January 14th 2008
Online Brand Creation
Some companies, particularly in the financial services sector, have established new online brands rather than use the Internet to reinforce existing brands. In the UK, examples include Egg (www.egg.com), which is owned by the Prudential, and Smile (www.smile.co.uk), which is owned by the Co-operative Bank. Egg has been particularly successful in attracting customers, and enjoys high levels of brand awareness, but the attractive rates of interest that it offers to savers and the high level of advertising expenditure have resulted in a perilous financial position. The bank hopes to achieve profitability by cross-selling more lucrative products to its savings account customers. Establishing new brands for online activity offers traditional banks — which often have a rather staid image the opportunity to ’start again’ and develop a more modern style to appeal to new customer segments online. However, one drawback is the increasingly high cost of establishing an online brand as the marketplace gets ever more crowded. Another is the increasing tendency for customers to expect a choice of channels, and not be forced to conduct all their banking online. Consequently, it is rumoured that Egg is now looking to set up a physical branch network. It has also been suggested that in the early days of the Internet, the strategy of brand creation was a ’safety net’ so that if the online venture failed, the established brand would not suffer by association with it. Continue Reading »
