Chal­lenger brands are Davids. They are not only small, but ambi­tious. And suc­cess­ful chal­lenger brands can rev­o­lu­tion­ize entire indus­tries. So what does it take to be a chal­lenger brand?

Speak­ers at ad:tech’s recent con­fer­ence in San Fran­cis­co dis­cussed what it takes to be a chal­lenger brand, as well as how think­ing like the ven­ture cap­i­tal­ists near­by can help mar­keters over­come fear, embrace fail­ure, and act more like chal­lenger brands.

Part I: Defining Challenger Brands

Accord­ing to Mark Bar­den, part­ner at brand con­sul­tan­cy eat­big­fish, a chal­lenger brand chal­lenges assump­tions and is on a spe­cif­ic mis­sion in a giv­en indus­try. Notable exam­ples include eye­wear brand War­by Park­er and rental site Airbnb.

The term “chal­lenger brand” comes from Barden’s busi­ness part­ner, Adam Mor­gan, who wrote the book, “Eat­ing the Big Fish.”

“We live in such tur­bu­lent times of mas­sive dis­rup­tion, soon­er or lat­er you will be cast in the role of a David to a Goliath,” Bar­den said.

What else do these so-called chal­lenger brands have in com­mon? And how does a brand become one?

Ambition

For chal­lenger brands, ambi­tion is much, much greater and more impor­tant than resources.

“Sim­ply being small is not enough,” Bar­den said. “You have to have ambi­tion and a will­ing­ness to close the gap.”

He points to mobile phone oper­a­tor T‑Mobile, which calls itself the “Uncar­ri­er” and has tack­led some of the ills of the cell phone indus­try “and leaves no uncer­tain terms of what it is try­ing to do,” Bar­den said.

Challenge

Brands must fig­ure out what they are chal­leng­ing and cre­ate a sto­ry that has ten­sion in its heart.

“It’s not always about who you are chal­leng­ing,” he said. “Some­times when you think about what you’re chal­leng­ing [you have to look at] what’s the big cul­tur­al mon­ster we can take on and by slay­ing that mon­ster will improve the for­tunes of those we serve?”

A good exam­ple of this is per­son­al care brand Dove, which Bar­den said has iden­ti­fied the beau­ty myth as the mon­ster it wants to slay with efforts like its #Beau­tyIs cam­paign.

Choice

Chal­lenger brands pro­vide new cri­te­ria of choice and change the way the world thinks about a giv­en indus­try.

Bar­den also points to the brand Method, which man­u­fac­tures nat­ur­al, non­tox­ic home prod­ucts, and is try­ing to intro­duce some­thing new into the soap cat­e­go­ry to change pur­chase cri­te­ria with char­ac­ter­is­tics like aes­thet­i­cal­ly pleas­ing pack­ag­ing.

“You can­not com­pete with the big fish by out­do­ing the big fish on their terms. You have to intro­duce some­thing new,” Bar­den said. “It’s not just always about want­i­ng to fight Goliath. Some­times it’s about chang­ing the rules and chal­leng­ing Goliath to a foot race or chess match – what­ev­er the big guy can­not do.”

Audi also changed the con­ver­sa­tion around pro­gres­sive lux­u­ry with its $120,000 RS7 mod­el and its more fuel-effi­cient tur­bo diesel tech­nol­o­gy. It also launched its A6 mod­el with mes­sag­ing about help­ing dri­vers bet­ter nav­i­gate on the crum­bling infra­struc­ture of America’s roads, Bar­den notes.

Vir­gin Amer­i­ca, too, asked what hap­pened to glam­or in the air­line indus­try.

“We’re treat­ed like self-load­ing freight,” Bar­den said. “But [Vir­gin Amer­i­ca asked], ‘What if we made it look like a night club?’”

Conviction

Chal­lenger brands need some­thing to believe in and that “what you’re doing is the right thing to do and the world needs this.”

In addi­tion, Bar­den said intel­li­gent naivete is often a real advan­tage to chal­lenger brand.

“It takes big ambi­tions to change the way the world feels about clean­ing and fly­ing,” he adds.

Part II: The Guardian’s Guide To Acting Like A Challenger Brand

While the Guardian is a 200-year-old brand in the U.K., it is only three years old in the U.S., so it is in a unique posi­tion as both an estab­lished and an upstart brand.

“We didn’t set out to be a chal­lenger brand in the U.S., we just came here and do what we do best,” said Eamonn Store, CEO of the Guardian North Amer­i­ca.

As such, Store offers four tips for act­ing like a chal­lenger brand:

1: Found your business on principles that are fundamental to you and that you really care about.

At the Guardian, this means fear­less inde­pen­dence in which staffers report to them­selves and hold each oth­er account­able.

“It’s open, par­tic­i­pa­to­ry, free and about inter­act­ing with the com­mu­ni­ty,” Store said. “There’s a huge amount of com­men­tary on the arti­cles we write about.”

2: Obsess about your obsessions.

“We don’t hire jour­nal­ists to do beats. You write about what­ev­er you’re obses­sive­ly pas­sion­ate about,” Store said.

In fact, he said NSA whistle­blow­er Edward Snow­den came to the Guardian with his sto­ry because “he knew we’re inde­pen­dent and we have fierce jour­nal­ists and he knows we care about pri­va­cy.”

3: Be true to yourself, not what you think others want you to be.

Accord­ing to Store, this trans­lates as val­ues over val­u­a­tion. He said the brand con­tin­ues to invest aggres­sive­ly in tal­ent and has a strong Mil­len­ni­al fol­low­ing and con­tin­ues to pro­vide more con­tent and depth to bring its audi­ence back and give it more rea­sons to return.

In addi­tion, Store said the Guardian doesn’t try to be every­thing to every­one.

“The U.S. is a mas­sive mar­ket with sig­nif­i­cant adver­tis­ing rev­enue. We don’t need to be everyone’s friend. We don’t need 100 mil­lion read­ers,” Store said. “We focus on find­ing clients that we want to go deep with and build endur­ing rela­tion­ships.”

4: Build a culture that underpins it all.

In the case of the Guardian, this means employ­ees sit as one team and work col­lab­o­ra­tive­ly and it recruits what Store calls the right tal­ent from the right sec­tors.

Per Store, the Guardian is chal­leng­ing com­pla­cen­cy in the U.S. by “[focus­ing] obses­sive­ly on read­er­ship.”

He points to lega­cy news brands in the U.S. “that are hold­ing on sto­ries because they are financed by adver­tis­ers and have bias around opin­ion.”

“Lega­cy news orga­ni­za­tions in the U.S. have become obsessed with their own celebri­ty,” Store said. “When I see the fights between Fox and NBC and mas­sive orga­ni­za­tions that are siloed, [I real­ize] we have that issue in the U.K. with 750 jour­nal­ists that have lost touch with the read­er­ship.”

But that’s not to say the Guardian doesn’t do native ads.

“The impor­tant thing about native adver­tis­ing [is you have to look at] why you’re doing it and what you’re try­ing to accom­plish,” Store said. “We don’t do it because we’re chas­ing a rev­enue stream. We don’t look at it that way.”

As such, the brand does native adver­tis­ing in “areas where we have a real pas­sion” like with ice cream brand Ben and Jerry’s and a cli­mate change cam­paign.

“When we talk about part­ners we want to work with, we sit down with the edi­to­r­i­al team and ask, ‘What clients/categories do you think fit with us?’” Store said. “Ben and Jerry’s wants to do inter­est­ing work, but it res­onates with us as a brand and with our read­er­ship.”

Part III: Marketing A Challenger Brand Like A Venture Capitalist

Per Julian Aldridge, vice pres­i­dent of brand evan­ge­lism and activism at Charles Schwab and Co., his brand is chal­leng­ing com­pla­cen­cy, as well as lethar­gy and defeatism.

Aldridge said his firm broke down bar­ri­ers upon its found­ing by enabling reg­u­lar con­sumers to invest in the stock mar­ket and it has since grown to $3 tril­lion in assets under man­age­ment.

And while fear often holds mar­keters like him­self back, Aldridge push­es the con­cept of what he calls “ven­ture mar­ket­ing,” in which he said he has tak­en the “VC atti­tude” of spread­ing lots of small bets and expect­ing most to fail, but then test­ing and learn­ing from those “invest­ments” and learn­ing from both his suc­cess­es and the fail­ures.

“You can leap up the suc­cess lad­der by fail­ing,” Aldridge said.

As a result, Aldridge said he has adapt­ed three mar­ket­ing lessons from the Sil­i­con Val­ley:

1. Lead from the front. Do things dif­fer­ent­ly and quick­ly. Set your brand up for quick learn­ing and fail­ure.
2. Cre­ate a method­ol­o­gy you real­ly believe in and that gives you agili­ty.
3. Cement an endur­ing ven­ture cul­ture that cel­e­brates fail­ures as much as suc­cess­es.

Fur­ther, Aldridge pro­vides three exam­ples from Schwab.

Venture Marketing Example #1

Aldridge said Schwab used a com­pa­ny called Score in an ini­tial cam­paign that cre­at­ed a con­nec­tion between the sac­ri­fices a bas­ket­ball play­er makes every day and the sac­ri­fices Schwab clients make to cre­ate a bet­ter future for them­selves.

Based on the suc­cess of that cam­paign, the brand had the courage to launch a cam­paign for Schwab Intel­li­gent Port­fo­lios around March Mad­ness and increase its invest­ment by five­fold from its ini­tial toe dip.

Venture Marketing Example #2

An ear­ly part­ner­ship with Vir­gin Amer­i­ca didn’t work out, but it but led to part­ner­ships with oth­er brands like Nespres­so and Smart, which have been more suc­cess­ful, Aldridge said.

Venture Marketing Example #3

An ear­ly series of influ­encer-gen­er­at­ed videos about pos­i­tive change on Vimeo gar­nered 2 mil­lion views, which, Aldridge said, gave the brand the courage to try some­thing dif­fer­ent with its Intel­li­gent Port­fo­lios and inte­grate it into its #SoA­maz­ing cam­paign. That, in turn, led to a pop-up store as part of its #OwnY­our­To­mor­row cam­paign in which the brand demon­strat­ed that invest­ing could be as easy as order­ing a cup of cof­fee by allow­ing con­sumers to actu­al­ly order cof­fee.

“It’s about cre­at­ing a foun­da­tion to allow your­self to exper­i­ment, suc­ceed, and fail and it’s about doing things one mile at a time and cre­at­ing an endur­ing cul­ture from the land of the­o­ry over wall of fear and to the land of action,” Aldridge said.

What’s your take on chal­lenger brands and ven­ture mar­ket­ing?