Cover image for eBrands : building an internet business at breakneck speed
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eBrands : building an internet business at breakneck speed
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Boston, Mass. : Harvard Business School, 2000
ISBN:
9780875849294

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Razak School 30000005169135 HD69.B7 C37 2000 Open Access Book
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Summary

Summary

This text focuses on internet brand strategies with best practices of top brands. It argues that a powerful electronic brand is just as essential as strong on-line service and traditional businesses must invest in all facets of corporate brand development on the Internet.


Reviews 2

Publisher's Weekly Review

Applying traditional business analysis to the realities of the new economy, Carpenter presents marketing case studies of six Internet firms to explain how brand making is conducted in the world of e-commerce. The music purveyor CDNow successfully adapted the old-fashioned hardsell by peppering customers with follow-up e-mails encouraging them to buy more. Yet Fogdog Sports tried more or less the same thing for sports equipment with less success. According to Carpenter (a Silicon Valley marketing director), Barnesandnoble.com has made its mark with Avis's old "number two tries harder" strategy, positioning Amazon.com as its Hertz. Unlike the first three, Yahoo! and iVillage were never bricks-and-mortar stores; their marketing tactics reflect their greater understanding of the Internet medium. Yahoo! staked out prime Internet real estate and defended it successfully with a combination of sharp personality and technical innovation; iVillage draws customers into interactive relationships with content, creating an umbrella organization of branded virtual spaces like Parent Soup and Better Health. Meanwhile, OnSale.com was an early online auction site that missed out on the growth of that business and is now merging with failed bricks-and-mortar computer retailer, Egghead, in an Internet retail venture. From these cases, Carpenter extracts several valuable lessons (among them, pay attention to the power of momentum and forge strong content alliances), but the book's format and organization is more likely to appeal to business school students than to practicing marketers. (June) (c) Copyright PWxyz, LLC. All rights reserved


Library Journal Review

Carpenter, a veteran Silicon Valley marketing executive, describes the benefits of "branding," i.e., establishing a powerful brand name on the Internet. His premise is that people cannot and will not search out all the options for e-commerce but will gravitate toward the well-known names. In separate chapters, he profiles six companiesDYahoo!, CDNow, iVillage, Onsale, Barnesandnoble.com, and Fogdog SportsDhelpfully using a common format for each. He identifies all of them as leaders, but, tellingly, only Yahoo! has ever earned a profit, and the 1998 financial figures used here actually show a loss. In addition, CDNow recently saw its stock price plummet more than 80 percent. Carpenter makes a strong case for spending in order to build brand identity, but he cannot prove that the theory actually pays off. His theories of brand identity and his analysis of the e-commerce market do merit attention, however. Recommended for larger public libraries and academic libraries.DA.J. Sobczak, Covina, CA (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.


Excerpts

Excerpts

Chapter One www. iVillage .com     When Bonnie Sakadales's marriage broke up, she turned to the Internet for advice on raising her son and daughter alone. During her search for parenting information, Bonnie found Parent Soup, an online parenting community developed by New York-based iVillage. She began participating in Parent Soup's online chat forums. Within days, she struck up a conversation with Al Oswego, a fellow single parent who was struggling with custody issues. Online exchanges soon became telephone conversations. Eventually, Al drove to Maryland to meet Bonnie. They fell in love and were married on Valentine's Day, 1996. Bonnie continues to voice the highest praise for Parent Soup. "It gave me a world to be in besides work and the kids. I can't imagine what my life would be like without it."     This level of enthusiasm for a product or service represents nirvana for marketers. And although the majority of its customers have not married people that they have met through iVillage, the iVillage network has become a valuable resource for thousands of people every day since the company was founded in 1995.     iVillage was formed by two women with extensive experience in the media industry. Candice Carpenter, chairman and CEO, was president of Q2, Barry Diller's electronic retailing venture, and had also served as president of Time-Life Video and Television, a Time Warner subsidiary. Nancy Evans, president, was the creator of Family Life magazine and had served as president and publisher of Doubleday and vice president and editor in chief of the Book-of-the-Month Club. Both had built successful businesses in the offline world and were intrigued by the possibility of developing an innovative new media venture, one that would take advantage of their past experience but also present them with the intellectual challenges that come with operating in an emerging industry. Their vision was to humanize cyberspace, to develop a home on the Web for people to find and exchange information about some of life's most challenging issues, such as parenting, work, and relationships. As Carpenter described it, "I was really interested in combining the authentic quality of a lot of the communities I saw springing up online--communities that had a powerful influence on people's lives--with a strong commercial model. In addition, I wanted to make cyberspace a really good place for normal people, those outside the CNET crowd. I wanted to build something there that they would find extremely useful."     In its early days, the company had a single online property to its name: Parent Soup, a community available both via AOL and the Web that is dedicated to parenting issues. Over the last three years, however, iVillage has grown substantially, developing additional online communities focused on issues such as health and fitness (Better Health), relationships (the Relationships channel), and personal finance (Armchair Millionaire). The network is now generating more than 73 million page views a month, which makes it the thirty-fifth most heavily trafficked media property on the Web. With 3.9 million visitors each month, iVillage is attracting a healthy number of regular viewers, putting it in the same class as sites such as Ask.com, an emerging search engine, and Sportsline.com, a sports content site. And among its regular customers, more than 1.6 million have registered for the iVillage network, providing the company with valuable demographic data that it can use to generate greater revenues by selling targeted advertising and presenting focused ecommerce offers.     Although such measures cast the company in a positive light, iVillage has its warts as well. It was late in developing an umbrella brand, for example, and focused instead on developing individual Web properties. As a result, it missed out on the marketing efficiencies enjoyed by companies such as Yahoo! that focused on developing an umbrella brand early on. In addition, iVillage has not yet seen financial success. By the end of 1998, the company had lost more than $65 million, and "it is known for having one of the most impressive burn rates in the business." iVillage has also had a fair amount of personnel turnover. Although the company has been successful in cultivating a closely knit online community, it has had much greater difficulty developing a positive work environment.     Its rich mixture of strengths and shortcomings makes iVillage an intriguing case study. What marketing strategies and programs has the firm invested in to get where it is today? How has the company taken advantage of partnerships to enhance the value of its brands? How well is iVillage positioned against the current competition, and what new competitors loom on the horizon? Are the company's personnel problems getting in the way of its brand-building efforts? In this chapter, we'll consider these and other issues in an effort to learn from iVillage's experience as a marketer in the new media sector. Best of Brand We begin this chapter with a look at those things iVillage has done well in its drive to build a major Internet brand. For example, iVillage has made effective use of public relations to build awareness and a sense of marketplace momentum. It has cultivated a rich online community, which in turn has helped iVillage to build a base of loyal customers who frequent the company's sites and evangelize the benefits of the firm's services to their friends. It has developed an intimate understanding of its customers' needs by listening to its users and observing their behavior, and the company has leveraged this knowledge to improve its service and sharpen the focus of its marketing efforts. It has forged a rich network of partnerships with other firms, providing the company with wide-scale distribution across the Internet and thus building both traffic and brand awareness. These are among the notable iVillage successes we'll examine as we come to know the best of the iVillage brand. Brand Awareness The efficacy of iVillage's awareness-building efforts stems from the company's strong sense of identity. From the beginning, the company has staked a claim as a place to which people can come for online information and advice on some of life's biggest challenges. Whereas much of the information available on the Web is irrelevant to our day-to-day lives, iVillage concentrates on presenting content that is relevant and useful. I have breast cancer; what are my alternatives to a full mastectomy? I'm pregnant; where can I find more information on the Family Medical Leave Act? What questions should I ask a nanny during an interview? Where should I seek counseling for a child with a drug problem? iVillage is about taking an honest look at tough problems and helping people to develop solutions, iVillage is real, not aspirational, explains vice president of member services and marketing MacDara MacColl. "Part of the essence of our brand is to say, `This is life. Let's enjoy it and get on with it. Let's not pretend that it would really make our lives great if we gold leafed our ivy.'"     Originally, iVillage focused its attentions on the baby boomer community--a natural for company founders Carpenter and Evans, who are boomers themselves. In the spirit of pragmatism, the company directed its efforts toward the early Web adopters among the boomer audience. But iVillage has always had its eye on the mainstream market. MacColl, the company's sixth employee, explains iVillage's ambitions this way: "From the beginning, we were always building for the time when the Internet became a mass medium. The core mission was to humanize cyberspace, so even in the beginning when the available audience was early adopters, we were not just trying to create a product for them--it's just that that was who [was] there." Carpenter backs her up here. "We were building for an audience that hadn't arrived yet, but we had to have a business in the meantime."     Over time, however, the demographics of the Internet have shifted. In the infancy of the Internet, the average Internet user was a well-educated male cybergeek. Today, 50 percent of adult Internet users are women. And although a typical Internet denizen may be moderately comfortable with technology, the Net is no longer a venue that welcomes propellerheads only. In conjunction with these changes, iVillage has expanded beyond Web pioneers to target a more mainstream audience and has repositioned the company as iVillage: The Women's Network. Despite the shift, however, the core attributes of the brand have remained constant. The basis of iVillage is utility, relevance, and community. Public Relations This collection of fundamental qualities serves as the foundation of iVillage's messaging strategy. The company has communicated these ideas via a variety of different marketing channels; among the most effective has been public relations, iVillage manages its public relations programs using a combination of both internal and external resources. The company maintains a small group of PR staffers in house and supplements their efforts with help from Cone Communications, a New York-based communications consultancy that has worked for iVillage since the early days. iVillage's communications work is focused on outcomes. According to Jason Stell, vice president of corporate communications and investor relations at iVillage, "[Our PR] is very results driven, very heavy on the media relations piece as opposed to disciplines that emphasize theory like corporate imaging and crisis planning. Our work is much more tangible." In other words, the mainstay of the PR team's work is communicating the latest news about the company: the announcement of a new distribution deal, for example, or the appointment of a key executive. The focus is on PR pragmatism.     iVillage has modified its PR strategy at multiple points over the past several years to keep pace with the frequent changes of the Internet landscape. In the first year or two, iVillage PR functioned in what the company called "missionary mode." The challenge was to gain credibility with early adopters, because it was essential to secure the support of these online pioneers if the business was going to fly. Not only would the early adopters be the first people to participate in an iVillage online community (at that point, Parent Soup), they would also be the ones who would tell their friends to try the service, write articles about the company, and help it attract advertisers and venture capital. At the center of the company's messaging was the idea of humanizing the Internet. But at this point iVillage also had to serve as an advocate for the concept of online communities, working to convince people that such entities provided value to consumers, iVillage also had to assume the role of spokesperson for a new kind of business model, one based on generating advertising revenues within the context of an online community. As an early mover, iVillage had to use PR to gain credibility for an industry, not just for its own specific business concept.     The firm was certainly not alone in these efforts; indeed, it would have been virtually impossible for a modestly funded start-up to drive such changes in thinking on its own. Companies such as PlanetOut, an online gay community, and Tripod, an Internet-based hangout for the twenty-something crowd, were also working to build credibility for the concept of advertising-supported online communities among key influencers. In 1996 and 1997, these ideas started to gain traction. Mainstream publications such as Business Week began writing about the category, publishing articles with titles like "Internet Communities: Forget Surfers--A New Class of Netizen Is Settling Right In." Fellow early movers such as GeoCities, which had created a community of online homesteaders whose free Web pages were grouped into themed "cyberhoods," began showing substantial increases in the size of their customer bases. As the industry began to mature and its own business grew, iVillage was able to modify its PR strategy, shifting away from promoting the business model and the community space as a whole to a new direction.     For starters, iVillage increased the intensity of its consumer PR efforts. As more and more people came online for the first time, the value of consumer-friendly "home bases" in cyberspace was becoming readily apparent. "`To most people, the Internet feels like jumping out into the ocean,' says Douglas Rushkoff, author of Cyberia , a book on cyberculture. `Online communities provide the lifeguards.'" As the interest in participating in online communities gained momentum with an expanded audience, iVillage devoted more money, time, and resources to true consumer PR, cultivating coverage in publications such as Newsweek and Cosmopolitan . Joe Berwanger, a director at Cone Communications, has said that "what Candice really wants to do is make the iVillage brand a household name, as much as AOL is. She wants every single woman who goes online to know iVillage.com." If iVillage is going to achieve this level of brand ubiquity, these are the kind of magazines on which the company must focus.     Once multiple companies had proven the validity of the concept of advertising-supported online communities, iVillage turned its energies away from defending the merit of the business model to focus instead on publicizing the successes of specific advertisers on the iVillage network. This was a critical decision, in my view, for by communicating the successes of iVillage's early advertisers, the company helped to reduce the perceived risk of advertising on a women-focused community site--not exactly a common ad buy for most media planners several years ago. The iVillage PR team's work to spread the word about sponsorship campaigns run by blue chip companies such as Charles Schwab and Johnson & Johnson on Armchair Millionaire, Better Health, and other iVillage properties secured coverage for the company in key trade publications. For example, pitching news of the three-year, $5 million sponsorship deal that iVillage sold to Charles Schwab for the Armchair Millionaire site, a financial planning site developed with Intuit, led to a positive article in Ad-Week . Publicity featuring the success of these advertisers attracted new sponsors to the fold; their positive experiences in turn drew new sponsors to iVillage in the kind of cycle of success required for iVillage to thrive.     Finally, iVillage modified the messages it directed toward the financial community. In the early days, iVillage focused on explaining the core attributes of the brand and how these ideas could serve as the basis for an economically viable business. Later, with more than 1.6 million registered members and tens of millions in capital at its disposal, iVillage concentrated instead on emphasizing its leadership position and the corresponding value of that position. "In addressing the investment community, we have sent a consistent message," explains Jason Stell. "Ours is a business that is going to be around. It's going to be one of the mega-brands in this new economy that everybody is talking about." For Internet companies such as iVillage, communicating with the financial community has a critical effect on the health of the brand. Given the interest of retail investors in Internet stocks, analysts' recommendations travel quickly beyond financial services and influence the opinions of a much wider audience. Nurturing the confidence of such opinion leaders is therefore a company priority.     In communicating with these various audiences, iVillage has used public relations as one of its most effective tools for cultivating the "mo factor," that feeling of energy behind a company that signifies that it is doing well, that it has market momentum. Each time iVillage signed another distribution deal or secured additional financing, or when one of its advertisers had an extraordinarily successful campaign, the iVillage PR team has been there to tell the story. "We want people to think, `Those guys are on the move. They are marching. They are knocking down things in their path,'" Candice Carpenter said. "Momentum is so big in this space. On the Internet, you are either gaining market share or losing it--you are never standing still." True, the offline world is also rife with such battles for market share. But on the Internet, the pace of change is substantially greater. In the real world, a cola company might be able to claim the gain of a percentage point of share over the course of six months as a substantial victory. On the Web, however, the introduction of a new competitor or of a technological or marketing innovation might upset an entire market sector during the same time period, iVillage understands that it needs to provide frequent evidence of its leadership position in order to maintain that role. Public relations has proven to be one of the most effective ways the company has found to communicate the momentum required to keep its lead. Online Marketing iVillage has also used online marketing to build both brand awareness and site traffic for the iVillage network. Online marketing encourages experimentation, for if a campaign isn't working well or a particular medium isn't performing, it is generally easy to make changes quickly and cheaply (in contrast to traditional media such as television and print advertising, for which changes require more lead time and can cost a great deal), iVillage now has several years of online marketing history behind it, and constant testing and refining of their ideas has taught the iVillage team to communicate in a way that produces results.     Some of iVillage's early online marketing efforts fell short of the mark. For example, the company engaged Cybernautics, an interactive marketing agency, to seed key search engines and generate interest within the Internet newsgroups. The search engine work didn't pan out. "They worked with us for three months," said vice president of online marketing Hillary Graves. "At the end of that period, we were roughly the 340th listing that came up in a targeted search on Lycos. I don't know what they did, but it didn't work." For a search engine listing to generate much traffic, it needs to be visible within the first few pages returned for a specific search. (According to Danny Sullivan, editor of Search Engine Watch , only 7 percent of searchers look beyond the third page of results when hunting for information on a search site such as Lycos or Excite.) If you assume that the average search engine displays ten results per page, the work that Cybernautics did would have placed the iVillage information more than thirty pages into the search results, providing little value.     Cybernautics's efforts to interject strategically placed comments into selective newsgroups also yielded modest dividends. In experimenting with this online marketing technique, iVillage was hoping to "rent an evangelist," that is, to hire Cybernautics to sing iVillage's praises in online public discussion forums and therefore drive traffic to the iVillage network. Performance was mixed, however. In addition, this was a practice with which Graves never seems to have become fully comfortable. "We haven't mastered the newsgroup thing--it's touchy. We are very conscious of the etiquette on the Internet and want to tread lightly." Today, rather than hire someone to do this work, Graves depends instead on iVillage fans to get the word out in such forums on the company's behalf. "Our community members are the best guerrilla marketers we have."     I think Graves is smart to follow this path, for the Internet's Usenet newsgroups are sensitive territory. With 17 million to 25 million people participating in its online discussion groups each day, Usenet has been around since the beginning of the Internet and is the largest online community in the world. While there are discussion groups within Usenet that are designed purely for business purposes (e.g., alt.business.career-opportunities), many of them (e.g., groups such as misc.kids.breastfeeding and alt.support.alzheimers) were formed as discussion forums for noncommercial issues, and people or companies that post "advertorials" within these groups catch flak for violating Usenet etiquette. As a company that hosts discussion groups itself, the last thing iVillage wants is to be accused of spamming public discussion forums. What's more, as the number of people on the Internet has grown, the amount of frivolous conversation, spam, and other noise within these groups has increased, making it difficult to communicate a message that people will pay attention to and thus decreasing the return on investment (ROI) of such a guerrilla marketing effort. It is better for iVillage to let its customers serve as ad hoc evangelists than to try to spark and control such discussions through a marketing firm.     iVillage has had much greater success with its banner advertising efforts. However, its approach to the management of the program, its messaging, and its media buying strategy have all changed a lot over time. When iVillage first started running banner advertising, it worked with Modem Media, a first-rate agency that has also worked for companies such as AT&T, Intel, Delta Airlines, and Citibank. Modem handled all aspects of iVillage's banner advertising: creative development, media buying, and analysis. Although the two companies worked together successfully, iVillage eventually decided that it wanted to pull the media buying component in house and that it might get more attention from a smaller agency. The company moved on to partner with IN2, a boutique firm that has focused on crafting advertisements and tracking campaign results for iVillage.     In developing its primary messages, iVillage worked with some of the same themes outlined in our discussion of the company's public relations work: community, a home in cyberspace, relevant information, real solutions, and so on. Over time, however, by analyzing the click-through results of its banners, iVillage found that it was the solution-oriented facet of the brand, and not the community elements, that got people to take action and visit Parent Soup, Better Health, or other sites in the iVillage network. Initially, people were more interested in the idea of experimenting with Parent Soup's Baby Name Finder, for example, than they were in the idea of participating in a virtual coffee klatch. "We've used community messages like `Find Support Here' or `Women's Support Here,'" explains Hillary Graves, "but these messages just aren't great acquisition drivers. People come to iVillage to find an answer to a question or to find certain information, but what ends up getting them to stay is this sense of community that they find, that emotional release." The idea of "real solutions for busy women ... is totally core to our brand," Graves states. Given that this message gets viewers to visit the iVillage sites, where they come to know the other attributes of the brand by interacting with the service, iVillage has concentrated on the "solutions" orientation in its more recent banner work.     The company has also put thought into refining its media buying strategy. An early mover in its category, iVillage has had more time than its competitors to experiment, to learn from the results of its trials, and to adjust its course accordingly, iVillage has run advertisements on news sites such as abc.com and nbc.com. It has experimented with online directories such as Big Yellow and InfoSpace. It has tested other women's sites, such as CondeNet; search engines, such as Lycos; and health sites, such as Fitness Online. Over time, the firm has tuned the list of sites it uses based on economic analysis, retaining those that have proven to be most effective, leaving the poor performers behind, and adding new test candidates to the queue. But beyond simply changing the selection of sites on which it advertises, iVillage has changed the nature of the deals it strikes with these sites. Although the company may test new sites using short runs, iVillage has moved toward crafting longer-term alliances with those sites that have proven cost-effective. "We really approach this as a partnership with these sites. We'll make six-month deals to get the best CPMs we can," explains Graves.     With a select group of highly targeted sites, iVillage has gone a step further, striking long-term, integrated deals in which these partners not only run advertising messages for iVillage, but also serve as distribution channels for the company's content. These arrangements are key to building both brand awareness and site traffic. We'll look at such partnerships more closely later in the chapter, but consider briefly the arrangement that iVillage made with Warner Brothers, producers of The Rosie O'Donnell Show . Rosie is a high-profile single mom with a large base of fans and a Web site of her own. Warner Brothers and iVillage forged an agreement in which iVillage provides content for Cutie-Patootie Parenting Tips, a section of Rosie's site. When viewers click on the articles in the Tips area, they are taken to the Parent Soup site to get the full text, giving them an opportunity to get to know the brand up close. In addition, Rosie's site features iVillage banners on the home page and in other key sections. This type of joint marketing and business development deal goes beyond the banner to offer iVillage a good opportunity to build its brand among a group of compelling target customers. Such integrated marketing campaigns represent the next generation in online marketing. Offline Marketing iVillage has also turned to an assortment of offline marketing initiatives in its drive to build awareness. The company's offline work started in 1998. This was much later than many of the firm's other brand development initiatives, and I believe that iVillage should have started running offline advertising at least a year earlier. But the company eventually recognized that to expand its reach beyond early Internet adopters, offline advertising was a must. For assistance in crafting a multidimensional offline campaign, iVillage teamed up with DDB Needham, the ad agency that has handled advertising for brands such as Yoplait, Bisquick, and the Discover Card. Together, the companies fashioned a two-prong strategy for broadening awareness of iVillage.     The first of these initiatives focused on the business and advertising communities. The campaign had two components. One was a series of print advertisements that iVillage ran in the Wall Street Journal heralding the dramatic increase in the number of women online. "More than 42% of all people on the Internet today are women," reads one ad in the series. "By the Year 2000, more than 70 million of them will spend time online. Put another way: in two years, nearly the entire population of the Eastern Seaboard of the United States will be online. And they will all be women." The ad went on to illustrate the purchasing power of female Web users. And, of course, it emphasized that there was one place on the Web that women online call home more often than any other Web destination: iVillage--the Women's Network. This ad was "our mission statement turned into an advertisement," said iVillage brand manager Heather Campbell. By advertising in the Journal , iVillage aimed to jolt readers into realizing that a revolution was taking place and that iVillage was there at the forefront. The campaign was not designed to increase traffic or sell ads, but to build brand, to stake out territory. "We felt we really needed to go out and claim this turf early on within the business community," said Paul Ahern, general manager of integrated marketing for DDB Needham. "We wanted to be the first to claim the positioning." iVillage actually was not the first company to adopt such a positioning. Women's Wire, the online community that eventually became Women.com, was in existence before the Web even emerged and took a similar market stance. But iVillage pushed aggressively to own this space in the minds of its key constituents, and offline advertising has certainly helped the firm in its effort to stake out a leadership role in this market.     The second component of the iVillage trade and business communications effort was a campaign the company ran in publications such as Advertising Age and Media Week . Here, the goal was to talk to the advertising community to contrast the advertising opportunity that iVillage presented with more traditional media buys and to compel readers to contact the company to pursue sponsorships on the iVillage network. This was precisely the kind of footwork that iVillage had to do to expand its base of corporate advertisers. It was an investment in educating prospective ad buyers on the distinctive opportunities that an iVillage sponsorship presented for reaching their target customers. And while it was not an inexpensive effort, it paid off by opening doors to advertisers such as Polaroid and Starbucks.     In addition to utilizing offline marketing to reach the trade and business communities, iVillage has used offline media to reach consumers. The company's management has seen that the market has reached the point at which it makes sense to start investing in more traditional media programs. According to Heather Campbell, "If PCs are going to go from 35 to 45 to 50 percent household penetration, and if the number of women online is going to grow from 22 million to 67 million within the next two years, you are really starting to talk about a mass market now. You are talking about an audience that you can reach effectively via means other than those that have traditionally worked for this industry--namely banner advertising."     The offline consumer campaign that iVillage has developed thus far is "pure image work," said DDB Needham's Paul Ahern--a combination of radio and television designed to make consumers feel that "that company understands women." Both the radio and TV spots featured interviews with real women talking about different issues that had arisen in their lives and how iVillage helped them to grapple with these issues. DDB Needham focused its media buys on those geographic markets in which Internet penetration was already high; iVillage and the agency agreed that in this first radio and TV push, it would be a strategic mistake to attempt to influence women who were not yet online. The campaign raised awareness among "wired women" in these key markets, communicating essential attributes of the brand and "laying the branding groundwork that everything in the future would build on," explained Gregg Greenberg, iVillage account manager for DDB. Sure, this campaign caused some women to fire up their browsers and visit iVillage. More likely, however, is that the messages simply registered a favorable impression. But the next time a woman who saw that TV spot or caught the radio commercial on her way to work saw an iVillage banner on the Web, the probability was higher that she'd click on that banner, for iVillage was then a brand she knew.     With the company's recent deal with NBC, iVillage will build on the foundation established by the campaign just described, increasing its television advertising substantially over the next three years. In return for equity, iVillage has lined up prime-time commercial space on NBC. NBC has a strong presence among 25- to 49-year-old women--the iVillage target market--which makes it an excellent partner. "Women are to NBC what kids are to Disney," said Tom Rogers, president of NBC Cable and executive vice president of NBC. "Women are not only the majority of the population, but they are the majority of the NBC viewing audience." Through this relationship, iVillage will have a chance to gain repeated exposure to the many women watching shows such as E.R., Friends, and Law and Order . As Patrick Keane of Jupiter Communications put it, "Offline promotional assets are a cherry for any Internet company." Although it did not pay cash for this TV time, iVillage certainly incurred a significant cost for this deal, because the company gave up both a seat on its board of directors and a minority stake that was worth millions. The payback may well be worth it, however, for iVillage will build awareness through this alliance that it could not afford to purchase outright. Community: The Key to Customer Commitment Of all the companies profiled in this book, iVillage is the one that has focused most heavily on the development of online communities as a way of forging Internet brands. Indeed, community represents the core of the iVillage business. Co-founder Candice Carpenter describes her company this way: "We strive to help women navigate through increasingly busy lives and maximize their potential in their various roles as parents, friends, spouses, partners, career women, breadwinners, employees, and individuals. We provide the supportive and nurturing environment--a lifespace, if you will, not just another Web site--where women can find sound advice and practical solutions from experts and each other." Her business partner Nancy Evans echoes these sentiments: "We're the virtual 24-hour hotline and community center."     The network of iVillage sites brings together a wide array of individuals with common interests, providing them with communities of peers with whom to share life's experiences. Whether visitors are interested in discussing breast-feeding techniques or postpartum depression, whether they are looking for advice on managing a difficult relationship or just need tips on how to whip up healthy weeknight meals, iVillage acts as a magnet for like minds, drawing people into shared virtual spaces and giving them the chance to exchange their information and insights. As co-founder Nancy Evans explains it, participants in these communities "feel connected--part of something larger. Some of them use it as a reality check with other women. The information we provide informs and the collective support we provide empowers. It's that double whammy that makes us unlike any other medium."     The communal aspects of the iVillage network define the distinct personalities of the company's various brands to a large extent. Visit Parent Soup and it's as if you've dropped in on a neighborhood coffee klatch, with moms trading birthing stories or exchanging tips on what questions to ask when hiring a nanny. Browse Better Health and it's like visiting a local spa, with people discussing workout routines and experts presenting nutritional advice, iVillage has encouraged this neighborhood feeling by listening to its customers and making changes to the service that reflect their needs. As MacDara MacColl describes it, "We tell our customers, `This place is yours. You create it. You can have an impact. You are respected here.' That's the most compelling thing in the world. They feel ownership and have brand loyalty like nobody else."     This community spirit has helped iVillage to develop brand loyalty. Yes, tools such as the Healthwise Handbook and the Armchair Millionaire Action Planner have been valuable, particularly for drawing people to iVillage sites for the first time. But it is the fact that iVillage has created "destinations of the heart"--communities "where you have an emotional resonance, where you belong"-- that has kept customers around. Tom Rielly, CEO of the online gay community PlanetOut, explained this concept as follows: "It's not the content. It's the people, stupid. Content may be why people visit a site. But community is why people stay."     A strong sense of community is a brand asset that is difficult to replicate. It takes substantial time and effort to develop a vibrant community. In the words of Howard Rheingold, author of The Virtual Community and founder of an early community venture called Electric Minds, "Any company that thinks they can go out and create a community in 30 days to sell a lot of pantyhose is going to be disappointed." Moreover, once members have made a community a part of their lives, they are unlikely to abandon it and the friends they've made there in favor of another. Switching costs, in other words, are high. In making community a cornerstone of its business, iVillage has developed a brand asset that will help it to fend off intensifying competition (see "The Competitive Threat" later in this chapter for more information on iVillage's fiercest foes). Focusing on community has also helped iVillage generate significant financial value. Building community keeps visitors coming back again and again. The more frequently they visit, the more ads they see and the greater the likelihood that they will purchase products through iVillage as the company ramps up its ecommerce efforts.     Candice Carpenter has said, "We get email notes every day that say, `I have breast cancer and I came to your site and got help.' Or, `I'm trying to raise two little kids on my own and ten people came to my aid and gave me books to read, medical questions to ask my pediatrician and ways to talk to my children--your site has changed my life.' The kind of loyalty that those experiences bring is unbelievable--it makes for a different order of relationships." In cultivating loyal customers, iVillage has also developed a set of advocates who spread the word about the network of communities the company has created. Such supporters have been critical to iVillage because this word-of-mouth marketing has helped the company increase site traffic quickly and inexpensively.     Within iVillage's corps of enthusiasts is a subset of people who have been particularly vocal evangelists: the more than 1,000 volunteer discussion leaders who facilitate online conversations on everything from planning for retirement to living with rheumatoid arthritis. These volunteers have strengthened the brand by moderating quality discussions on difficult issues and by "cross-selling" various iVillage resources (for example, the leader of the Preparing for Pregnancy discussion on Parent Soup might encourage participants to experiment with the site's Baby Name Finder). To expand the influence of these volunteers into the offline world, iVillage retained a political organizer to travel to the cities in which the company has run its TV and radio spots and work with local volunteers. Armed with marketing collateral produced by iVillage, these volunteers banded together to meet with local women's groups such as the PTA or Women's League and tell others about iVillage. Although other online companies, such as AOL, have also used volunteers to moderate discussion forums, iVillage is the only company that I have seen take grassroots marketing to this extreme. Through these efforts, iVillage has built brand on a personal level, getting people excited about the service it provides and then tapping this enthusiasm to bring others into the fold. Although such guerrilla marketing efforts are hard to scale, they have the potential to have a significant impact on those people they can reach. (Continues...) Copyright (c) 2000 President and Fellows of Harvard College. All rights reserved.

Table of Contents

Acknowledgments
Introduction
1 iVillage
2 CDnow
3 Barnesandnoble.com
4 Yahoo!
5 Fogdog Sports
6 Onsale Conclusion
Notes
Index
About the Author