It sometimes seems as if the courts have spent the past year clogged up with companies trying to retrieve the dotcom versions of their brand names from a new generation of Internet speculators. Yet some of the most successful and memorable online businesses launched by bricks-and-mortar companies have been launched under a brand-name which is completely different from the parent company. So, should you create a new brand identity or stick with your existing brand when going online?
Launching a new brand - whether offline or online - is not cheap, so it is not a decision you should take lightly. "The spend to build a new brand is enormous and you can't say you've built trust and brand loyalty until at least three years out," warns Irene Inskip, a director of branding and design consultancy Corporate Edge, which worked with Prudential to develop the Egg brand. "Internet technology is seductive and implies you can do things faster, but one thing you can't do quickly is change customer perceptions. One of the big disservices ad agencies did was to pretend building name awareness was the same as building a brand."
Yet there are times when it does make sense to create a new brand: when you're targeting an audience which includes very few members of your existing customer base or have a proposition that is radically different to your existing brand. For example, Abbey National created Cahoot - as well as going online under the Abbey National brand - because it wanted to target more affluent customers who had not responded to its main brand proposition in the past. Similarly, explains Inskip, Prudential created the
Egg brand because its main brand was so closely associated with insurance that it didn't have credibility as a provider of online banking.
If you do create a new brand, says John Hall, senior vice-president at branding and Internet consultancy Siegelgale, which developed the Cahoot brand for Abbey National, you need to decide whether to link the new brand explicitly with your existing brand, and whether to transfer some of the brand values of the main brand to the online operation. Both Egg and Cahoot wanted to draw on the aura of reliability and solid backing their parent-brands held. At the same time, the new brand needs to be sufficiently independent to allow consumers to associate it with different values.
A number of companies have also created new brands - and new subsidiaries - because they didn't have the right culture and corporate structures within the main brand to move quickly enough to deliver the brand promise. "It was a way to create an organisation that was true to the brand," says Richard Gold, head of the interactive media team at branding consultancy Wolff Olins. "But many have found that it costs a fortune to generate and keep business. Now that they've built the infrastructure and it works, a lot of companies are asking why they are supporting two brands and are looking to pull them together into an overall branding strategy."
In addition, points out Chris Wills, an online marketing consultant with Internet consultancy Business Systems Group, any offline brand needs to have some online presence these days - even if the company's main efforts are focused on a new brand - otherwise people begin to question the credibility of the brand. Gold agrees that you need to think about what to do with your existing brand, even if you're creating a new brand, because if you don't make an online offer to customers they will go elsewhere.
There are also advantages to sticking with existing brands when developing online, not least the ability to draw on brand loyalty and understanding created through previous investment in the brand in other channels. However, Wills warns, companies are right to be cautious about taking existing brands online. "The whole idea behind branding is to deliver a promise. With the Internet there is the potential for things to go wrong, while consumers can now have high expectations for online operations," he says.
Furthermore, if you are taking an existing brand online, you need to transfer all the brand values that the offline brand can lay claim to into the online experience. Hall warns that this will not happen automatically, especially if the customer experience is markedly different online from that offline. Wills says that if it is not possible to replicate every attribute of an offline brand on the Web, companies should cherry-pick the brand elements they can deliver and then create a sub-brand that offers a more limited proposition to customers, which can be delivered.
Going online can provide companies that have messy offline brand strategies with an opportunity to review their branding and allow brands to interact more effectively. Wimpey Homes, for instance, has sub-brands which sometimes compete against each other for business. The company's Web site allows it to pass leads from one brand to another if the first brand proposition cannot support the sale.
Above all, you should remember that the fundamentals of branding stay the same whether you're online or offline. "You shouldn't be thinking, 'We're going to be an Internet company, so what's the strategy we should use?', but start from the point that you're a particular type of company, with this kind of brand strategy, and then work out how to apply that to the Internet," says Gold.
Harvey Nash survives credibility gap with FirstPersonGlobal
When established technology recruitment agency Harvey Nash set up its online arm, it created a new brand, First-PersonGlobal. Its chief executive officer Paul Smith admits the reason for this decision was a fear of jeopardising the main Harvey Nash brand - especially as the company is publicly quoted. However, a new brand also made sense because First-PersonGlobal was interested in using the Internet to explore different approaches to recruitment, while the company thought there was potential for shareholder return through a spin-off of the Internet arm.
The FirstPersonGlobal brand did have some success, but the company quickly found that it lacked credibility, especially among the senior executives it was targeting. "The cost of marketing to achieve a large candidate database was prohibitive, especially as we needed to distinguish ourselves from job boards and make it clear that we offered a full service," says Smith.
The company also found that the new brand was cannibalising its existing business and realised that its online offering should be similar to its offline model, with the Internet providing improved communications.
By adopting a strapline under the FirstPersonGlobal name, the link with the Harvey Nash brand was made explicit. "We immediately saw a dramatic effect on people's
willingness to register," says Smith. "They now felt that their CV would be safe, that we knew the marketplace and that we had a well-supported infrastructure and approach."
The company has since given the Harvey Nash brand greater prominence on the site. Behind the scenes, integration of all candidate and vacancy databases means that it no longer competes against itself.
"Knowing what we know now, we would have created a sub-brand called Harvey Nash something," says Smith. "We would have used the value of our existing brand more effectively. But the approach we took means we could create a new brand with value in its own right, while Harvey
Nash has benefited from the FirstPersonGlobal brand and new model we created."
Micron Technology relabels online as Crucial
As one of the world's top three manufacturers of DRam computer memory, Micron Technology was quick to see the potential of the Internet as a channel for direct sales to the consumer upgrade market. However, Micron needed to minimise conflict with its existing sales channels, while it was still not clear at that time - November 1996 - whether Internet-based commerce was viable, so there was some risk to the reputation of the parent company. This was also a market Micron had never targeted directly, so its existing brand would be a "new" brand in customers' minds. It therefore made sense to launch the e-business under a separate brand, Crucial Technology.
Rafe Vandeberg, Crucial Techn-ology's marketing director, adds that the separate brand gave Crucial
more flexibility when developing its business because it didn't have to think about the impact on the parent brand or deal with the "baggage" the Micron brand had acquired. However, where appropriate, Crucial could leverage its relationship with Micron, drawing on Micron's reputation for quality products and the security Crucial could offer as part of a large company with a 20-year history.
Micron was willing to give Crucial time to grow its revenue, allowing Crucial to build its brand through word-of-mouth rather than expensive advertising campaigns.
"Our offering is based on quality and service as well as value," explains Vandeberg. "Our stance from the beginning was that it would be more powerful to build the brand through interactions with customers, showing them what we could do by delivering on every element of our brand promise, rather than just telling them about it."
Now Crucial is one of the top three memory upgrade providers globally, conducting more than 90% of its business on the Internet.
WHSmith relaunches on the Web simply by adding "Online"
WHSmith entered the online world in 1998 when it bought Internet Bookshop. The company's first move was to clone the site and rebrand it as WHSmith Online. WHSmith Online managing director Kate Kennedy says the option to launch under another brand was dismissed as soon as it hit the table. "The online store is selling the same product categories as the high street, only at greater depth, and we have an established brand with a 200-year history," she points out.
Also, the WHSmith brand attributes of trust, security, reliability and accessibility work well with the Internet. "If customers are nervous about using their credit card online, they feel they can shout at someone in our shops in the real world," Kennedy says. In return, the Internet operation has altered perceptions of the main brand.
However, with such a strong brand, it is essential that the e-business operation blends with the company's other channels. Kennedy admits that the company's initial efforts were "a bit 'launch and learn'. We're now finessing our efforts and making the site more like the high street in terms of product categories and navigation."
Kennedy also knows that customers judge the online world by the same standards that they apply to the offline world. "They expect perfection and we have to make sure our online service lives up to the brand promise delivered through our stores," she says. "We can't allow online customers to be disappointed and then become disappointed by the main brand. A lot of time has been invested in building the value of the main brand and we have to be careful not to damage that."
This was first published in August 2001