Net Expert Predicts Death Of Brands

Are brands less or more important in the age of electronic commerce? That question threw up some interesting answers at one of the last sessions during this years annual meeting of the World Economic Forum.

John Hagel, partner at McKinsey and author of Net Gain, argued that branding was traditionally designed to get around two bottlenecks; lack of sufficient information with the consumer, so that the brand became a proxy for full information; and lack of physical shelf space in stores. With the coming of the internet, both bottlenecks disappeared because those on the web could access all the information they wanted, and there was no need for physical shelf space.

 

Instead, Hagel argued, the new bottleneck was limited attention span. The challenge of branding, he therefore argued, lay in maximising the return on attention, and one way to do this was by gathering as much information as possible on the customer and then customising products or services to meet the needs of individual customers.

Halsey Minor, founder of CNET (which is a web-based service for all information related computers, and which gets 1.5 million hits a day), dwelt on how to create a completely new brand on the web.

He argued that doing this was akin to creating a TV programme-content was critical.

Minor recounted how Jaguars sold in the past even when the car was built badly, because a lot of people saw themselves as Jaguar drivers.

This could not happen on the web; no one saw the serial Dallas or Dynasty because they thought they were Dallas type people. They had to like the programme.

The second challenge, Minor argued, was to ensure stickiness, or getting people to come back to a web site. He said the internet made it possible for word of mouth publicity (both good and bad) to reach millions of people very quickly indeed. So you had to make sure, for instance, that your site worked well and stood out from all the other sites that dont work very well.

But advertising remained critical in order to create awareness, and Minor said his company spent every fifth dollar it had on a major advertising campaign to tell people that there was a good web site. At the end of it all, the brand had become critically important, he said, because his creative director told him the value of the CNET brand was equal to the value of the entire company.

Rodney McLaughlan, senior managing director of Bankers Trust, described banking in the wholesale segment of the market as nothing other than information arbitrage. And Ed Jensen, CEO of Visa International, said the electronic world helped glocalise a business. He argued that Visa was one of the original cyberbrands because no one knew where it was or came from and it enabled electronic commerce by facilitating payment.

Michael Cutillas, chairman of Bacardi, argued that you had to stick to the basic principles of branding but exploit the new electronic tools that were available.

The internet, for instance, could be used to track consumer trends far more closely, he said.

Cutillas underlined the importance of the brand, no matter what the context, by recounting how in 1960 Castros Cuba had taken over all the assets of what was then a 98-year-old company. All the Bacardi was left with, according to Cutillas, was the brand name for the companys rum, and the senior executives.

With those as a starting point, Bacardi has been re-build into a company 200 times bigger than it was in 1960.