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THE DEADEST AIM IN THE BRANDING SHOOTOUTYahoo! keeps hitting the target -- but rivals are getting closerThe name Yahoo! (YHOO) is splashed on the Zamboni machine that glides across the hockey rink of the San Jose Sharks. It's plastered on station wagons that ply the San Francisco-to-Silicon Valley corridor. It appears on TV shows and in films. It is scrawled on 120 products, from backpacks to T-shirts to organizers. What seems like a shotgun approach to marketing is in fact a carefully orchestrated campaign that requires each branding opportunity to meet one strict test. It must reinforce the image the company wants to project: a service for the little guy that's friendly and lively but not obnoxiously hip. That's a fine line to walk, but Yahoo has done it so far. The result: 44% of Internet surfers know its brand, according to research firm Intelliquest Inc. How has an essentially meaningless name expressed in an uneven line of yellow letters become the powerful symbol of a company with a market value of $9.1 billion? In two words, guerrilla marketing. A simple example: reaching the grassroots by sponsoring sports and music events such as this summer's Horde tour, a traveling rock music festival. Yahoo has also built its brand by spreading its message beyond the online digerati. For instance, it teamed with publisher Ziff-Davis Co. in late 1995 to create Yahoo! Internet Life, a consumer-friendly monthly magazine guide to what's new on the Web. Most of these marketing efforts have cost Yahoo nothing. In fact, just one-quarter of its brand awareness comes from something the company paid for, estimates Karen Edwards, vice-president for brand marketing. And the marketing Yahoo has paid for -- such as TV advertising -- has been persistent and wisely managed. The company still runs two-year-old spots featuring an elderly man yodeling the Yahoo name after using the service to find better fishing lures. In each of its promotion campaigns, moreover, the company is careful not to ramp up its marketing until it has a hook in a market --- such as a local guide -- or can justify the expenditure in terms of the size of the target Web audience. The 1996 TV campaign was initially broadcast only in the most Web-centric cities: San Francisco, Los Angeles, and New York. WHAT'S IN A NAME? Establishing brand awareness is important. But having a name to work with is crucial. And part of Yahoo's success lies in its name, with its implications of a good time. The name's irreverent ancestry -- it stands for "Yet Another Hierarchical Officious Oracle" -- is Web lore by now. What's often overlooked is the accidentally propitious nature of the choice. "A key part of the entire brand positioning is the name," says Owen Shapiro, senior analyst at market and brand research firm Leo J. Shapiro & Associates. "The name contains the promise of the product." Adds Jupiter Communications Inc. analyst Evan Neufeld: "Lycos (LCOS) means nothing; Yahoo is cool. It's just dumb luck they have that name." It takes more than luck to make such a name stand for something, though. That bit of handiwork was crafted by Edwards, a veteran of Apple Computer Inc.'s (AAPL) ad agency who joined Yahoo in January, 1996. She positioned the brand to appeal to Web surfers who were just coming online. And the company decided on a tag line -- "Do You Yahoo!?" -- that didn't narrow the brand to merely an explanation of its product. "We wanted it to be something that wouldn't pin us in a box," Edwards says. "We didn't know exactly what technology we would add, so we wanted something that was as broad and potentially global as possible." Once chosen, the tag line was printed on some 5 million stickers distributed in direct mailings with partners. It was also plastered on postcards given away in restaurants and bars in nine cities. RADIO PLUG. One challenge Edwards discovered is that doing something first seems to heighten the continual need to do something different. For instance, she says today she wouldn't do postcards in restaurants because it just isn't novel anymore. She's starting to feel the same way about stand-alone TV ads. So Yahoo is pushing TV branding one step further, placing mugs and posters bearing its name on shows such as Ally McBeal. And in a stab at getting beyond T-shirts, of which it already has 20 different varieties, it has licensed its logo to Gregory Mountain Sports, which is making computer bags to be sold in Staples (SPLS) and Recreational Equipment Inc. stores this fall. As Yahoo has added more "content channels," moreover, it has begun marketing them separately. For instance, Yahoo! Finance does a weekly online survey of Yahoo users for National Public Radio that's read each week on the Market Watch finance radio show. "That has a slightly different voice -- it goes from seriousness to lightheartedness, like the show," says Edwards. The question for the future is whether Yahoo can continue to flourish as marketing-savvy rivals such as Microsoft (MSFT), AOL (AOL), Disney (DIS), and NBC (GE) train their guns on it. The upstart does have a few advantages: It has created a brand that's synonymous with the wackiness, optimism, and growth potential of the Web. And it has been a winner in the portal market so far by being the first -- after America Online -- to add new features, such as chat, or by quickly catching up to competitors, as it did when Excite (XCIT) added free E-mail in mid-1997. Some experts also say it isn't yet certain that traditional companies can effectively translate their brands to the Web. "It's one thing to be a big brand. It's another to be a brand in another category," says David A. Aaker, a professor of marketing at the University of California at Berkeley's Haas School of Business. "You can damage your brand if you stretch it too far." DISNEY TREATMENT. Such concerns are unlikely to spare Yahoo from a frontal assault, however. "There's a huge branding war that's about to happen," says Halsey Minor, Cnet's founder and CEO, who points out that although 44% of Internet users are familiar with the Yahoo brand, only 2% of non-Internet users are. That gives Web services such as Snap!, which is owned by NBC and Cnet, and Infoseek (SEEK), which has minority backing from Disney, a shot at capturing the loyalties of the next 50 million people who come online. Indeed, NBC has given Snap! the mission of being No. 1 or No. 2 in the portal business, Minor says. Snap!'s name will be broadcast on NBC to about 400 million people during the summer, and double that number in the fourth quarter. Infoseek President and CEO Harry Motro says Disney will be just as aggressive. Its new portal service, to be launched by the end of the year, will be promoted much like any of Disney's properites, with blitzes in theme parks and on movie trailers. "Think of the type of promotion you saw with Mulan, and you'll get an idea of what we will have," Motro says. Ultimately, all the promotion from these companies will bring more people online, says Jeff Mallett, Yahoo's chief operating officer. And he argues that Yahoo has a service many of those people will prefer. "We believe a number of people who come to the Web because of the suggestions of other companies will try us and stick with us," he adds. If he's right, the branding war and the battle for customer loyalty are Yahoo's to lose.
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Updated Aug. 28, 1998 by bwwebmaster
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