In late 1998, the Financial Times was quoted as saying “Goodbye Coca-Cola, farewell McDonald’s, the Internet age is upon us and it is the end of history for brands”. Technology was everything. At last the perfect consumer described by economists would be able to access perfect information and make perfectly rational choices.
By last year the FT had amended its position, saying: “It is just possible that in a world of super-abundance, brands will become more important than ever.”
In truth, the majority of the businesses which flooded onto the Internet during the initial “land grab” period knew that brands were important, which is why we are surrounded by so many new brand names. The question is: are we surrounded by many new brands?
Brands exist in the minds of consumers as a result of experiences. Think about the star of Mercedes. In itself it means very little.
It is the collection of meanings and associations derived as a result of ownership, dealership, advertising, talking to friends, and so on, which together constitute a brand.
What makes a brand?
So when considering “online” brands, we must consider every “experience”, both onand offline. Amazon is a powerful brand not just because it has a “standard-setting” interface (more of that later), but because it delivers, in terms of customer service, logistics, stationery, packaging and payment systems. (It is interesting to note that most “Web brand” league tables focus on the “usability/functionality” of the website and ignore every other aspect of the experience).
However, powerful brands are built by experiences which do more than simply pass the test of acceptability. In the “real world”, we would not regard a company’s ability to deliver on time as particularly outstanding (how many people do you know who still sound amazed when a company like Amazon actually delivers?). These simple capabilities are regarded as “hygiene factors”. We must use a much tougher test: that of differentiation.
Differentiation is critical to building a successful brand. Well-differentiated brands tend to be built upon single-minded, powerful ideas which inform and unite every aspect of the business. The Virgin Group is particularly good at creating and delivering such ideas.
Bonding with the consumer
It is at this level that we should really assess the power of brands. The distinctiveness of the brand’s core idea, the relevance of that idea to customers (and all stakeholders) and the ability of that idea to create a powerful emotional bond with consumers, a bond which will command premium pricing and, ultimately, increase shareholder value.
Many Internet businesses have simply failed to create the level of differentiation needed to be truly outstanding brands. In the early days of the Web we saw the rush for generic names – Priceline.com, Drugstore.com, Buy.com and Business.com. (At the time, Jeff Bezos, founder of Amazon.com, was criticised for picking such an “obscure” name and breaking the rules of the Web). These offers are by nature “generic”. They were what fuelled the early stories of “doom for brands”. But generic sites fail to provide a solid platform for competitive differentiation. Consumers have long been taught by clever marketers that generic offers are “low-value” or commodity offers. In the early days it was cool to be a dot-com, but when you are called Drugstore.com, the dot-com extension disappears and you are suddenly in competition with Boots.
Beyond the most basic differential of the brand (the name) we arrive at the level at which the majority of dot-coms seem to think they have found the Holy Grail of branding: the logo. The similarity of brand logos across Internet businesses in general, and even within categories, is alarming.
Beyond this, good corporate/ brand identity should build upon the differential idea. However, most online players fall short of consumer expectations and marketing best-practice.
In our Zurich office we recently ran a simple piece of research. We exposed people to “de-branded” homepages. We picked the top ten Swiss sites, the top ten global sites and ten of the top “billion dollar brands” from our own survey.
Only 18 per cent of participants recognised Amazon after the first three-second exposure. This rose to 30 per cent after a second exposure for ten seconds. About 60 per cent of the sample were Amazon users. Many of the “offline” companies such as Coca-Cola and Diax (a local telephone company) proved much more recognisable, mainly due to offline experiences. Even the most successful online brands are failing to create truly distinctive online design.
We now see a woefully small number of brands which offer a powerfully differentiated idea, a distinctive and memorable name and a potent online visual identity. But even that isn’t enough. What about a differentiated experience? This is the area in which we believe most online players fall short. Far too many adhere to the “best practice” paradigm that derives from an online newspaper designed in 1994 and refined by Amazon in 1995.
During the “rush” we witnessed the sacrifice of innovation and progress for the safety of “proven means”. Usability is, without question, fundamental, but in most instances it only delivers hygiene factors, and at best it offers parity with the competition.
A colleague of mine recently pointed out that car designers settled early on some of the basic controls – a steering wheel and pedals. However, around these conventions we have witnessed incredible creativity and innovation for the benefit of the driver, and indeed the gearshift of a Ferrari is an experience in itself. The truly differentiated and successful brands of the future must, therefore, offer a compelling experience to the consumer.
The customer is always right
So the online world has much to learn, and indeed much to fear from offline brands waking up to the Web. The ultimate judge, however should always, and will always, be the customer.
Late last year we tested five major online retail brands, isolating and quantifying the individual attributes which produce consumer commitment. Earlier in the year we had performed a comparable study on the major supermarket brands.
Not surprisingly the online brands scored below their real world counterparts. Amazon.com is a well-established online brand, but the scores (out of 100) for the online brands averaged in the 20 to 30 range, while the offline retailers hit about 60. We would expect to see the power brands, (such as Coca-Cola) hitting 90.
What would real-world incubator brands such as Pret a Manger or Starbucks score? We predict that they would do better than their dot-com counterparts.
If only it were that simple. One of the most interesting findings was the considerable difference in customer commitment between Tesco and Tesco.com. The results illustrate that the branding competition starts again once a business goes online. Online is a new brand experience and customers will appraise you as a business all over again. It’s not just a simple case of putting the business online – we must understand how customers will experience branded businesses through each digital medium, gauge their mood, needs and expectations, and build solutions as elegant as those which now exist in the real world.
Trends to come
So what of branding in the near future? How should we approach the shifting sands of the Web, WAP, iTV and others? Online branding will quickly become a discussion of the past, as the Internet ceases to be a subject of conversation and becomes a way of life. Every branded entity will have some electronic interface. Indeed many brands will have multiple interfaces. Here are a few trends we would expect to see emerging over the next few years:
– Simple, powerful concepts will drive the successful brands of the future; in an increasingly cluttered world the fight for consumers will become more fierce. Simple, motivating ideas will be the driving force behind the businesses which truly stand out within this environment.
– As product and service advantages become increasingly short-lived, the distinctiveness of the experience itself will become the differentiator. Look to companies such as Virgin for this kind of approach.
– As people become more Web-aware, and we approach the “always-on” world of broadband, we will expect deeper experiences. Evidence from markets such as Holland, where broadband services are already expanding, suggests that, while surf time increases, the number of sites surfed shrinks. This suggests the opportunity for deeper relationships between brand and customer, and consequently a deeper experience.
Part of this trend will be triggered by a change in the nature of the online audience as Internet access becomes available to those lower down the social ladder. Consumers will demand greater entertainment values. These will be delivered through a richer “less technical, more editorial” approach to structure and content, but also by the increase in the televisual content offered by broadband connections.
These entertainment-driven, “deep” brand experiences will spread across devices and will require the emergence of brand experience management; it will no longer be acceptable for the left hand to be ignorant of the right hand’s actions. Customer relationship management will have to enable consistent experiences cross-platform, cross-department, cross-continent, cross-product.
Conversations will become more important than communications; Seth Godin coined the phrase “permission marketing”. The key to success in this field will be the increasing sophistication of communications approaches, such that a customer will engage in a “conversation” with a brand, not pivoting simply around product or service fulfilment, but about building emotional, branded bonds between consumer and product. Tone of voice will become a powerful brand weapon.
As we become less enamoured with technology and become more focused on customers and their needs, we will begin to explore avenues and opportunities we have yet to imagine. The successful brand builders will follow a broadly familiar path; understanding customers, creating motivating ideas and delivering consistent experiences.
The truly successful brands will be those who realise that it’s not just about a website, it’s about an entire business harnessed to deliver a differentiated experience. Value for money, speed and accuracy are just hygiene factors.
Jez Frampton is the managing director of Interbrand Interactive