Weekly Web Watch: On Internet, nomad brands are on move more than ever before

Traditionally, when a company wanted to grow, it had a few choices open to it. It could grow with a growing market sector; it could grab market share from its competitors; it could spread itself geographically; and less convincingly, it could simply buy other companies in related or sometimes very different sectors. And there is another option that has always been open to the companies with the strongest brands - they can extend their brands to cover new types of business. It’s the last one that is the most interesting.

Traditionally, when a company wanted to grow, it had a few choices open to it. It could grow with a growing market sector; it could grab market share from its competitors; it could spread itself geographically; and less convincingly, it could simply buy other companies in related or sometimes very different sectors. And there is another option that has always been open to the companies with the strongest brands - they can extend their brands to cover new types of business. It’s the last one that is the most interesting.

Traditionally, when a company wanted to grow, it had a few choices

open to it. It could grow with a growing market sector; it could grab

market share from its competitors; it could spread itself

geographically; and less convincingly, it could simply buy other

companies in related or sometimes very different sectors. And there is

another option that has always been open to the companies with the

strongest brands - they can extend their brands to cover new types of

business. It’s the last one that is the most interesting.



One of the classic examples is Virgin. It’s a music and book retailer,

an airline, a bank, a record company, a tour operator and a clothing

retailer.



You can even drink Virgin Cola. This is not one company with many

brands, each identified with a particular category of product. It is one

overarching brand that embodies, across all these sectors and

categories, largely the same values and associations.



Virgin didn’t need the Internet to spread itself in this way. But have

you noticed how brands are becoming much more mobile in the Internet

era?



Some of the most aggressive of these all-conquering brands were spawned

by the Internet. Think of Yahoo! or Amazon. Yahoo! began as a search

engine, and search is probably still the reason most people go to the

site the first time. But it’s also a visa card, a place to find or

advertise a job, it’s an online auctioneer, an investment aid, a news

service, somewhere to go shopping. Amazon started out as a bookshop. Now

it also retails music, toys and games and is an online auctioneer and an

electronics store.



Brands like Yahoo!, Amazon and Virgin are known as ’nomad’ brands.

That’s probably a bit of a misnomer. To the traditional, rather

slow-moving occupiers of the sectors these brands descend on, they’re

probably a bit more like the marauding Mongol hordes, raiding market

sectors and conquering territory as they go. The Internet enables nomad

brands to move faster and to occupy more unlikely market territory than

companies could in the past.



For nomad brands, there is no such thing as a core business. Their core

business is getting as much of what a consumer will spend as possible in

as many areas of their life as possible, over as long a period of time

as possible. The yardsticks here are not just market share, which

measures businesses in very narrow vertical sectors, but also things

like share of consumer or even ’share of life.’ These businesses want to

know that they touch more parts of the life of a consumer, and more

often than their competitors. It’s about measuring the lifetime value of

a consumer: how much they’re likely to spend from the time they make

their first contact with you until the day they die, rather than any

immediate purchase they’re likely to make. Looked at from that point of

view, some of the high figures that Internet companies pay just to

acquire customers don’t seem so stupid after all. This kind of brand

mobility is also one of the reasons why it is so attractive for

retailers and consumer companies to tie their brands to Internet access

provision. It is an increasingly important key to many aspects of

people’s lives.



The point of this homily is that when it comes to nomad brands, there is

one thing they are interested in above all else: gaining the trust of

consumers. It is this trust that enables these brands to move into new

markets and to take customers away from the other players, seemingly

effortlessly. And loss of that trust is the point on which they are all

most vulnerable. And trust is about reputation.



There’s a selling point in this for PR professionals.



- Stovin Hayter is editor of Revolution. All e-mails should be sent to

stovin@revolution.haynet.com.



Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.