Brand Building - Building A New Brand

BUILDING A NEW BRAND

New e-commerce companies that want to build their brands typically begin with an ad campaign to build brand awareness and market share. Oftentimes, that proves expensive, and funds may run out before the brand is established and the enterprise can sustain itself. In the crowded field of online brokerage firms, E*Trade and Ameritrade spent heavily to establish their brands. In 1997-98 Ameritrade Inc. spent $20 million on a national advertising campaign that focused on the company's $8 online trading fee. While heavy advertising expenditures built awareness and helped increase the number of new accounts, Ameritrade sustained higher quarterly losses as a result of its marketing expenditures. Apparently the company was satisfied with this approach, however, as in 1999 it spent another $50 million on advertising to launch OnMoney.com, its financial portal.

E*Trade's large expenditures on advertising to build its brand resulted in it being the fourth most recognized e-commerce brand in 1999, behind Amazon.com, eBay, and Priceline.com ., according to the Internet Brand Study by Opinion Research Corp. In 2001 the company used its Super Bowl ad to position itself as a brand that could still be trusted amidst the failure of so many dot-com companies in 2000. The ad served to remind people that E*Trade was not going to go away like many other dot-coms.

A smaller start-up brokerage, Web Street Inc., spent $10 million in six months on cable TV and newspaper ads to make its name better known. MarchFirst, a newly named electronic commerce and information technology (IT) consulting firm formed by the merger of Whittman Hart Inc. and USWeb/CKS, launched an $18 million ad campaign to gain recognition for its new name. According to Crain's Chicago Business, the ads more than tripled the number of visitors to the MarchFirst Web site. That firm later became one of the higher-profile casualties in the dotcom shakeout.

Priceline.com appeared more successful at using advertising to reach a mass audience and build its brand. Its aggressive radio and newspaper advertising strategy (begun in 1998 and later expanded to include television) featured the actor William Shatner as a spokesperson. The company's ads resulted in name recognition for Priceline.com among at least a quarter of the U.S. adult population, or some 50 million people, according to a study by Opinion Research Corp., which listed the top five Internet "megabrands" as America Online, Netscape, Yahoo!, Amazon.com, and Priceline.com.

Once a company's brand and its market share have been established, it will typically cut back on brand-building advertising expenditures. After studies showed that Egghead.com 's brand was fairly well established, for example, the company slashed advertising and marketing expenditures by 65 percent year-to-year in the fourth quarter of 2000. Replacing online advertising at Egghead.com were telemarketing, direct marketing, and more marketing to the firm's customer base. As with so many of the dot-coms, it was difficult to say whether this strategy succeeded; by the second half of 2001 Egghead had filed for bankruptcy.