What Is Brand Transparency and Why Does It Matter?

Relationships are part of the foundation of commerce and business—and buyers’ voices are now louder than ever. There’s more pressure on brands to include consumers in the conversation, while being thoughtful in the process and in establishing a point of view. 

Customers now ask: what does a business intend to do to change or better the world, and how transparent will it be about it?

Brand transparency in commerce is linked to openness and honesty. Eighty-six percent of American customers believe transparency from businesses is more important than ever, and globally in 2022, 60% of consumers said brand transparency was a big concern for them—increasing from 55% the year before. 

Customers are more discerning, basing purchasing decisions on a personal value system that, if not aligned with one brand, will mean taking their money elsewhere.

Ahead, learn when and why brand transparency became important and relevant for both brands and consumers, where it’s showing up, and where it’s going in the future. 

What is brand transparency?

Brand transparency is how a brand presents itself as genuine or authentic, and how accessible it is to its customers. It’s a broad term with weighty influence. It’s both tangible and not, concerned largely with a realness that drives customers to return again and again.

Transparency means different things to different brands, but at its core a business is transparent when messaging is clear and authentic This refers to any content and communication published by the brand, as well as product and policy information. Brands using models or influencers that reflect “real” people in both marketing and advertising—and engaging with customers about it—is an example of brand transparency.

Brand transparency also appears in conversations about business practices. Brands that are willing to pull back the curtain to reveal decisions in areas like product development and diversity hiring are more likely to have increased customer trust. And trust matters—an Edelman survey concluded that 81% of buyers needed to trust a brand in order to buy from them. 

According to many customer surveys and even comments on social media, brands must be transparent. Nearly three in four customers find transparency in communication crucial, particularly in a post-pandemic world. 

Why is brand transparency important?

Brand transparency has always been relevant on some level to consumers. But more recently, customers have become more curious about the policies and practices businesses employ before making a purchase, including social or political beliefs and affiliations. 

Cultural connection

Big moments in culture often contribute to the desire for brand transparency. Black Lives Matter protests and conversations certainly influenced many brands to participate in the ongoing conversation about systemic racism, while the COVID-19 pandemic and the uncertainty it raised for millions of people brought brands into the fold too. External factors like these have an impact on brands, whether they engage with them or not.

The trend toward brand transparency started earlier in the 2010s, because millennials became the driving buying force dictating how brands act and adapt, largely speaking more loudly about social and cultural matters that affect us all. In a mid-2010s report, compared to other consumers, 73% of millennials respondents were willing to pay extra for sustainable brands, and 81% said brands ought to make public declarations of corporate social responsibilities. In the almost decade since, 83% of millennials still consider a brand’s value before supporting them with a purchase.

Social impact

Social impact pillars have become a key factor behind how millennials buy and where brands can look to understand the core of this shift in buying. These pillars are investing in improving societal problems, prioritizing impact, transparency on all efforts, and inclusion of customers on social media. For example, consumers may ask if what they are buying hurts the planet or supports causes to improve it.

Disintegrating trust

Millennials’ value systems shifted from that of their parents and older generations. They wanted to know more because their investment mattered. They ultimately end up asking: Can I trust you?

This conversation coincided with technological acceleration and a digital-savvy generation. Soon, social media and digital spaces became a place where buyers could buy their products and converse directly with the brand about the issues that mattered to them.

While some consumers adopt new technology more quickly, there’s still an aspect of distrust in how personal data is being used and if privacy is invaded. These are crucial issues to remain on top of if you’re a brand that will retain consumer data. 

Where brand transparency shows up 

It’s no secret that the internet—and by extension social media—fundamentally changed the commerce game. Access to different cultures, perspectives, and ways of buying and selling impact why we think the way we do and how we do business. 

Social media

Let’s start with social media. It is a bit of a figurative chicken and egg situation: Did a brand adapt because of something on social media or did social trends change because of a brand? 

The answer is both. 

Instagram has over 1 billion active users, is expected to reach nearly 1.5 billion by 2025, and is most popular with those aged 25 to 34. There are around 200 million brands using Instagram. It’s the perfect medium for a lot of brands to consider both professional and social conversations alongside the products they sell, and even for selling their products right there in the app.

Eighty-one percent of people believe a brand needs to do something on social media to address current issues, yet only 15% believe brands are transparent about their approach. 

Next, there’s TikTok. Forty-three percent of Gen Z buyers begin their buying journey on the app and it’s getting closer to one billion users as well, becoming the social media platform that more or less caters to consumer reviews (and scathing video essays and parody videos). 

Brands have needed to pivot strategies in a short period because of how discourse and technology move. Today, people crave authentic interactions on social media. The global pandemic accelerated this trend around people’s lived experiences, signaling a massive shift away from aspirational content.

Social media has become an entry point for many into difficult conversations. Maintaining the status quo and focusing on brand voice only is no longer an option: buyers want their brands to be discerning and informed. Supporting every single cause is a no-go, lest they be viewed by buyers as inauthentic and opportunistic. Tackling what matters most to brand values encourages buyers to respond to it. 

Fashion and sustainability

Another key conversation is climate action. Sustainability is one of the most important topics to take hold of businesses around the world. Yet, Vogue Business posited that transparency might be a dead end in fashion in particular. 

Sustainable efforts, while looking at Fashion Revolution’s Transparency Index, are tepid. Some brands are deploying manifestos that try to improve transparent communication with buyers on their sustainable practices. Transparency is necessary for holding brands accountable for more ethical practices, but it is simply surface level if a brand decides to be selective on what it does or does not disclose.

Herein lies the quandary for many brands: it hurts the brand to be silent but it also hurts them to be surface-level and it might hurt them to disclose everything. As time goes on, and cultural shifts inevitably occur, customers’ engagement and purchasing power will still likely align with a value system that matches their own, especially as Gen Z continues to reign. 

It’s simply measuring risk. Do you include customers on the journey or not? 

Brand transparency examples

Before any attempt of purchase, customers want brands to actively take a look and communicate how they do their business. They want disclosures of struggles and past mistakes and current opportunities for change. If the brand doesn’t do that, customers often go digging themselves for that information if transparency isn’t evident.

Here are a few examples where brand transparency worked—and where it backfired. 

Everlane

Everlane went through a very public growing pain, having to reconcile their “radical transparency” with day-to-day realities with employees. The brand is still leaning into sustainability, and this radical transparency, with collections targeted at timeless fashion offerings rather than trend pieces, are focused on helping reduce waste. 

Girlfriend Collective

A different way that could have been handled is an example from the athleisure brand, Girlfriend Collective. The brand posted on their social channels about diversity at the company, titling it “Full Transparency,” which plainly established where they have to improve their hiring. 

Shein

Brand transparency attempts can backfire too, as it did recently with fashion brand Shein. Influencers were invited to take a look at the brand’s factories and combat pervading notions on labor conditions. The trip didn’t go over so well on social media, TikTok in particular. If there’s a history of a lack of authentic brand transparency, and then an attempt to overcorrect such errors (as is the case with Shein and this trip), there will inevitably be some consumer pushback. 

Generations influencing brand transparency 

It seems quaint thinking now about the initial difficulty of marketing and appealing to millennials with picky Gen Z driving a lot of current effort. But millennials, the first most diverse generation of this century, began to demand more in the face of important cultural shifts.

It’s crucial to understand that millennials wanted to be understood and marketed to accordingly by brands. Perhaps this is where the trope of the selfish millennial came from. But theirs is a transaction that does not and cannot exist solely in the form of profit or loss—there is a deeper emotional connection between this buyer and what they purchase. Millennials value experiences, purchases that make them feel good, peer-generated endorsements, and relevancy when it comes to buying. That ethos is the foundation for the generations to come. 

Gen Z, with purchasing power of $360 billion, expect brands to do everything millennials spent years asking brands to do: be inclusive, diverse, and socially and environmentally conscious. Brand transparency to them captures all of those elements and a brand cannot truly be transparent without touching these topics. 

Over 60% of Gen Z buyers prefer content with real influencers and people or celebrities. They trust in word-of-mouth and peer-reviewed content over journalism or marketing strategies. About 69% of Gen Z buyers are likely to buy from a company that publicly contributes to social causes. This generation intuitively seeks comfort and refuge online, sharing their thoughts and feelings with relative ease. These intangible components are important to understand when it comes to marketing to Gen Z.

Where brand transparency is going 

It’s very unlikely customers are going to stop caring about brand practices, the real ins and outs of product development, and how corporate social responsibility is prioritized. Customers are invested top to bottom. Ultimately, this is a good thing—for brand loyalty and retaining buyers, and hopefully, the world. It takes time and effort to understand why this is important now and to adapt accordingly. 

A brand is not a person. But it is a reflection of the founders, employees, and customers who invest in the product or a brand. Humanizing, or even softening, a brand to amplify the real experiences of those who work for it or buy from it is more important than ever before. As aspiration gives way to reality with a resurgence in authenticity, brands must adapt. It’s no longer acceptable to simply pivot with the times. It’s important to understand and metabolize the cultural atmosphere in which you’re doing business. 

Being transparent matters to your bottom line. But more importantly, it’s there to maintain a deeper relationship with customers.