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Why Brand Capital is Part of National Security: Reibstein, Aharoni, & Sable

Just as brands play a critical role in the success of companies, they are also very important for nations. A change in a country’s brand image can have a deep impact on its economy. Ambassador Ido Aharoni, the Israeli consul general in New York City, is responsible for building and nurturing Israel’s brand. Aharoni has earlier served in the Israel Defense Forces and was also the head of Israel’s brand management team in Jerusalem. He believes that it is crucial for nations to be proactive in building their brand identity. A country’s brand capital, Aharoni says, is part of its national security.

Aharoni discussed these issues and more in a conversation with David Reibstein, a Wharton professor of marketing; David Sable, global CEO of Young & Rubicam; and Bruce Brownstein, a senior fellow at the Wharton SEI Center. The interview was part of the “Measured Thoughts” show on Wharton Business Radio on SiriusXM Channel 111.

David Reibstein: Why is it necessary for someone to be in charge of a brand for a nation or for a city, as you were doing at Jerusalem? To a very large degree, you’re in charge of the Israeli brand. Is that a fair characterization?

Ido Aharoni: An open, vibrant, dynamic place like Israel cannot really have one person in charge of the whole brand. What you can do is try and help the management of the various dimensions, the various expressions and the performance of the brand. The whole idea of engaging in country positioning or country branding emerged from the days after 9/11 when we understood that something dramatic had happened to the positioning of Israel in the world. We started a process of soul searching and we discovered something astonishing. We discovered that the state of Israel had never seriously or systematically studied its own performance as a brand independently.

Bruce Brownstein: Is it common for a nation to study its brand?

Aharoni: No. It’s very common for nations not to study their brand. They rely on studies performed by others, not realizing that whether it’s a think tank or an institution or a company or an organization, they always have an agenda. You have to perform your own independent research in order to understand your positioning in the world.

Reibstein: Is that part of your responsibilities today?

Aharoni: Yes, absolutely. David Sable [global CEO of Young and Rubicam], introduced me to one of the research mechanisms [for studying nation branding]. We added Israel to that research mechanism back in 2003 and for the first time in the history of the state of Israel we received an accurate depiction of where we were. It was an eye-opening experience because it was very different from what we thought.

Reibstein: Most of the time, when you get results that do not conform with what you thought, you reject the results. Was that the natural inclination [in your case]?

Aharoni: Probably for some people that’s the case. But I was trained by social scientists. I studied sociology and social anthropology and I studied film and television and critical thinking. I was taught that the two most important words in science are “so what?” We looked at the research, we looked at the findings that contradicted everything that we knew up until that point, and we said, let’s try and look at the problem differently. Let’s try to tackle this issue using tools that come from a different discipline. In this case, tools that come from psychology, social psychology, marketing and social research and not necessarily from political science and international relations.

Reibstein: What’s Israel’s brand [image] around the world? I suspect it’s very different depending on what part of the world we’re talking about.

Aharoni: Exactly. We started studying brand Israel in the U.S. and in Europe and we discovered that there’s a tremendous gap between perception and reality. Twelve or 13 years ago, brand Israel was universally, predominantly associated with conflict, with tension, with bloodshed, with confrontation. [There was] very little knowledge or awareness of other dimensions. We decided to do two things. First, identify the reasons for that. Second, develop an effective strategy to close the gap. We realized that this would not happen overnight. But we also realized that you have to start at some point. So we included Israel in the database in 2003. Implementation of the strategy started sporadically in 2004- 2005. In 2008, we engaged in a more systematic effort. We brought on board other governmental agencies, other organizations and we started to see the needle moving by about 2009-2010.

Reibstein: What do you think the image of Israel is in the United States?

Aharoni: The most prevailing conversation about Israel is still in the context of its geo-political hardships. It’s very difficult to run away from it. Not that we try to run away; we don’t think that’s the way to go. We believe that the conflict — we call it the unhappy circumstances of our region — is part of who we are. It’s part of our resume. Whether we like it or not, this is who we are. But I believe that today you see more and more evidence of the wide recognition Israel is gaining as a bastion of creativity, whether it’s in the field of high tech or even Hollywood. Israel is the third largest provider of content to Hollywood today. It’s hard for people to believe but this is one of the manifestations of Israeli creativity.

“If you in the field of nation branding do not take a proactive approach and define your own brand identity to the world, your competition will do it for you.”–Ido Aharoni

Reibstein: My belief is that this wide disparity is there even within the United States. Globally, it’d be even greater. Within the United States, there are some people, most of them Jews, who have a natural, positive affinity to Israel. There are others, maybe in high tech and Hollywood, who have a positive association with the creativity and innovation coming out of there. But then there are … other groups that have a negativity towards Israel. And there’s a … group that just doesn’t know anything about Israel. They have no idea that technology and Hollywood come from there….

Aharoni: Our research shows that 75% of the people have no position on the situation in the Middle East. Therefore, this is our room to grow. We don’t think it’s an obstacle. We see it as a great opportunity. A couple of years ago, we embarked on a study that looked at 14 different nations, 14 different societies and 14 different cultures that are important for Israel. We tested 11 different stories among them. We wanted to know which of the 11 stories that we told them about Israel would be viewed by them not only as creditable and reliable, but also as authentic and attractive. It was not an easy task. The one story that emerged universally, from Japan through China, all the way to Russia, Poland, Canada, Mexico, the United States, is the story of Israel as a place of creativity and inspiration. So we decided to embrace this as the strategy. We are now working to highlight Israel’s creative and inspirational dimensions.

Brownstein: Why do you care what the image of Israel is? What difference does it make to Israel what people in other parts of the world think about it?

Aharoni: The simple, short answer to your question is — because your brand image, your brand capital, is part and parcel of your national security. Twitter People in Israel were led to believe that national security begins and ends with military power. But we live in a different world today. National security has everything to do with the strength of your economy, the strength of your society, the strength of your tourism industry. Tourism is a huge agent of change. Every person who has a positive experience in Israel becomes a brand ambassador.

It was an uphill battle within Israel to convince people of the importance of this.

Thank God for people like [actor] Sacha Baron Cohen and Borat [the lead character in the 2006 British-American mockumentary Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan] who taught us a very important lesson about the importance of country image as part of its national security. What happened with Borat and Kazakhstan was a fascinating case study for us. It was an eye opener.

Reibstein: I want to hear that story. That was a negative representation [of Kazakhstan] and I suspect people in Kazakhstan were pretty negative about how he portrayed them.

Aharoni: Well, maybe [they were] at first. I don’t know how they feel nowadays. But I can tell you that Sacha Baron Cohen did something very interesting that is indirectly helping us understand the importance of brand capital in the context of nation branding. He almost single handedly created a new identity for the nation of Kazakhstan through the fictitious character Borat, the journalist who comes to visit America. And he taught us a very important lesson: If you in the field of nation branding do not take a proactive approach and define your own brand identity to the world, your competition will do it for you. There is no vacuum.

Unfortunately, Israel for many years did not take the proactive approach. We wanted to win a debate with our adversaries and our detractors and we engaged whole heartedly in this debate. We forgot that no brand can thrive on crisis management alone. You can’t win marketing campaigns by talking about your problems. That’s what we were doing. So, we [took] the help of people like David Sable and others. We said it’s time to go back to the basics of marketing. We need to talk about the advantages of the product, not its problems. We introduced a whole different approach to Israeli diplomacy by marrying it with marketing and branding.

Reibstein: What do you measure to see how well you’re doing?

Aharoni: We have several mechanisms. The first, of course, is research. We have the country brand index on which Israel is performing better every year. We have the United Nations Human Development Index. We have the BAV — Brand Asset Valuator — maintained by WPP and Young & Rubicam, where Israel is being monitored since 2003. Other sub-brands like Jerusalem and Tel Aviv are also monitored separately.

But the most important thing is the numbers on the ground. The most important number, of course, is in the field of tourism. Tourism tells you a lot about the strength of the brand. Another indication is media coverage of different aspects of Israeli life.

And then, of course, we look at the foreign direct investment figures. How many dollars are we able to attract as a nation? You also see more and more Israeli companies doing business across the world. That is a sign of strength. We have over 400 Israeli technology companies operating in New York alone. Their contribution to the economy of New York is huge. The more interaction with the world, the stronger your brand is.

Reibstein: But these things coming out of Israel don’t have a strong Israeli branding. Everybody knows that Samsung is from Korea, Toyota is from Japan. You are saying there is all this content and technology coming out of Israel and we don’t know about it?

Aharoni: Absolutely. Historically, Israel has several sub-brands that emerged over the years. All of them were because of the dominance of the geo-politics in our brand personality and had something to do with security. The Israel Defense Forces is perhaps the strongest brand associated with Israel in America, especially among members of the Jewish community. Mossad [Israeli intelligence agency] is a very powerful brand worldwide. Then you have the Uzi submachine gun — that’s an Israeli brand.

The challenge today — we hope to develop a sub-brand that will have a wide recognition worldwide — is perhaps at the municipal level. I’m referring to Tel Aviv, which is making huge progress as a leading beacon sub-brand, as we call it in our professional language. And Jerusalem. Jerusalem has been there for ages but it’s a very powerful brand, perhaps the number one brand that we have today.

Reibstein: You have a challenge in terms of media coverage. The only thing we see in the press is hostility in the Middle East.

“We introduced a whole different approach to Israeli diplomacy by marrying it with marketing and branding.”–Ido Aharoni

Aharoni: There are two ways to deal with it. The first is to improve the way you manage crisis. But, at the same time, you have to be able to implement a long term strategy that corresponds well with the crisis, but does not necessarily deal directly with it. Crisis gives you an opportunity to highlight other facets of your brand. That’s one of the benefits of what Borat did to Kazakhstan; he brought them to the level of public awareness for free.

This is something that other brands invest billions on. So that’s where we are. We are at the center of attention. It is a challenge but it is also a great opportunity to push forward the kind of conversation that benefits the brand.

Reibstein: Unfortunately, one of the things in the news more recently has been Prime Minister Benjamin Netanyahu’s speech to the Congress and President Barack Obama’s reaction to it. [In his address to the U.S. Congress in March, Netanyahu said that the U.S. was negotiating a bad deal with Iran and this could trigger a “nuclear nightmare”.] It looks like there’s a little bit of a rift between Israel and the United States. How have you tried dealing with that? Also, do you measure it?

Aharoni: I try to deal with that just like any other diplomat. It’s not part of the marketing effort. This is strictly a policy issue. What you have here is a friendly disagreement between two allies. It’s OK to have disagreements among friends.

Reibstein: Well, this is not a program on politics but I am concerned about the impact it has on one’s brand. Let’s talk about how you manage the brand. You have a budget for trying to help the Israeli image, right?

Aharoni: Yes. Very modest.

Reibstein: If you had your budget doubled, what would you spend on?

Aharoni: The most important thing in my view is to bring people of influence, members of the media, influencers in social networks, to visit Israel and see for themselves what the brand is all about. There’s nothing like the experiential dimension of brand building. We are not afraid of criticism because we believe in our brand. We believe that we have a very powerful brand and that it’s OK not to agree with Israeli policies. Most Israelis don’t agree, you know? Israelis are very critical of Israel.

Reibstein: Let’s get a different perspective from David Sable, global CEO of Young & Rubicam. Could you explain how you help countries understand their national brand?

David Sable: Sure. Nation branding has become quite the business these days. But let me go back some 14 years. I don’t think the term nation branding had actually been coined yet. The Ambassador and I talked about Israel as a brand: Could one look at it as a brand and how might it look?

We took our BAV, a 20-year-old proprietary study created by Young & Rubicam, which really changed the way the industry looks at brands. Up until the time, we fielded the Brand Asset Valuator, people would line up brands of similar products, [like various brands of sodas, for instance] and ask: “Which do you like better?” [With the BAV] we said, what if we just assumed that every brand has a set of characteristics that could be looked at the same way as another brand, whether it was a country, a can of tuna fish, soda pop or a service like AmEx or whatever. We asked consumers about these brands in a non-referential way. We asked the same questions [about different brands] so we could create a huge database that would revolve around attributes.

Ido asked us if we had any countries in the database. And we did. We had looked at the U.S, France, Japan, the U.K. and some other countries. We made a presentation for him. We looked at pre 9/11 and post 9/11 and we looked at Japan, the U.K. and France from the U.S. point of view. What was really interesting was that you could see how after 9/11, the brand power of France had dropped. But we didn’t just say that the brand power of France had dropped. We layered in the information on imports and exports and the huge drop in commerce between the U.S. and France during the same period as the brand drop.

Reibstein: That’s precisely what I’m interested in looking at — how does a change in your brand affect some of the economic factors?

Sable: It affects economic factors, it affects tourism. That’s a whole separate study. We’ll have this study out in the next few months. But what was really important is we came out of that presentation [with Aharoni] and said, let’s put Israel in [our database]. Since then, we have been running this study for the Ambassador, for the foreign ministry and they’ve been receiving updates on a regular basis over the past 14 years.

Reibstein: Ido was telling us about his role within Israel and how he’s trying to help develop the brand. I have heard him define himself as the chief marketing officer of Israel. Do other nations have such roles and do they invest in building their brand?

Sable: Absolutely. Singapore is a great example. It might be one of the best examples in the world. But I think just about every country today takes the time to think about their brand, to think about how their actions affect their imports, immigration, price of housing, tourism, business, business visits. If you watch any set of advertisements — online, on television, wherever — just look at the stuff you see from abroad. Or even look at [advertisements by] American cities. Michigan, for example, is running a whole series on how Ann Arbor is a great place, how Michigan is a place of ideas.

Reibstein: We’ve seen the “I Love New York” campaign for a long, long time. Or, “What happens in Vegas stays in Vegas.”

“Crisis gives you an opportunity to highlight other facets of your brand.”–Ido Aharoni

Sable: Yes, absolutely. Though some of those are strictly about tourism, others are about tourism and business. Some are about both. But it is a very, very powerful tool. I think that countries, cities, regions, states that think about their brand and work on their brand, do better. They do better in the business environment, tourism environment, in the general overall environment.

Reibstein: Hillary Clinton recently announced she’s running for President. We have also recently seen an election that took place within Israel. How does the government leader play a role in the country’s branding?

Aharoni: The political leadership of any place, whether it’s a city or a country, plays a key role to the extent that sometimes they’re perceived as the embodiment of their own brand. But at the same time, because every politician is an elected official and the political leadership by definition has opposition, the downside of this embrace may be a criticism from the opposition. If you look historically, that’s what happened in England with Cool Britannia. It happened in Nigeria. It happened in other places. One of the most important lessons that I have learnt is that the government has to take a step back and let the people own the process. Let partnerships drive the process forward. Without forming partnerships and coalitions you won’t be able to do anything. And the partnerships have to involve the private sector, the NGOs, the parties, the institutions.

Sable: By definition, a brand is the sum of all the positives and negatives that people perceive it to be. And so, the brand from a certain point of view has to be bigger than any one crisis. We go back and we see Tylenol, we see Coke, we see BP, we see brands that went through terrible, terrible crises. Some have survived because the power of the brand was very strong. So, yes, a political leader has an effect. There’s no question. But if the power of the brand is big enough, it transcends that period of time. It transcends that leader.

Reibstein: So the power of the brand is greater than the impact of the leader?

Sable: Yes, it has to be.

Reibstein: Let me try and test that. I want to know about brand U.S. within Israel and what has been the impact of having Barack Obama as our president?

Aharoni: First of all, I would say that Israelis feel that from a cultural perspective they are part of the United States. So, your president is our president by definition, no matter where they come from or which party they belong to. Because we have no other president. As my father used to say, America is our insurance policy. That’s the way the average Israeli looks at it. We see ourselves as an outpost of your values in our region.

But Israelis do make a distinction between the politics of a leader and what the nation represents. The United States unquestionably is the strongest country brand in the world. There’s no doubt in my mind. And Israelis feel that way.

Reibstein: As you look at other nations and what they’ve done to impact their brands, what have you seen that you could learn from — either good or bad?

Aharoni: I would certainly use the example of Spain in the 1980s as a perfect example of a country that actually got it. Spain in the early 1980s was still battling the image of the Franco era. It was viewed as industrial, non-democratic, gray, not colorful. They decided to go with this terrific brand that relied on their natural assets, mostly the climate. They came up with the “Everything Under the Sun” concept that said we are a place of diversity, we are a place of inclusion, we are a place of fun. They invested heavily in improving the brand. We have such opportunities as well.

Reibstein: David, do you have any good examples that you could share?

Sable: Yes, I do. I mentioned Singapore before. I think that Singapore is a bit like Disneyland — an adult Disneyland. It has a kind of an aura to it. It can be a bit autocratic. And yet, it has this incredible [quality]. People who live there love it. It’s an amazing place of commerce, of industry, of thinking. As closed as it is on one hand, that’s how open it is. I think they’ve done an absolutely brilliant job.

Vietnam too has done a great job. They have done a brilliant job of transcending the past and looking into the future. When you go there you’re presented with the war, but it’s not in a mean spirited way. It’s just a way of saying, “Look, this is who we were. This has built our character.” You walk around and you see young people who are energized, who are excited. Business opportunities there are fabulous. Another great example as a city is Berlin. It has done an incredible job of re-inventing itself as a city not just of culture or of politics, but as a city of creativity, open thinking, incredible art and innovation. It has also merchandized itself very well around the world. A big part of it, by the way, is merchandised today by social media. Berlin has become a must-stop, a go- to-place for young people today.

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