NEW RULES APPLY AS BRANDS MOVE ONLINE

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Brand names have traditionally been represented in marketing by one-sided, impeccably groomed, untouchable images.

But in the nascent, seductive world of new media, brands have taken on lives of their own. Quite touchable lives. Where consumers can choose to interact with the brand or ignore it.

Interactive media is turning the entrenched relationship between marketer and consumer on its head, giving consumers an unprecedented number of choices and levels of control over the messages they receive. And that's forcing marketers to radically alter their brand-management strategies.

"Up until now, the conventional media have been where we've bought time and space, and people have watched the media" and seen commercial messages, said Lynn Upshaw, managing director of Ketchum Interactive Group, San Francisco, and author of the forthcoming book "Building Brand Identity: A Strategy for Success in a Hostile Marketplace" (John Wiley & Sons).

But in the new consumer-controlled environment, "brands are going to have to be a lot more irresistible in everything they do for people to select them," he said.

That thinking requires new skill sets. MCI recently hired the No. 2 executive at Prodigy to oversee, and shape the image of, its branded Internet services.

"There's a real unique dynamic in new media," said the executive, Scott Kurnit, president of MCI Business Information Services Co. "You can't just throw an ad in front of someone. A commercial presence on the Internet should offer about 80% to 90% value and 10% to 20% ad."

That transformation requires companies to put marketers, rather than techno-geeks, in charge of their new-media efforts.

"New media are not about technology," said Nicolas Kojey-Strauss, senior account planner/new-media strategist at Merkley Newman Harty, New York. "They are about developing new ways for brands to communicate with their customers. Brands are going to make a comeback in new media by having a different kind of relationship with their consumer, a two-way relationship."

New-media brands are struggling with the same issues themselves. The growth of the Internet and the multimedia World Wide Web and the coming of rivals like the Microsoft Network are putting increased pressure on commercial online players like America Online, CompuServe and Prodigy to brand their services.

That means the war for content providers will heat up, since the commercial services have counted on third-party brands like Time, CBS and MTV to differentiate themselves and draw consumers.

"Branding is the ultimate defense against commoditization, and at a time when a subset of pundits continues to call for the demise of commercial online services, the powers of a brand and the attributes associated with it are how you defend yourself," said Scott Kauffmann, VP-consumer markets at CompuServe.

He predicts commercial online services will add more image campaigns to their traditional marketing mix, which now rely heavily on direct marketing and software bundling.

Established brands have an advantage over brands that are born in cyberspace and lack the equity that comes with having an established customer base and well-oiled marketing machine.

"Without a doubt more powerful brands have a better shot at getting consumers to try their new-media application than start-up brands," said Russ Ferstandig, a consultant specializing in online consumer behavior. "Time magazine on Pathfinder has a much better chance of attracting someone than a no-name start-up, but they also have to ensure the standards of their new-media efforts are at least as high as their core business, because if they're lower, they risk undermining their current brand equity."

Starwave Corp., Bellevue, Wash., has taken both the branded and non-branded approach to developing online services. It started its own unbranded sports service but later turned that into a joint venture with sports powerhouse ESPN. It has also launched an outdoor-oriented service with Outside and last week rolled out Mr. Showbiz, a new entertainment brand. A family service in development will also carry its own, new brand name.

"We went into this saying we don't know how important brands are so we're going to go at it from both sides," said Tom Phillips, VP-publisher, Starwave. "I might have postulated that the Web would reject existing brands because it's sort of a rebel culture, but it turns out that's not true. It turns out we seem to be doing well on both fronts."

Debra Aho Williamson contributed to this story.

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