brands.
- Portfolio Layout: the criteria to organize the company’s brand portfolio – name and design – to obtain the best performance from each one of them and achieve the constant strengthening of the system.
A well-thought-out brand architecture, designed according to the objectives of each business, will be a fundamental part of its success.
Types of Brand Architecture
There is no single model that fits all businesses.
To know which structure is best, it is necessary to think ahead, regarding the overall concepts that will be worked with future products and services.
The three principles of brand architecture must also be met by the chosen model.
Clarity: the concept and the objective of the architecture model must be clear to the market and to the associates so that it can be easily understood even if it is not explained.
Synergy: the chosen structure must allow the main brand to exchange values, such as trust, with the other products and services.
Leverage: the company must focus on a brand architecture model that paves the way for the coming years, making room for potential new products and industries, while keeping an eye on the company’s goals.
1) Branded House
The monolithic brand architecture model is characterized by the use of the same name and visual identity across all products and services. The idea is to leverage customer loyalty to the main brand when offering new products or services, so marketing costs and brand awareness are optimized.
General Electric uses this concept and it is clear to its consumers that all its products will follow the same quality standards. The downside is that if there is a negative repercussion for one brand, it will affect all.
Another disadvantage is that if the categories become too broad, it can also be difficult to have a clear sense of what the company stands for. In addition, new acquisitions will also have to undergo rebranding in order not to lose their equity.
2) Sub-brands
The branding strategies of the sub-brands also use the parent brand as the main frame of reference, but they carry a certain degree of autonomy by adding new elements or different associations.
There are similarities with the umbrella brand, which stands above the others. Let’s take Apple as an example. The brand has a careful naming strategy, that sometimes differs from the master brand, but keeps the trademark amongst the offers: iPhone, iPad, iTunes, and so on.
The fact that it also has just one logo, one color palette and one single layout style, makes the consumer feel right away that all the products and services are connected and will deliver the same aspects of design and technology.
This type of architecture allows investments in communication to be used, even partially, among the sub-brands. After all, the popularity of the parent brand can be very helpful in the launch and reputation of new products.
3) Endorsed Brands
In this architecture model the sub-brands of a company are connected through an endorsement, which means that the public knows that they belong to a single corporation. This communication can be visual or verbal.
Having a linked name to the parent brand is a great example of endorsement. Nestlé does that with Nespresso and Nescafé, and McDonalds with Big Mac, McNuggets, Egg McMuffin and so on.
This structure increases the flexibility for having different brands that don’t necessarily have the same brand identity as the parent brand, but also limits the synergy. If you have different audiences that don’t share the same values, this can be a good option.
4) House of Brands
The independent brands model, features a collection of distinct brands and their corporate brand is important primarily to the investor community.
Sometimes products within the independent brand architecture can present the corporate brand identity on their packaging, through a small logo. Some brands choose not to disclose the relationship, due to specific pricing strategies, perceived quality or target audiences.
Good examples of House of Brands models are usually large conglomerates such as P&G, Unilever, Coca-Cola, LMHV, among others.
This type of brand architecture provides more autonomy for the brands, greater diversification of the company markets, and investment opportunities. On the downside, it is more expensive to create and market new sub-brands, since they don’t have the endorsement and awareness of the parent brand.
5) Hybrid Model
This is a very common model, since most companies start out as just one brand and, as the company grows, they tend to create different brands that don’t fit all under the same umbrella.
The hybrid model is a mix of all of the above. Some brands can be sub-brands, while others can remain completely separated from the parent brand.
Google is a really good example of a hybrid model. They have a monolithic architecture for some of their products and services (Google Drive, Google Pay, and so on), but they have created or acquired independent brands such as Android and YouTube.
Rebranding YouTube wouldn’t make sense from a marketing perspective, can you imagine?
So, above that, they created a holding company – Alphabet.
With a good strategy for a Hybrid Brand Architecture you can get the best of both worlds, the only downside is that if you don’t keep track of all the different brands things can get confusing.
Benefits of Having a Brand Architecture
Clarify your brand positioning
Nothing increases the effectiveness of your brand positioning like clarity. Clearly articulating the message of your brand and sub-brands will eliminate any noise in communicating with potential customers.
Significantly reduce marketing costs
When brands and sub-brands are architected in a logical and intuitive way, your marketing efforts are exponentially more efficient. With cross-promotion opportunities between sub-brands, marketing is also more effective.
Increase flexibility for future expansion
By establishing an intuitive brand architecture, you set the stage for easily adding products or services as your brand grows. Your brand becomes a modular entity ready for the addition of new sub-brands.
Strengthen trust
A brand with well-defined brand architecture is a brand that is thinking about future growth. And forward-thinking brands are a reassuring sign for investors and employees.
Build and protect brand equity
The result of all the above benefits is the most valuable asset for any company: brand equity. Growing your brand equity gives you compounding returns as an industry authority and market valuation grow with it.
The Importance of Brand Architecture in Web3
A strong and significant brand is not built overnight. Building a consistent brand to impact the web3 market requires a lot of work.
The need for brand architecture is not limited to big corporations. Any growing institution needs to evaluate what brand architecture strategy will support future growth.
Yuga Labs is a great example of how brand architecture is already being applied within web3. The brand uses a Hybrid model, as we can see below.
The first three brands (BAYC, MAYC and BAKC) follow an endorsed model, having elements in common that connect the three projects visually. The Otherside brand follows the same color palette and style, but it differs from the other three, as it is their metaverse platform and not a PFP project.
On March 11, 2022, Yuga Labs expanded its NFT ecosystem further by acquiring CryptoPunks and MeeBits from Larva Labs, hence, they follow different brand guidelines that are easily distinguishable from the parent brand.
TL;DR
- Brand architecture is how a company organizes its brands portfolio and it can be divided into 5 types: branded house, sub-brands, endorsed brands, house of brands and a hybrid model.
- The branded house follows the same identity for all the company’s brands.
- The sub-brands use the parent brand as their main reference and create all the other brands following the same guidelines.
- The endorsed brands will have some kind of similarity (visual or textual) with the parent brand, but it won’t be as obvious as a sub-brand.
- A house of brands will not have a correlation between the brands.
- The hybrid model is a mix between two or more brand architecture types within the same hierarchy.
- The benefits of having a brand architecture go from clarifying the brand positioning, reducing marketing costs, generating trust, and much more. It is a very important step for expanding brands to generate brand equity.
- Brand architecture is also a topic that web3 brands should have in mind as they expand their portfolios. Yuga Labs is a good example of how this applies.
Deciding on the right structure for your brand requires extensive research and a deep understanding of your position, offerings, and strategy. If you have an extensive portfolio, or if you’re thinking about expanding your business, keep this in mind and start your brand architecture as soon as possible.
