Connect with us

Advertising

The Psychology Behind Logo and Color Choice

Published

on

Some professionals scoff at the importance of branding in business.

For many investors and analysts, this area of marketing seems fluffy and intangible, which makes it very hard to measure any potential benefits. While it’s true that quantifying intangibles is not always easy or accurate, it doesn’t mean that branding has no value to begin with.

In this way, branding may be comparable to the concept of “leadership” in sports. Athletes like Mark Messier, Michael Jordan, Ray Lewis, Mia Hamm, and Steve Yzerman weren’t just good players from a technical perspective, but they also had intangible qualities that elevated the performances of their respective teams. While it is hard to measure work ethic, passion, leadership, drive, and loyalty, or how these qualities rub off on teammates, it’s still clear to many coaches and managers that intangibles help win championships.

Like leadership, we know good branding when we see it, even though it can be tough to quantify. Coca-Cola is recognizable and nostalgic, while the Starbucks name may be the difference in choosing their cafe over an average-looking coffee shop in an unfamiliar neighborhood.

The Psychology Behind Logo and Color Choice

Logo and color choice are two of the most important parts of creating a quality brand. Today we have two infographics from The Logo Company. One shows the five major forms of logos, while the other dives into the meaning behind color choices.

We’ll add some commentary on the implications of logo and color choice in of the areas below.

Five logo styles

Companies cannot control the actual emotional responses to their brand on a personal level, but they can do their best to control shape, style, and color to at least guide these interpretations.

In fact, our brains are hardwired to learn and memorize new shapes, so the way a logo is presented can have a big impact on its effectiveness. The five major types of logo forms – brand marks, word marks, letter marks, combo marks, or emblems – are a way to control shape and identity.

Word marks, for example, have the name of the company in the logo itself without any imagery. This helps achieve brand recognition, while the lack of accompanying graphics may convey a sense of sophistication to consumers.

Using just initials in a letter mark can show even more sophistication. Leading luxury consumer brands such as Louis Vuitton or Chanel have used this with much success.

On the opposite end of the spectrum, some companies use just a brand mark to convey a sense of universality. Even though “Shell”, “Apple”, and “Nike” are not spelled out in name, their famous icons are known throughout the world. The Nike swoosh conveys movement, while the World Wildlife Fund can tell a powerful story just by using the famous panda in its brand mark.

Target is another instantly recognizable brand mark. The simplicity and circular shape are key elements to the design, but the bright red color also plays a role. Here’s a guide to how color can evoke different emotions in consumers:

Color Emotion Guide

One step further, here is another version with a little more nuance, from Web Designer Depot.

Color Meaning Table

Of course, colors can and do get interpreted in different ways. However, they can also have the power to represent broad ideas for cultural or evolutionary reasons.

In a previous post on the psychology of color, we dive into this in more depth. For example, it explains why the color red stimulates appetite, or why blue brings a sense of productivity and efficiency.

Continue Reading
Comments

Advertising

How the Tech Giants Make Their Billions

Collectively, the Big Five tech giants combine for revenues of $802 billion, which is bigger than Saudi Arabia’s economy. Here’s how it breaks down.

Published

on

How the Tech Giants Make Their Billions

At a glance, it may seem like the world’s biggest technology companies have a lot in common.

For starters, all five of the Big Tech companies (Amazon, Apple, Facebook, Microsoft, and Alphabet) have emerged as some of the most valuable publicly-traded companies in the world, with founders such as Jeff Bezos or Bill Gates sitting atop the global billionaire list.

These tech giants also have a consumer-facing aspect to their business that is front and center. With billions of people using their platforms globally, these companies leverage user data to tighten their grip even more on market share. At the same time, this data is a double-edged sword, as these same companies often find themselves in the crosshairs for mishandling personal information.

Finally, all of these companies have a similar origin story: they were founded or incubated on the fertile digital grounds of the West Coast. The company that has the weakest claim to such origins would be Facebook, but even it has been based in Silicon Valley since June 2004.

Sizing Up the Tech Giants

For all of their commonalities, it seems that there is less of a mold for how these tech giants end up generating cashflow.

But before we get to how Big Tech makes its money, let’s start by looking at the financials at a higher level. The following data comes from the 2018 10-K reports filed last year.

CompanyRevenue (2018)Net Income (2018)Margin
Combined$801.5 billion$139.0 billion17.3%
Apple$265.6 billion$59.5 billion22.4%
Amazon$232.9 billion$10.1 billion4.3%
Alphabet$136.8 billion$30.7 billion22.4%
Microsoft$110.4 billion$16.6 billion15.0%
Facebook$55.8 billion$22.1 billion39.6%

Together, the Big Five tech giants combined for just over $800 billion of revenue in 2018, which would be among the world’s 20 largest countries in terms of GDP. More precisely, they would just edge out Saudi Arabia ($684 billion GDP) in terms of size.

Meanwhile, they generated a total of $139 billion of net income for their shareholders, good for a 17.3% profit margin.

How Big Tech Makes Money

Let’s dig deeper, and see the differences in how these companies generate their revenue.

You are the Customer

In the broadest sense, three of the tech giants make money in the same way: you pay them money, and they give you a product or service.

Apple (Revenue in 2018: $265.6 billion)

  • Apple generates a staggering 62.8% of its revenue from the iPhone
  • The iPad and Mac are good for 7.1% and 9.6% of revenues, respectively
  • All other products and services – including Apple TV, Apple Watch, Beats products, Apple Pay, AppleCare, etc. – combine to just 20.6% of revenues

Amazon (Revenue in 2018: $232.9 billion)

  • Amazon gets the most from its online stores (52.8%) as well as third-party seller services (18.4%)
  • Amazon’s fastest-growing segment is offline sales in physical stores
  • Offline sales generate $17.2 billion in current revenue, growing 197% year-over-year
  • Amazon Web Services (AWS) is well-known for being Amazon’s most profitable segment, and it counts for 11.0% of revenue
  • Amazon’s “Other” segment is also rising fast – it mainly includes ad sales

Microsoft (Revenue in 2018: $110.4 billion)

  • Microsoft has the most diversified revenue of any of the tech giants
  • This is part of the reason it currently has the largest market capitalization ($901 billion) of the Big Five
  • Microsoft has eight different segments that generate ~5% or more of revenue
  • The biggest three are “Office products and cloud services” (25.7%), “Server products and cloud services” (23.7%), and Windows (17.7%)

The remaining tech giants charge you nothing as a consumer, so how are they worth so much?

You are the Product

Both Alphabet and Facebook also generate billions of dollars of revenue, but they make this money from advertising. Their platforms allow advertisers to target you at scale with incredible precision, which is why they dominate the online ad industry.

Here’s how their revenues break down:

Alphabet (Revenue in 2018: $136.8 billion)

  • Despite having a wider umbrella name, ad revenue (via Google, YouTube, Google Maps, Google Ads, etc.) still drives 85% of revenue for the company
  • Other Google products and services, like Google Play or the Google Pixel phone, help to generate 14.5% of total revenue
  • Other Bets count to 0.4% of revenue – these are Alphabet’s moonshot attempts to find the “next Google” for its shareholders

Facebook (Revenue in 2018: $55.8 billion)

  • Facebook generates almost all revenue (98.5%) from ads
  • Meanwhile, 1.5% comes from payments and other fees
  • Despite Facebook being a free service for users, the company generated more revenue per user than Netflix, which charges for its service
  • In 2018 Q4, for example, Facebook made $35 per user. Netflix made $30.

So while the tech giants may have many similarities, how they generate their billions can vary considerably.

Some are marketing products to you, while others are marketing you as the product.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Advertising

Animation: The Top 15 Global Brands (2000-2018)

This stunning animation shows a dramatic change in the world’s most valuable global brands. Watch tech companies like Apple shoot up the rankings in style.

Published

on

Animation: The Top 15 Global Brands (2000-2018)

Time travel back to the early-2000s, and a list of the world’s most respected brands might be surprising.

Tobacco company Marlboro is still one of the top 15 global brands with a value of $22 billion, while companies like Nokia and AT&T also help to round out the group.

Aside from Microsoft, the tech companies at the time were mostly focused on hardware and services. HP was considered a top global brand at the time, and even IBM was still making PCs until the year 2005.

The Platform Revolution

How times have changed.

In today’s animation from TheRankings, you can see how the list of the top 15 global brands has evolved over the last two decades or so.

The visible shift: as soon as Google hits the rankings in 2008 (2:21 in video), it becomes clear that the money is on the software side – particularly in coding software that ends up as a dominant consumer platform.

Shortly after, companies like Apple, Facebook, and Amazon enter the fold, quickly climbing to the top. Here are the final numbers for 2018 in terms of brand value, with data coming from Interbrand:

Top 15 Global Brands in 2018

The Problem with Hardware

What’s the difference between the big hardware firms of old, and the successful ones that dot the list today?

From a business perspective, hardware companies need to have a bold and accurate vision of the future, constantly taking innovative strides to beat competitors to that vision. If they can only make incremental improvements, the reality is that their competitors can enter the fold to create cheaper, similar hardware.

Samsung, which finished 2018 as the world’s sixth most valued brand, is a good example of this in practice. The company has had the top-selling smartphone for every year between 2012-2018 – an impressive feat in staying on top of consumer trends and technology.

Despite Samsung’s success, it remains stuck behind four other tech brands on the list – all companies almost exclusively focused on platforms: Microsoft, Amazon, Google, and Apple.

Why are Platforms so Dominant?

Constant innovation is a good barrier to entry if you can keep doing it – but the platforms have an even more bulletproof strategy: being everywhere at once.

Facebook uses the powerful network effect from billions of people as a moat, and then it buys up-and-comers (Instagram, WhatsApp) to cover even more ground. As a result, competing with Facebook is a nightmare – even if you could theoretically acquire new users at $1 per user at a ridiculous scale, it would require a marketing investment of billions of dollars to make inroads on the company’s audience.

Microsoft owns various platforms (Windows, Xbox, LinkedIn, Azure, etc.) that help insulate from competition, while Google’s strategy is to be everywhere you need to search, even if it’s in your living room.

Because platforms have massive scale and are ubiquitous with consumers, it gives them the ultimate pricing power. In turn, at least so far, they have been able to establish the world’s most powerful consumer brands.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Catch the Next Investing Wave

Subscribe

Join the 100,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular