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August 15, 2000—Free Is Better (for Brands)

The family was just down at the ranch, learning to drive, seeing the abundant wildlife, and watching the steers get branded. Branding has not changed that much from cowboy times. A simple sign is searingly imprinted, and it says, "This is us."

Right now a bunch of companies are trying to get branded or re-branded. And they're puzzled as to how to do it. This kind of branding has really changed, and it is hard to learn the new rules.

With a whole new media world, which we shall talk about next week, it becomes a devilishly complicated task to project a company's identity into the marketplace. The dotcoms, not knowing any better, try to do it with pages and pages of very traditional print advertising. Either they don't believe in or don't know how to use their own medium. So very few dotcoms become brands. But they are not alone in using yesterday's techniques to do today's chores.

Traditional companies, in cutting costs, have severely degraded their brands. Often they have cut product quality. Most often they have adopted sub-basement service practices, which undermine their value propositions. This means a consumer can't reach them on the telephone, and they do nothing even if a hopeless soul does reach them.

One the one hand, then, you don't create brands the way you did in yesteryear. On the other, companies with established brands are losing them.

Given this brand vacuum, opportunity abounds. L.L. Bean and Land's End still are fine brands, but their sales are flat, and their operations cry out for new marketing practices. GM, Brooks Brothers, Wal-mart, and most of the airlines have so cheapened their fare that they may be in terminal decline, and it may be easier to create whole new companies. Amazon, Yahoo, Sephora, MSNBC, The Economist, C-Span, Calvin Klein, Dell Computer, and many others are rising stars.

For several years, we have been studying how corporate brands get created. Likewise, we have been examining which brands are in a rising, declining, or maintenance mode. Our most important realization is that the corporate brand has never been so important as in our current decade, where sustained year-on-year growth is hard to achieve and where the business compulsion of consultants and companies alike has been to promote practices that erode the brand.

Nonetheless, companies here and there are making fragmented but interesting efforts to revive their brands. British Petroleum ("Beyond Petroleum" or BP) has just introduced a new identity to convey that it is a "tomorrow" company. The new logo material, though quite handsome, needs to be backed up by other initiatives for BP to realize the economic benefits of this image work.

This campaign has acted a little differently, though probably not differently enough. In the new broadband age of digital delivery and very targeted audiences, we can give away things and services to build fast goodwill and recognition in our marketplaces. One of the propositions we will be putting forth in our brand research is that one of the cheapest ways to do branding now is to show ingenuity in giving away our products or services. Paradoxically, we feel this will be the quickest route to rising revenues and brand equity. Worthwhile, thoughtful freebies have a lot to do with digital commerce. It is in this vein, for instance, that Incyte now gives away gene sequences on its website.

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