Do online businesses need a brand?


Many online businesses have seemingly thrived without a brand but as we move into the next online era, will this still be possible for today’s StartUps?

I was being challenged, in a good way. The guy had a lot of credibility: here was an online entrepreneur who had been there, done it and had the money in the bank.

He had asked me there because he knew brands were becoming more important online – he had the data to prove it – but he was a committed A/B tester and he was A/B testing my business concept, the one that says online businesses need to be better branded.

“You’re right, brands are important. But always? There are so many examples of great online consumer facing businesses that don’t have a brand…so do online businesses really need to develop their brand to be successful?”

My answer was: Yes…but the right kind of brand.

That needed some explanation. Let’s start with the yes.

The online world is maturing. We are in the Post-Land Grab era.

There is enormous online clutter and it’s only going to get worse as the StartUp energy/bubble continues and expands out across various countries. We are living in the Istanbul Spice Market: everything looks the same, you know it’s all pretty good and everyone is shouting at you.

Nowadays, few people are worried about buying online. People trust online businesses with the basics as much as bricks & mortar brands. Function and utility are commoditized.

The cost of entry is getting lower all the time. Development costs have come down massively, as has the effort required. And the Lean Philosophy has given us the permission to get out there quickly, knowing there is a community of early adopters willing to give us a try.

People are attuned to try new stuff. Everything is one-click away. Loyalty is difficult to find.

New entrants hope to exploit this so they keep piling in. Clutter to the power of x.

Investors pile in. They expect more than a quick ride, the want longer-term growth and confidence that you can keep the customers you have.

For all of these reasons, online businesses need brands, because only a brand can address the issues they raise.

A brand is an expression of difference and so an extremely cost-effective way of standing out from the clutter.

A brand contains the emotional and intangible and so can defend an established business against all the eager and over-excited new entrants biting at your ankles.

But – conversely – a brand is also a powerful tool for new entrants to make a mark in an established market. The distinct energy and personality of a new brand is the most effective way to challenge the status quo, break old consumer habits and create new expectations. Orange coming 4th to market in mobile telecoms. Apple in the face of the dominance of Micorsoft. Ben & Jerries’ youthful exuberance to counter the adult-ness of Haagan Dazs.

A brand gives investors confidence. Warren Buffet talks about making his investing decisions on the basis of a business having a moat. Of all the possible moats, brand meaning, because it is so intangible, is the most ownable and sustainable of them all.

As the StartUp bubble slows – or pops – and usage becomes more habitual, brand moats will become more important in the online world too. And then maybe Buffet, that famously tech shy investor, will embrace the online world.

So yes, online businesses need a brand.

But the right kind of brand. By which I mean…

Brands are not what they were.

They used to support one-dimensional products like shampoo or clothes detergents.

Then products got more complicated. They became the whole business, with multiple services, non-core products, customer support, partnerships and APIs etc. They became a philosophy, a commitment to environmental well-being, a cultural role. People buy all of these things.

The human brain is not selective. In fact, it doesn’t like to work very hard at all.

It doesn’t only listen to the ads and then ignore the rest. It uses everything (usually without actually consciously thinking it through) to create meaning and through that meaning gets a sense of how something differs and whether they like that difference. Brand meaning is created every time a person comes into contact with that business. When they see it, when the use it, when they speak to it – or it speaks to them, when they hear or read about it, when they are in a conversation about it, when they ask something of it and when it asks something of them.

If it doesn’t add up, they’ll notice. And if they don’t, someone on social media will help them along. Despite appearances, people are smart. Perhaps you can fool some of the people some of the time. But they can smell marketing BS a mile off. (It is the most odorous of all BS.)

But that doesn’t make people more rational. People are easily bored and most businesses bore them. We’ve learnt that people want loftier, more emotional leaning. They want their brands to think they can make the world better. Like Chipotle and Lifebuoy. Or heroic. Like Nike and Apple.

What is required of a brand in the modern world is not a summary of a core product but something all encompassing that makes people care, that brings them emotionally closer to you and – critically – is evident in everything you do. Without that coherence, it won’t add up and it won’t be considered credible.

So generally a brand is not a way to communicate your product, it’s a way to structure a business – and only then communicate something.

The take-away for any StartUp is this. The biggest mistake online businesses keep making is to think a brand is advertising or a brand logo. The business is the brand and you need to create a Branded Business.

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