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BRANDING ON THE NETThe old rules don't apply. So how do you hustle those wares online?Devotees of Troy and Linda will never know how their romance turned out. Bell Atlantic Corp. (BEL) has pulled the plug on its online soap opera, which revolved around the yuppie newlyweds. The weekly installments ran on the Bell Atlantic corporate Web site last year. The serial had lots of fans. It won rave reviews from entertainment critics. But the Baby Bell's research showed Troy and Linda didn't do a thing to build the Bell Atlantic brand. No bounce in brand awareness surveys. No spike in consumer loyalty. ''Creative is fine,'' says Janet Keeler, vice-president for brand management at Bell Atlantic. ''But that kind of creative just didn't pan out. We want to build our brand on the Web.'' She and everyone else in the marketing community. Harnessing the reach and interactivity of the Internet to build and maintain brands has become the Holy Grail of marketing. It's the focus of conferences. The subject of committee meetings. The talk of the consultancy circuit. The tantalizing prospect of pushing a brand name and stoking consumer loyalty in the one-on-one setting of the personal computer attracts everyone from carmakers to newspapers. But as Bell Atlantic discovered, branding tactics that work in the real world don't always translate online. ''It's the biggest issue facing the marketing community in 25 years,'' says Elliott Ettenberg, CEO of Bozell Retail Advertising. ''What keeps us all up at night is the idea: Is my competitor going to figure it out first?'' The buzz about branding on the Net has intensified in the past year, in part because Procter & Gamble Co. (PG), the nation's second-biggest advertiser, mobilized interest with its Internet advertising summit in August. More important, the first handful of legitimate, recognizable brand names have emerged from the chaos of the virtual world. As companies such as America Online (AOL), Amazon.com (AMZN), Yahoo! (YHOO), and Netscape Communications (NSCP) graduate from obscure virtual businesses to those that score in the 50% range on unaided brand-recognition surveys, marketers have begun to salivate. The potential is there, they say. A brand can grow and secure customer loyalty on the Net. And as today's huge generation of computer-savvy kids matures, that power will only increase. ''That has all of us wondering how can we do it, too,'' says Joel Anderson, who heads up Internet marketing for Toys 'R' Us Inc. (TOY) ''To do it well is worth millions.'' Marketers, who have used TV and print ads for decades to imbue even cigarettes and dish detergent with an emotional aura, know full well the value of a strong brand. ''A brand is the emotional shortcut between a company and its customer,'' says Ted Leonhardt, principal of Leonhardt Group, a brand-marketing firm. But as the older mass media of TV and print become more fragmented and crowded, their ability to build brands has weakened. The advertisers whose real-world brands grew up with TV worry they'll be left out if they don't solve the enigma of marketing on the Net. For companies whose businesses are based on the Internet, forging a recognized brand name is even more important. With nothing to pick up or touch and hundreds of similar-sounding sites to choose from, online consumers have little to go on besides a familiar name. In cyberspace, anyone with enough resources to rent space on a server and build some buzz for their brand is a potentially dangerous competitor. NO POP-UPS. But just as the need to build brands on the Internet is spiking, there's a growing recognition among marketers that the tactics they have tried so far have been ineffective. The emotion-laden vignettes that work so well on TV simply don't woo viewers in cyberspace. Meanwhile, the established methods of Internet advertising don't do much better. Interstitials, ads that just pop up on the screen, are tagged as annoying interruptions to the online experience. Spending on banner ads is expected to drop next year as companies conclude that computer users are ignoring them. ''You're not allowed to say or market anything online unless the customer wants to hear it,'' says Chan Suh, CEO of Agency.com Ltd., an interactive consulting firm. It's the central theme differentiating television from Internet marketing, he says. ''In this kind of marketing, the customer is in charge.'' That means marketers set on building their brands in the online world have to persuade consumers to participate in their marketing efforts. The latest theory of how to do that involves something called ''rational branding.'' The idea is to marry the emotional sell of traditional brand marketing--the pitch that links ''Disney'' with ''Family'' or ''Volvo'' with ''Safety''--with a concrete service offered only online. Rational branding strives both to move and help the online consumer at the same time. In essence, the advertiser ''pays'' the consumer to endure the brand message by performing some kind of service. But the tactic poses a real challenge to makers of consumer products. There are frighteningly few ways to make soap or soda useful in the virtual world. Indeed, of the top five buyers of TV advertising, most are nearly invisible online. But companies that can provide a time saver or money saver online are diving in. MasterCard International Inc., in search of a rational branding plan, has transformed its Web marketing from one that simply hypes the card to one that offers a helping hand to the online shopper. While MasterCard pumps out shamelessly schmaltzy TV commercials--such as one with Mark McGwire sending No. 62 over the fence under the tag line ''Priceless''--its online branding efforts take a different tone. The company is pushing Shop Smart, a sort of MasterCard seal of approval given to E-commerce sites that use advanced credit-card security systems. The program lets MasterCard slap its logo all over the hottest new online shopping sites. It also gives the company a chance to promote its Internet image. While the TV pitch is clearly about using MasterCard to achieve a peak experience, online the image is about security, trust, and service. ''The TV user is looking for entertainment. The Internet user is online for more practical reasons,'' says Debra Coughlin, of the company's Internet marketing team. ''Our brand efforts reflect that end-user goal.'' LESS HYPE. When General Motors Corp.'s (GM) Saturn revamped its Web site to offer more help and less hype, it was easy to measure the improvement. Site visits over the last year tripled to as many as 7,000 a day. An astounding 80% of Saturn's customer leads now come via the Internet, almost double a year ago. Saturn's old site offered the usual car specs and dealer referrals, but last year the carmaker began adding features that were actually useful, including a lease-price calculator, an interactive design shop for choosing options, and an online order form. Then it highlighted the new online features with a TV commercial that delivered an old-fashioned emotional brand appeal. The humorous TV ad features a college student in his dorm room using the Internet to order a Saturn, as easily as one might order a pizza. The site quickly took off. ''This improves our brand position in a way an online brochure could not,'' says Farris Kahn, Internet coordinator for Saturn marketing. ''By giving the consumer something they want, you are helping them and promoting your brand message at the same time.'' How did marketers figure out the potential of offering consumers a practical benefit online? By watching the Internet brands build their businesses into powerhouses. The common thread running through the successful online technology sellers, such as Dell Computer Corp. (DELL), and such retail and service companies as Yahoo!, Amazon.com, and America Online, is that they help the Web-surfing consumer do something. BUILDING BLOCK. Dell lets customers configure and price a computer system online. Yahoo! and AOL offer a slew of options for customizing their services. David Risher, senior vice-president for product development at Amazon, says that more than any ad or sponsorship, the Web site itself is the crucial building block for his brand. And he says that ''70% to 80% of the feeling people have about the brand is from the experience they have online at our site.'' Much of Amazon's effort at brand building is therefore focused on improving the site with frills such as one-click ordering and software-generated book recommendations. The success stories are reverberating through the online-marketing industry. Two top Net consultants, Jupiter Communications and Forrester Research Inc. (FORR), have released studies examining the practical turn of Net marketing. Jupiter coined the phrase ''rational branding.'' Forrester's Jim Nail calls the tactic of adding an interactive service ''experiential marketing.'' ''Experiences--not advertising-induced perceptions--will drive brand attitudes,'' he says. He expects spending on experiential marketing will grow from $1.1 billion this year to $11.2 billion in four years, while spending on banner ads will top out at $300 million in the next year and begin to decline. But for most packaged-goods marketers, who have little to offer online, the trend toward rational branding poses a huge dilemma. More than half of consumers surveyed by Jupiter say they never visit a consumer-product Web site. Even the most popular ones pale in comparison to truly high-traffic locations. In May, Budweiser.com, among the top five most popular consumer-product sites, drew 180,000 visitors, according to a study by Jupiter Communications. Meanwhile, Netscape.com welcomed 10,828,000. It's not that the packaged-goods makers haven't tried. But they are rapidly discovering that what made them powerful on the TV screen does not easily translate to the computer screen. Consider Coca-Cola Co. (KO). Recognizing its slick TV commercials wouldn't play well on the Net, Coke tried a different tactic--one that works beautifully in the real world. It acted as sponsor for entertainment. For example, the company rigged its Cherrycoke.com site as an entertainment gateway, filled with links to interesting sites around the Internet. Coke executives thought the site was fine until they realized consumers were spending an average of 90 seconds on it before moving on. That might be a long time on TV, when consumers are passively letting an ad wash over them. But for a consumer searching for something else, it's far too short to make an impact. ''We wanted to use the site to capture our consumer and provide a unique brand experience,'' says Scott Brannan, Coke's manager of interactive communications. ''But all we were getting to do was say, 'Thanks for coming.''' Now the soft-drink maker's site focuses more on promotions, which keep the Internet consumer looking at the Coke logo a little longer. WAIT FOR VIDEO? Others have tried the service proposition, with only mixed results. P&G offers the Stain Detective at tide.com; Unilever's (UN) Ragu brand has a popular site filled with recipes; and Bristol-Myers Squibb Co.'s (BMY) Clairol site allows consumers to scan in a personal photograph and experiment with different hair colors. The idea is to let consumers ''try on'' a brand online. But even as these sites win praise from consultants, the brands continue to get most of their boost from traditional marketing. ''In direct marketing or traditional ads, it's much easier to show a return on investment,'' said Peggy Kelly, vice-president of advertising services at Bristol-Myers, at an industry conference in August. Does all this mean that the Internet is simply the wrong place to advertise cereal and soda pop? The answer may be yes...for now. Some big name brands are settling for a dollop of consumer attention online while they wait for the Web to grow up. McDonald's sports a Web site with everything from financial data to kids' games. But David G. Green, senior vice-president for international marketing, says Web marketing will only be a sliver of the McDonald's game plan, until the technology allows for more video and audio programming. ''It is more difficult for those of us who do not have a good or service that is transferable to a virtual experience,'' says Green. But while TV and print are more powerful now, tools such as full-motion video will someday be more available online. ''That makes it important for us to be in touch with the Internet,'' Green says. He, like others, acknowledges that despite current difficulties in marketing online, in the long run no one can afford simply to ignore the medium. The Net offers an extremely attractive demographic mix that will only get better. Already, the online world is losing its status as a boys' club; women now make up 38% of Web surfers. With a median income of $63,000 and a heavy tilt toward the professions, Internet users are a brand marketer's dream. Most compelling of all, the current generation of children is the largest since the baby boom, and they are growing up with the Net as a given. As they mature into the next great consumer generation, no marketer will be able to ignore one of their favorite media. The hope among the traditional TV advertisers is that new technology will give them a way to present the emotional visual pitches that have worked so well for them elsewhere. IBM just unveiled HotMedia, a new Java-based product that aims to make banner ads and other online marketing tools more visually gripping while still leaving them quick and easy to use, even by consumers with slower modems. But the real anticipation is for the day when consumers can command all the wizardry of the Internet from their living-room entertainment centers. ''Eventually, this medium is going to hit our business,'' says Denis F. Beausejour, P&G's vice-president for worldwide advertising. ''It's critical that we be in this space, experimenting, trying to develop our own business models.'' Interestingly, one industry that's already getting the hang of the Internet is retailing--an industry experts predicted would be especially threatened by the medium's emergence. Stores have begun to use their Web sites as both a sales channel and a place to build consumer loyalty and extend brand awareness. Macy's online services, for example, offer a gift registry and personal shopping assistance via E-mail. Visitors to the site, drawn by TV and print ads, are younger than the average store shopper and are more likely to be male than the average. ''It's clear the Internet presence is extending our brand to shoppers we were not reaching with our stores,'' says Kent Anderson, president of Macys.com. ''To us, that's classic brand building.'' The retailer success stories hold a lesson for all marketers: The Internet cannot build a brand alone. Macy's credits the combination of Internet and other ad vehicles for its success. And even the pure Internet companies agree. The most successful and well-known Internet companies have sought significant publicity in the real world as they've struggled to build their brands. America Online is famous for distributing free disk samples through computer magazines and the mail. Yahoo! has recently embarked on an aggressive real-world brand-marketing campaign featuring television and print advertising and a slew of licensing deals, from a co-branded Visa card to T-shirts. CAR TALK. Internet car seller Autobytel.com. Inc. goes even further. It has used mostly real-world marketing to build itself into the top car-shopping service on the Net. To woo new customers, it relies on the most traditional of marketing methods: public relations. Anne Benvenuto, Autobytel's senior vice-president of marketing, travels the country with her laptop, talking up the site to the media, to Wall Street analysts, to anyone who might talk about car buying to consumers. The company has set up publicity stunts such as car giveaways to lure press coverage. ''You can't build a brand solely on the Internet. Not yet, anyway,'' she says. Brand marketing, she adds, must be done even when the consumer is not thinking about buying your product. ''The Internet consumer is already thinking about car buying. We also have to plant our seed in the mind of the consumer not yet in the market for a car.'' That need for real-world brand building may increase as rival Internet companies begin to fight for dominance within product categories. Just look at the bruising battle shaping up between Barnes & Noble Inc. (BKS) and Amazon. Amazon, like most of the strong Net-based brands, achieved dominance because it was first to offer a high-quality online service. That has created enormous brand equity for the bookseller--but for the first time ever, it faces a rival with an equally strong brand name and the financial wherewithal and marketing skills to match. Expect Amazon to hammer home its message of superior selection and online knowhow, while Barnes & Noble plays up its authority as the nation's No. 1 bookseller. The battle of the booksellers has already created fallout. Determined not to get caught in the same bind as Barnes & Noble, for example, Toys 'R' Us is opening a new online shopping site in time for the holidays. Does the toy giant see visions of huge online profits? Not exactly. The move is at least in part defensive, to counter branding efforts by online upstarts such as tiny eToys. ''Barnes & Noble learned it the hard way,'' says Anderson. ''If you are not online, your competition is out there alone talking to the online customers.'' That highlights another lesson for marketers. The fact that such heavyweights as Barnes & Noble and Toys 'R' Us are responding to rivals a fraction their size speaks to the leveling power of the Net. If the retailers were competing in the nonvirtual world, the smaller companies would barely register as a threat. That power, the ability to turn upstart pygmies into mighty amazons almost overnight, is what keeps marketers coming back to the Net. Will rational branding prove the best way of harnessing that power? One thing is certain: Surfing the Net, whether for fun or for business, is going to become an increasingly sponsored experience.
By Ellen Neuborne in New York, with Robert D. Hof in San Mateo, Calif.
To read a letter to the editor about this story, click here.
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Updated Oct. 29, 1998 by bwwebmaster
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