A conversation with Phil Carpenter, author of eBRANDS: Building an Internet Business at Breakneck Speed - eBrands: Building a Brand on the Web

A conversation with Phil Carpenter, author of eBrands: Building an Internet Business at Breakneck Speed HBS Press, 2000.

Define "brand"—a word that tends to be tossed around fairly loosely—and the related concept of "brand equity."

A "brand" is a distinctive name or symbol, such as a Nike logo or the Coca Cola bottle, that is intended to identify goods or services as those of a particular company or trade group, as well as to differentiate those goods or services from competing products. "Brand equity," on the other hand, is a set of assets and liabilities linked to that brand that can add or subtract additional value to the product or service. Brand equity is a broader term, and is the concept that is at the heart of eBrands. I'm not merely interested in telling you about how Barnesandnoble.com developed its logo. EBrands looks at subjects such as the techniques the firm has used to generate brand awareness, the ways in which the company has developed brand loyalty, and its approach to securing distribution through strategic partnerships with other Web players. Although creating a great logo may be hard, getting these other things right is much harder.

Real-world brands that are widely recognized, like Coke or Visa, have invested years establishing a presence. Do you think online brands are as enduring as offline brands?

I believe that online brands have the potential to be every bit as enduring as their offline counterparts. Given that the commercial Internet really only began to take off in 1994, we don't have a long time horizon over which to evaluate the durability of Internet brands. But if you look at brand awareness as a way of gauging the success of these "new economy brands," the newcomers are doing extremely well. Companies like Yahoo! and Priceline have penetrated our consciousness just as deeply as have offline brands, some of which have been around for a lot longer.

The packaging of nearly every product is emblazoned with a URL these days. What role should brands like M&Ms and Tide have on the Internet? Visitors can't buy or sample the product online.

Just because these products can't be consumed online doesn't mean that the marketing teams behind them shouldn't include the Web as part of their marketing mix. The Web can be used to communicate information about such products that will increase usage. The M&Ms site, for example, could include recipes for M&M filled goodies that will get consumers to buy and use the products in new ways. A Web site can be used to build loyalty. For example, a Tide consumer might be able to visit the Tide site, enter proof of purchase numbers and his address, and receive a coupon for his next purchase. And the Web serves as a fantastic vehicle for the distribution of information. The Tide site might offer tips on the best ways to get grass and blood stains out of children's clothing, for example.

Some of the goals of brand-building are the same online as they are offline; for example, generating awareness and building loyalty are essential to both. How do they differ?

There are a variety of differences between online and offline branding; let's focus on two examples. In the online world, distribution has emerged as being even more important than more traditional brand-building tools. If you don't have Web allies that can get your brand in front of large numbers of people at a reasonable cost, it's unlikely that your business will thrive. Also worth noting is the value of perceived market momentum. In the book, I describe a phenomenon I call the "Mo Factor" — the need to communicate a constant sense of momentum, that your company is driving forward quickly and accomplishing great things along the way. Smart online marketers know that with momentum behind them, barriers to business success get pushed out of the way. Strategic partners become more eager to develop alliances. Potential competitors think twice about entering the category. Customers see the company as a winner, which strengthens the perceived quality of the brand. Without momentum, however, a Web company will languish. Cultivating the "mo factor," therefore, is critical to building a powerful Internet brand.

Advertising has always been a cornerstone for building brand awareness. As the competition for ad dollars intensifies, how can a start-up like Fogdog, whose pockets aren't as deep as more established players, compete?

Start-ups with limited resources need to focus their advertising dollars. They can begin their efforts online, where advertising buys can require smaller financial commitments. And they can also do targeted offline buys — radio advertising in a select group of cities, for example, or cable television. But advertising is just one element of the marketing mix. I'd argue that PR is actually more important than advertising in the Web space, and a good PR program is significantly cheaper to run than a sizeable advertising campaign. And smart distribution deals can raise visibility for Web properties at prices that are much lower than traditional offline advertising. There are numerous ways in which start-ups can build brand awareness; while effective, advertising should not be seen as the "silver bullet."

Web vendors that manage to attract visitors, and maybe even turn a transaction, are still faced with the difficulty of getting customers to return. CDNOW, with repeat purchase rates of over 50 percent, and iVillage, which has built a devoted online community, keep people coming back for more. What contributes to such strong brand loyalty?

On the Web, brand loyalty is rooted in providing customers with an outstanding experience. An e-commerce site, for example, can contribute to loyalty by offering a great selection, good prices, and a simple purchasing process. A news and information site can offer rich, relevant information in a format that is easy to navigate. Companies must supplement an outstanding usage experience, however, with marketing programs that help to draw customers back again and again. Through email, companies can reach out to their customers with e-commerce opportunities or information offerings that are uniquely tailored to their needs. Through this process of "mass customization," firms can present themselves in slightly different ways to large numbers of people, cementing long-term relationships with customers by tuning their offerings to meet the distinct needs and interests of those customers.

Many of the companies you profile in eBrands have benefited from an early mover advantage. What advice do you have for latecomers to the Web?

At this point in the evolution of the market, latecomers to the Web will be best served by looking to exploit distinctive market opportunities. Sure, a company can create yet another online drugstore. But in doing so, it is destined for an extremely expensive marketing battle if it ever hopes to steal share away from the incumbents. I believe that today's Web entrepreneurs should pay particular attention to niche opportunities, markets in which they will not be forced to battle entrenched players with resources much greater than their own. Once they've identified these fertile markets, the best practices outlined in eBrands should be at the heart of the plans that these start-ups develop. Build brand awareness. Forge strong content and distribution relationships. Work hard to provide extraordinary value and customer service. The core concepts the book contains are valid for both early entrants and newcomers alike.

The level of customer service online still lags behind the service customers receive offline. How much impact does this have on a brand?

Providing quality customer service is proving to be increasingly important as the Web matures. This is true for business-to-business and business-to-consumer players alike. While early adopters of the Web might have tolerated mediocre customer service as an acceptable cost for having easy access to a world of books or CDs, that is no longer the case now that the average Joe has begun shopping online. And businesses making significant purchases online now expect the same kind of attention from Web vendors that they receive from their offline suppliers. While the customer service offered by many Web-based firms is still sub-par, this won't continue for long. Poor service has an extremely damaging affect on brand, and those companies that don't shape up quickly will not survive as the Web evolves.

We're seeing Internet companies extend the product categories they offer. For example, in addition to books, Amazon.com now sells CDs, electronic equipment, and has even entered the auction business. Is this a smart strategy-becoming one-stop shopping for customers-or does it dilute the brand's image?

I would caution companies to be careful about how far they attempt to stretch their brands. Extending the breadth of categories covered can help a company to reduce its cost-per-sale by cross-selling. Once Amazon has sold me a book, for example, it has the opportunity and permission to pitch me other related items. But how broad is too broad? When does the brand begin to lose its meaning? I would argue that by moving into categories such as hardware and home furnishings, Amazon has gone too far. Its brand will soon mean nothing more than "big." To avoid stretching their brands into illogical territory, companies should be sure to do their homework, to talk to customers about which product categories are a good fit with the brand and which ones just don't compute.

You discuss crossover marketers—real world companies that have moved onto the Web. What strategies should these companies employ to successfully take their brands online?

Real world companies should make sure to bring their core brand elements onto the Web. From their color schemes to the tone of their language, from logos to cartoon characters, companies should make sure that elements that have become an integral part of their offline brand personalities are carefully integrated into their online brand personas.

Another key tip: companies that have had great success offline should make sure to aggressively leverage their offline assets to build their Web brands. If they have retail stores, they should tap these stores to promote Web-based shopping as a convenient alternative. If they have TV properties, they should drive viewers from the set to the PC. If they have magazines, they should salt them liberally with pointers to their online editions. These offline properties can provide tremendous exposure for a Web brand; using them wisely can provide cross-over marketers with a tremendous advantage.

In the end, who will be the biggest winners on the Web: pure-plays or crossovers?

In my opinion, there is plenty of room for both pure-plays and cross-overs. Each type has its distinct advantages, as well as its limitations. Long-term, the most successful firms will be those that maximize the value of those advantages while skirting the problems that stem from their limitations.

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