Barry Diller once said at a conference that I attended (shop.org) that he doesn’t place too much value in “reviews and ratings.” To him, they are just imperfect replications and proxy for a more powerful concept called “brand.” I certainly do not agree with him completely but I do understand where he is coming from and the importance of the statement.

Answer this simple question, if Coca-Cola was to launch today, how many “positive ratings and reviews” does Coca-Cola need to have in order to build its “brand” to what it is today? Probably infinite. . . ie it will never get there if “reviews” was all it focused on . . . Positive reviews are certainly neccessary . . . much like word of mouth . . . but Coke will never be able to create powerful and emotional connections between the company and its customers without focusing on the intangibles of building brand equity . Pepsi always had better reviews (think of its taste test challenges) but somehow consumer preference for Coke never waivered. (BTW, read about David Aaker’s concept of brand equity and other brand measurement techniques here)

Today, in a world dominated by search engine marketing, many online companies have foresaked the concept of brand for immediate ROI . . . certainly for most, its a right decision because

1. its a lot easier to measure return . . . (revenue - COGS)/Click - cost per click = $ made
2. many brand building strategies requires significant scale in distribution and marketing expenditure to be effective. If I am running a $500K a year shoe web store, there is really no point for me to do anything but search engine marketing.

But for the many online companies out there, the time has come for them to think hard about moving a portion of their budget beyond search. It is not that search does not build brands. . . it does to certain extent . . . but that in the end, you do not want to be in the business of competing with your competitors purely on each other’s ability to pay more for a click. Its simply not strategic because your ability to pay is only dependent on your cost structure. Search marketing can not be ignored. . . but for the many startups that have “grown up” by perfecting the search engine marketing game, its time to think about owning that customer relationship directly and realize that Google no longer deserves to make money by dis-intermediating you and your best customers.

If you watch TV tonight (sunday), you will see the launch of one company’s exercise in building and extending its brand . . .

What Is It?