Internet portals such as Yahoo!, Excite and Lycos are often held up as paragons of the Internet economy, aggregating online content and customers on an incredible scale. Leading portals have become among the most prominent companies in cyberspace, and have been rewarded with both mind-boggling stock valuations and investment backing from blue-chip companies such as Microsoft Corp., NBC, Netscape, USA Networks and Walt Disney Co.
The success of these sites has caused a wild outbreak of "portalitis" on the Internet. In the last three months alone, more than 20 major companies, including Dow Jones & Co., Federal Express Corp. and Time Warner have announced large-scale portal efforts.
A closer look reveals this enthusiasm is hardly justified. Even the leading portals are almost completely undifferentiated businesses. They are visually indistinguishable; they structure their information the same way; provide the same services and features; and make largely the same commerce deals with the same limited pool of merchants.
PORTALS VOID OF `UNIQUE FEATURES'
To begin to see just how undifferentiated these e-businesses are, we've assembled a little quiz. We've taken each of the six leading portals' home pages and stripped away their logos. Can you identify which company owns which portal?
If you found this task difficult, you're not alone. When we asked 100 Internet professionals to complete the quiz, only two could successfully identify all the portals. Most identified fewer than half correctly. If trained professionals can't differentiate these sites, can consumers be expected to do so?
We also examined the way these Web sites structure their content into channels and found that, on average, 90% of the sites' "tables of contents" are identical in both language and structure.
We also did a head-to-head comparison of 29 different portal features and functions. The result? We couldn't identify a single unique feature of any significance on any of the portal sites.
With statistics like these, it's little wonder Internet research firms IDC and Media Metrix recently found a startling 22 million home Internet users--more than half the market--have no loyalty to any of the portals.
This lack of differentiation not only inhibits customer loyalty, it erodes the portals' ability to deliver value to their advertisers and commerce partners, who provide the lion's share of the revenue. According to Jupiter Communications, fewer than 5% of e-commerce executives say they are "highly likely to renew" their current agreements with portals because without compelling loyalty programs, portals do little to help deliver repeat purchases.
If the current "portal wars" show us anything, it's that no portal can differentiate solely on the basis of technology. While technology is clearly important, each innovation introduced by one portal (such as personalization, free e-mail or home page-building services) has been commoditized within weeks of its introduction.
To compensate for this effect and to differentiate themselves from the pack, Web portals should invest heavily in establishing a clear, compelling brand voice. With the exception of Yahoo!, none of the portals has effectively developed its brand.
Developing a brand voice means more than devising a beautiful logo, a witty tagline and humorous advertising. It means identifying a credible and relevant promise to the market, and delivering on that promise in every interaction with site visitors.
A clear understanding of this brand promise and personality should drive a portal's content and technology decisions, not the reverse.
LACKING A CENTRAL IDEA
A textbook illustration of this principle was recently provided by Time Warner, which has finally been forced to shelve its Pathfinder.com content portal. The service didn't fail because of the quality of its content or the depth of its technology. It failed because the service was never driven by any central idea. By trying to be all things to all people, the service ended up being nothing to anyone.
An understanding of the brand promise should influence site design as well. The need for technical simplicity may once have required keeping portal home pages visually plain, but the lack of branded design within these sites today is shameful.
The portals are presented with an incredible opportunity to innovate. The first one that stops senselessly piling on commodity technologies and delivers site visitors a true branded and integrated experience will reap extraordinary rewards. Which portal will win this race is anyone's guess. But there must be change because the current state of affairs is unsustainable.
Mr. Siegel is CEO of Siegel & Gale, New York, and Mr. Zolli is a VP at Siegel & Gale's Interactive Media Group. Siegel & Gale specializes in strategic brand-building, communications and interactive media.
Copyright May 1999, Crain Communications Inc.