Two weeks ago, at DEMO 2000’s tenth anniversary in Palm Springs, a wide range of hopeful new dot-coms vied for the attention of the media, investors, and potential partners. IDG, the event’s organizer, did its best to prevent the new dot-coms’ marketing machines from going berserk, but still every opportunity for marketing was found and creatively used.
The hotel rooms, the cutlery, the cocktails and breakfast all became vehicles for marketing gimmickry. At the exhibition itself, dot-com marketing and press personnel jostled to grab delegates’ attention. The fight simply reflected a broader reality about what is going on in the wider world of Internet entrepreneurship.
On average, new dot-coms spend $25 million per year on marketing. If you were to approach an advertising company with a smaller budget they’d look at you as if you’d just arrived from another planet.
The tactics in this battle for consumer recognition are even more desperate during events like the Superbowl. This extravaganza secured almost 40 companies as advertisers and most of these were dot-com entities. A year ago, such exposure was enormously successful for a handful of dot-com companies. This year resulted in disaster, as expected. Not many in the audience could recall unaided any of the new dot-coms that were paraded before them. But many could recall the well-established brands.
Thus a very expensive advertising investment on the part of these new dot-coms effectively turned into a generic advertising campaign for the Internet itself. The most significant thing many recalled about the dot-coms is that they were… well, dot-coms. The rest of the name escaped them.
So is the advertising battle worth the investment? While the combatants shout and scream about their brands, as they did at the NYSE, no clear voice can be distinguished in the cacophony. What’s the solution? Should new companies scream louder to be heard? Or should they leave the room and initiate dialogue outside NYSE? Will next year’s average dot-com budget have to be $40 million to establish a brand name? Or will something dramatic happen to halt this desperate trend?
It’s likely that alternative communication channels will be used for promotion. Radio, television and outdoor spaces are fully booked for the next half-year. The print media is approaching the same saturation level. So guerrilla marketing could be the next big thing. Internet start-up half.com, for instance, paid a small U.S. city to change its name to the brand’s domain name.
But consumers have a low level of tolerance for stuff like this. The lavishly unexpected can become as ineffectual as white music if it’s here, there and everywhere. The alternative might therefore be simple: Go back to basics.
The reason names like Pepsi, Visa and M&M’s are so readily recognized and remembered by consumers is because they were established at a time when the advertising noise wasn’t as loud as it is now – and because they’ve invested years in establishing a presence in the market. Significantly, such brands have a concrete existence in the real world with products on supermarket shelves, brand names in display windows, and so on.
Most dot-com companies have barely any visibility in the everyday community, with billboard advertising representing their toehold on real-world participation.
New dot-com brand names are likely to appear on the scene in partnerships, similar to Charles Schwab‘s clicks-and-mortar strategy. The idea is that the mortar isn’t just in the recognition value of bricks-and-mortar retail stores. It’s also in every shelf product the consumer knows and loves.
This isn’t to say we won’t see any new dot-com names appearing in the future. But it’s likely we’ll see new brands combining their marketing efforts with those of existing brands to exploit the leverage they can enjoy from association and borrowed brand profile. The offline brands deliver market position while emerging dot-coms offer a new mindset.
The past five years of the World Wide Web have been characterized by the exigencies of online survival. But nothing can survive forever in extremes, and now the pendulum is swinging back. And as it does it hints at how important brands will be in the next clicks-and-mortar wave.