Story and photos by Nick Ross

Building brands in the age of the Internet

Thirty years ago I confess to having bought a cute sock puppet from Pets.com. That's all I ever bought from them -- perhaps the reason why that company is no longer in business.

Pets.com spent millions of dollars in advertising and promotion to make their sock puppet mascot, and by extension the company, a famous brand. The puppet appeared in Good Morning America, at a Super Bowl commercial and was interviewed by People Magazine. Yet the very dearly paid for fame was not enough to ensure any fortune.

The idea behind Pets.com was sound; the notion that people wanted to buy pet food online and have it delivered to their homes has made Chewy.com and Wag.com successful. It was just that Pets.com was ahead of its time. The internet was not as ubiquitous then as it is now, therefore the potential client base was not as large then.

Pets.com was Amazon for pet products and Amazon became one of Pets.com’s early investors; they had the same internet purchasing system where customers can order from the website and the company made the deliveries. The lesson here is that sometimes, the line between the world's biggest success and the world's biggest flop is a matter of timing. But Pets.com’s implosion raises another question:

Does spending millions on advertising and promotion make a difference in the Web Age? And what do companies have to do to adapt to Web Reality?

I think there is a simple answer to a very complicated question... Spend Smart!

Looking at branding from the trenches, and from the viewpoint of my involvement in the branding industry for at least 45 years, I can see the evolution of the art -- and I consider branding still an art, based mostly on gut feeling and not on focus groups, as the large advertising agencies will now have you believe. Forty five years ago, branding was the creative thing you did with the name of the product or designing distinctive packaging or it was creating print and television advertising that expressed the client's massage. Then in 1981, Al Ries and Jack Trout came up with their Positioning theory and branding became a battle for the consumer's mind. Today, brands are considered the sum total of the positive and negative images people have in their heads about a particular company or a product.

In the past, product information, and especially negative product information was difficult to discover. Yes, marquee brands regionally suffered if they showed up in a mass discounter's store together with poor quality merchandise. Or, if your brother-in-law bought a car that kept breaking down, you found out. If Consumer Reports gave negative comments for a food processor, their readers found about it. But, the major source of information was mostly anecdotal stories around the office water cooler.

The web has changed all that. Information about products and companies can be easily found in sites from anywhere in the world. Name-of-company-sucks.com sites have proliferated and negative information of all kinds, from disgruntled employees to product failures, is there for all to see on a global scale.

Additionally, internationalization and proliferation of knock-off branding in unregulated or poorly regulated markets eroded consumer's respect and desirability for the actual name brand.

Manufacturers and other brand originators are starting to recognize that at the time of  “instant” communication they can no longer afford to turn their back on what happens at any level. With price as the only point of differentiation, both brand originators and retailers find that there is brand value erosion in the minds of the buyers and when that happens, profit points shrink.

Additionally, not promoting a value proposition adds to the general lack of brand loyalty. In the U.S., corporations lose half of their clients every five years and half of their employees every four. If you looked at Fortune 50 five years ago, you will see that 35 of them are no longer in that category now. And all of them were companies that spent considerable amounts in advertising and promoting their products.

Let’s look at the coffee category. Fifteen years ago the prominent brand was Maxwell House. Today, the brand is obviously still sold in the supermarkets but as a commodity item, often heavily discounted. What is the dominant premium brand in the mind of the U.S. consumer? Starbucks, a company that built its brand not by spending obscene amounts in advertising, but with product quality and good service in its stores. And that brand is starting to pale as well, as imitators are flooding the market with similar products and knock-off branding is appearing in a number of markets and the consumer is starting to question the value of paying in the US over $3.80 for a small (deceptively called tall!) cup of coffee.

We tend to think that branding comes first and a company's success follows. In fact, when you look at successful businesses, no matter whether they exist on or off the Web, you will realize that a quality product comes first, infrastructure and service second, and only when these items are in place the brand evolves into success over a number of years.

You can throw as much money as you want into advertising and promotion, as many of the now defunct dot coms did, including Pets.com. You can wall-to-wall the whole Super Bowl commercial time, if you want to and if you can afford it. But, if the fundamentals are not there: uniqueness, product quality and service as well as proper timing, you will never become a presence in consumer's lives. And that's what builds brands.

 

 

 

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