It's the reputation you build in the publishing community and to your readers of what kind of stories to expect when they see your name on the cover of a book.
Is author branding necessary?
If you want to build readership, yes. If you want to sell more books, yes. Readers who like westerns aren't typically interested in a science fiction book. For this reason, so many authors have had to create pen names for various subgenres. People work hard for their money and they can chose to spend it on a number of things. You don't want them to be disappointed if they take a chance and spend it on your book. If that happens, most likely they won't spend more money on anything else with your name on it, nor will they encourage others to do so.
Author branding is another way of target marketing. If you are promoting your book based on the book's contents, you are going to appeal to those who would like that particular book. Marketing and advertising is expensive. You don't want to waste your time and money trying to appeal to an audience who won't like what you write. You aren't likely to sell many books that way, and it doesn't make sense. So why wouldn't you create an author brand for yourself?
If you're like me, you might be hesitant to build a label around yourself because you don't want to be limited to writing one kind of book. I've already mentioned pen names as one way to get around this. Another way is to write the same subgenre for a decade or two and then rebuild your image. Lots of authors do this, and if you do it well, you won't lose readers, in fact you may gain more. For instance, a contemporary romance author may chose to brand him/herself as a romantic suspense author. That way you aren't losing readers who like romance and contemporaries, you're just giving them a new element to read along with what they already read. Keep the subgenres similar, but give readers more. This will ultimately lead to more readers, which will lead to more sells.
Do unpublished authors need an author brand?
Yes. Before you can sell books on a store shelf, you first have to sell to a publisher. You need to stand out among the masses of other writers. There isn't enough shelf space for all the wanna-be writers in the world, so you've got to find a way to stay out of the slush piles. There are a lot of good writers who sit in the slush piles year after year. Their works are good enough to be on the shelf of a bookstore. The difference is, their marketing proposals may not be unique enough or stand out and get noticed.
At one time I believe it was true that good writing would get noticed. But with the competition the way it is today, the demand so buoyant, and the hectic schedule of the publishing industry, I no longer believe that's true. You still have to get someone to read your work in order for it to be noticed. That can only happen if you stand out in promoting yourself and your work. You must make a good impression in your proposal and presentation of your work before an editor or agent actually sits down to read your work. If your impression in your proposal doesn't stand out, they'll never turn to the first page of your manuscript.
Remember, an unpublished writer is selling to an agent or editor. These folks are looking for specific markets where they know they can sell something. While good writing has to go along with it, if an author has written something that's great, but the story isn't right for an open spot, then it still won't sell. Don't waste their time or yours. Sometimes a quick rejection is a good thing. It will give you a chance to get that manuscript where it belongs much faster than wasting time on an editor's desk where it isn't going anywhere. By building an author brand, you will be letting them know upfront what they are getting from you. This will help you appeal to the right agents and editors. Target market to the right publishers and you will sell more faster.
Plus, publishers have less in their marketing budgets for new authors and mid-list authors. They reserve most of their budgets for the BIG name authors where they know their investment will pay off. Therefore, a new author will have to do so much more of their own marketing. By showing you are ahead of the game in your promotion and author branding, an editor will feel more comfortable taking a chance on you. This means if it comes down to your good writing as opposed to another author's good writing for one publication spot, you might have the edge since you have self-marketing potential. Editors are looking for authors they can build into careers for a long investment, not one-time book wonders.