Four years ago, it was just another domain name, a miniscule blip on a limitless electronic highway. Now Amazon. com is a household name, a Wall Street darling with a market cap of dollars 20 billion, and a huge signpost to success for all who choose to chart a course on the Internet.
How did founder Jeff Bezos and his team do it? The answer does not lie in the wide choice of books, CDs, and videos that it sells. Nor does it lie in the easily navigable site, or the excellent customer service?although obviously they were essential elements. No, the key to Amazon's success so far lies in the company's amazing brand building.
Relying on reputation
In an online world, branding is even more important than it is offline.
People have to remember your name and type it in. What's more, anyone with a bit of capital can register a 'dot-com' name, gather some stock and start selling it, so that in protecting your market from competitors you are relying on reputation.
When Amazon started out it did not advertise. In fact, for the first few years, Amazon's advertising was limited to a few radio spots and a collection of banner ads on the net. But Bezos proved a PR genius, and surrounded himself with others who understood a great deal about branding through public relations.
Opinions within Amazon differ on whether the success can be chalked up to PR. Senior PR manager Paul Capelli says PR has been 'central' to the company's growth. 'There are few companies who have the understanding and appreciation of PR that we have,' he says. But Kay Dangaard, director of media relations, says the early success 'had nothing to do with publicity and was purely down to word of mouth.' Bezos spins a similar line to Dangaard.
Rosanne Siino, former head of PR at Netscape, fits the two explanations together: 'I think in the case of Amazon, it really was word of mouth.
Certainly they weren't that aggressive with the media relations part of the equation. But of course they were building a relationship with their public, and that was central to the Amazon brand.'
So what did they do? Branding guru Laura Ries of Ries & Ries, explains: 'The first and most important thing they did was to choose a name people could remember. E-books is too generic, Amazon allowed them to own the category.' In trying to find a name signifying size and power, Bezos almost went with Cadabra; fortunately?so the rumor goes?he ditched it when his lawyer misheard it as 'cadaver.'
Bezos also created a now-mythologized 'history' for the company, telling people of his decision to quit a big-money Wall Street job and head West, writing his business plan while his wife took the wheel of their Chevy and his dog looked on. It is now known that this is not strictly true, but it makes for good copy and it has that pioneer quality that Americans appreciate.
Amazon staff, originally based in a run-down building in one of the less salubrious parts of Seattle, are told to put across the message that they'd sacrifice anything to get the customer discount books, double-quick. 'We make sure that everyone in the company knows that the customer is paramount,' says Simon Murdoch, now managing director of Amazon in the UK. It works.
Even now, an analysis of its media hits shows its customer service gets regular favorable mention. The internal communications worked, and the word spread.
Ries also points out that Amazon was in an ideal position to use the newest tool in the PR pro's armory?e-mail. When customers ordered books, the Amazon system built up a profile of their tastes and sent them personalized e-mails telling them about new book releases. 'It was perfect one-to-one relationship building,' says Ries. 'That's how you build loyalty,' Siino adds.
The media hits followed. Bezos was wheeled out to meet the media, and as the 1997 IPO approached, the frequency of Amazon's media hits rose.
'If they launched or did the IPO now they'd be drowned out by all the noise,' argues Siino. 'But back then, they were able to ride the groundswell of enthusiasm. Simply by being first they attracted media attention.' Perhaps all that press was luck, but who in PR is going to believe that?
The IPO is said to have been one of the most successful of all time, sales grew 313% in 1998, and the customers just keep on coming. But the company still hasn't turned a profit?although it almost certainly could if it cut its cost base?and the sniping has started. Finance mag Barron's recently plastered 'Amazon.bomb' across its front cover. The gloss seems to be peeling off the shiny Amazon image.
Interbrand valuation director Raymond Perrier says Amazon has 'created a personality' but faces a couple of obstacles. Most significantly, he points out that it did not really have much competition in the early days, but now it has Barnes & Noble and Bertelsmann, strong offline brands, pushing into its online arena. 'The question for Amazon,' says Siino, 'is how loyal are its customers going to be as competitors attack their market. One-to-one marketing or PR could help ensure that loyalty.'
As crucial to the firm's future is whether Wall Street continues to put its faith?and investment?in Amazon. Advertising is now being used to protect the Amazon brand and to drive traffic to the site, but the negative press, from sources such as Barron's and the analysts who are not so enamored of the stock, centers on Amazon being over-hyped.
Critics are waiting for the bubble to burst.
So the newly expanded PR team is charged with a tricky task. Maintain the company's reputation of offering great service and market lead, but keep the lid on the obvious hype. Subtlety is paramount now?this is not about cover stories, or boastful TV advertising. Relationship building and one-to-one PR remains the key to Amazon's success.