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Tuesday, May 08, 2007

Tired Brands: The Cream nightclub

Last dance saloon?

In the 1990s Liverpool nightclub Cream grew from being a small intimate venue catering for around 400 clubbers every Saturday night, to being one of the UK’s first ‘super clubs’ regularly attracting thousands of devotees from all over the country. It quickly capitalized on its success by launching merchandising material, setting up its own record label in partnership with Virgin, touring nationally and internationally with a variety of sponsors, and even embarking on a series of dance music festivals called Creamfields, catering for around 40,000 clubbers. By the end of the 1990s there were regular Cream nights in places as far afield as Buenos Aires and Ibiza, as well as the brand’s native Liverpool.

Yet in September 2002, Cream co-founder and boss James Barton announced that the Liverpool club was closing. Although Barton said the reason for the closure was to concentrate on other aspects of the company, he also admitted to Radio One that ‘if the club was doing the sort of numbers it was doing four or five years ago we wouldn’t be making this decision.’ The media responded by saying that the decision not only signified the imminent death of the Cream brand, but of club culture in general. Whether or not Cream manages to survive without its spiritual home remains to be seen, but the closure certainly indicates tough times ahead.

So why exactly did it happen? How could a club that became a household name for a generation suddenly lose its appeal? The reasons, as you might well expect, are numerous.

One argument was that as Cream expanded it gradually lost its cool factor. In 1992, the year James Barton and Darren Hughes set up the club, Cream was immediately viewed as a welcome antidote to the business-minded approach of the London club, Ministry of Sound.

Word of mouth helped to fuel its early growth, along with celebratory pieces in dance music magazines such as Mixmag which named Cream its ‘club of the year’ in 1994. Around this time Cream decided to expand its operation, moving the club to a larger venue and launching nights in Ibiza.

By the middle of the decade, Cream was everywhere. Clubbers were sporting tattoos of the distinctive Cream logo (which itself had won awards for its ‘propeller-style’ design), DJs from around the world were lining up to play in the main room, and one Liverpool couple even decided to get married at a Cream event. In 1996, Cream was cited as the third main reason people applied to Liverpool University in a poll conducted by the university. Over 60,000 people rushed out to buy the ‘Cream Live’ CD in the first week of release.

Then, in 1998, the first signs of trouble started to appear. Darren Hughes left the company to set up his own super club, Home, in London’s Leicester Square. The year after the first ‘Creamfields’ festival, Hughes started his own ‘Homelands’ event. The club’s former director was now the competition.

Another problem was the cost of putting on Cream events at the Liverpool club. Ironically, for a club which helped to establish the cult of the ‘superstar DJ’, the fees charged by big names such as Fatboy Slim, Sasha, Paul Oakenfold, the Chemical Brothers and Carl Cox were becoming the major weekly cost. However, without paying for the DJs, Cream would have risked losing its market altogether. ‘It’s the performers who make the real money, though they used to draw in enough custom to make it worth the club’s while,’ says Mixmag editor Viv Craske. ‘Big clubs still rely on the same old DJs, despite no longer drawing the crowds.’ With big names typically charging four or five figure sums for two hours’ work, the costs could clearly be crippling for a club such as Cream which always advertised their events on the strength of their DJ line-ups.

Another factor, and one beyond Cream’s immediate control, was the fact that its original customer was now getting too old to be on the dance floor at three in the morning every Saturday night. For many 18-year-olds, the idea of ‘super clubs’ and ‘superstar DJs’ was starting to be wholly unattractive. As Jacques Peretti wrote in a July 2002 article in the Guardian, this generational shift took place at the end of the 1990s:

These teenagers were more interested in rebelling against their siblings and joining a band. Instead of going to clubs, it became cool to follow American nu-metal bands such as Slipknot and Papa Roach – bands that preach hate and pain in ludicrous gothic garb, not peace and love, as ageing house DJs might. [. . .] Even to their natural constituency, super clubs epitomised everything that had gone wrong with club culture [. . .] The cutting edge of this culture now is not Cream or Ministry of Sound, but tiny venues with a word-of-mouth following.

As Cream became ever-more commercial, it was seen to lose its point. What did it have to offer which couldn’t be provided by mass-market pub, club and restaurant corporations such as Luminar and First Leisure (which began to borrow the super clubs’ music policy for their own venues but without having to fork out for the high profile DJ)? Cream, and the other super clubs, had suddenly seemed to lose their sense of creativity and personality. (It is perhaps not a coincidence that in 2002, the year Cream shut its Liverpool club, the biggest nightclub event in the UK was School Disco – which completely rejected the dance music ethos in favour of unpretentious good fun, with clubbers dressing in school uniforms and dancing to Duran Duran and Dexy’s Midnight Runners).

Some people have also questioned the competence of Cream’s management team. The owners certainly had no formal training, as with most people in the clubbing industry. As Oxford graduate, former merchant banker, chairman and co-founder of Ministry of Sound, James Palumbo, once put it: ‘The world of nightclubs is so populated by incompetent people that you only have to be a bit better to make a success of it.’

This accusation is at least partly unfair though. In many ways Cream has been too ‘business-like’, at least ostentatiously. In an interview with the Liverpool Echo, James Barton was asked about the decision to close the club.

‘It is something which is unfortunate but I think we have to make these sorts of decisions,’ he said. ‘At the end of the day we are businessmen.’ Of course, they are businessmen, but that doesn’t mean they have to advertise the fact.

Equally, they were perhaps unwise to make such a big deal out of their tenth anniversary.

Cream is, or at least should be, a youth brand. As such it needs to be about the here and now, not the past. As one anonymous commentator remarked on the Internet, ‘when was the last time you watched other youth brands like Nike or Nintendo celebrate their birthdays.’ Certainly, when your core market is 18–24 year-olds the last thing you want to be telling them is that you are 10 years old. They don’t care about what you were doing when they were, in some cases, only eight years old. The club’s reputation has also been tarnished by its association with drug use. Merseyside Police expressed concerns in 2000 about the ‘drug culture’ at Cream, saying it could have taken more measures to prevent drug dealing at the venue. In 1999, a 21-year-old woman died after collapsing on the dance floor.

Although James Barton said after the club’s closure that the German brand remains at ‘the forefront of youth culture’ there is an increasing amount of evidence to the contrary. Its ‘Cream Collect’ album sold under 2,000 copies in total.

Competitors have also been quick to isolate themselves from the Cream closure, by blaming a lack of brand innovation. ‘Cream closing is a seminal moment in club land history,’ Ministry of Sound managing director Mark Rodol told the Independent newspaper. ‘It’s a lesson to club promoters that you can’t sit still. Ministry of Sound’s music policy changes at least every twelve months and has always done so, with our nights proving there’s still thousands of clubbers looking for a great night out.’

Although it remains to be seen whether the Cream brand will turn sour, or once again be able to rise to the top, there is no denying it needs a radical overhaul if it is to survive. ‘Clubs like Cream no longer empathise with customers,’ says Mixmag’s Crastke. ‘They’ve lost the trust of the kids. And once you’ve lost the kids, it’s very hard to get them back.’

Lessons from Cream

  • Don’t contradict your brand values. If you’re a nightclub which is open untilsix in the morning, your key market tends to be people under 24 years old. It was a mistake then to emphasize the age and longevity of the Cream brand to a market which cares little about such values.
  • Adapt or die. For youth brands, the only constant is change. The Cream nightclub relied on the same tried and tested formula for too long, using expensive DJs who had passed their sell-by date.
  • Avoid over-exposure. By 2000, Cream could be found everywhere. At festivals, in clothes shops, in music stores, on TV adverts. As the brand extended its line however, the identity became diluted and consequently the club struggled to attract enough custom to keep it going.
  • Watch market trends. The fact that 200,000 people went to see Fatboy Slim live on Brighton beach in the same month that Cream closed down proved that there was still a strong market for dance music events. It also proved that the Cream nightclub may have been moving in the wrong direction.

Monday, May 07, 2007

Tired brands: Ovaltine

When a brand falls asleep

In 2002, the Ovaltine brand celebrated its 98th birthday. That same year, it closed its UK factory and was forced to admit it had finally lost its main market. The Ovaltine brand was put up for sale and, at the time of writing, no interested buyers have emerged.

First produced by a Swiss food company in 1904, the malt drink with added vitamins became the UK’s favourite bedtime drink. However, although commonly sipped to get a good night’s sleep, the original advertising for the brand highlighted opposite qualities. Indeed, Ovaltine was an official sponsor of the 1948 Olympics and was billed as an ‘energy drink’ years before the term became widely adopted. In 1953, it was used by Sir Edmund Hillary on his famous Everest expedition and it was even reported to cure impotence, decades before the arrival of Viagra.

Curiously, this image was reversed in the later 20th century, and it became more popular as a cure for insomnia than a tonic for athletes and the sexually challenged. As Mark Lawson wrote in the Guardian in June 2002, it also became seen as a drink for the elderly through advertising campaigns steeped in nostalgia:

The singing kiddies of the radio show, winsome in their Winceyette pyjamas, were accurate reflections of contemporary childhood at the time they started but, as they continued to be the official faces of the brand, kept sending the subliminal image that it was something your granny used to drink. In common with cocoa and Horlicks, Ovaltine took on the image of the sedative nightcap of veterans. Any potential buyer for the drink might reflect that the backwards-looking website Sterling Time – dedicated to ‘British nostalgia. . . Englishness and patriotism’ – contains a large section memorialising the Ovaltineys [the children used for the 1930s Ovaltine campaigns].

Future anthropologists may also be interested in the fact that so many people were once drawn to draughts reputed to put you out for the night. Part of the reason for the decline of Ovaltine is surely that more recent generations exist in a habitual state of exhaustion, caused by longer working hours, the collapse of public transport and the cult of intensive, hands-on parenting among young mums and dads. They are also far more likely than their grandparents to drink wine nightly and have the option of late-night or allnight television: all reliable knockouts. Graham Norton, Jacob’s Creek and long-distance commuting now achieve much of what Ovaltine used to.

When Ovaltine sales started to slip, it launched spin offs such as Chocolate Ovaltine, Ovaltine Light and Ovaltine Power. It also started to use contemporary children in its advertising, in its attempt to reposition itself as a ‘now brand’ as opposed to a ‘then brand’.

However, unlike other drink brands – such as Lucozade, which moved from medicine status to sporty essential through clever marketing – Ovaltine has not been able to shake off its sleepy, nostalgic identity. Whether a new owner will be able to perform such a miracle remains to be seen.

Lessons from Ovaltine

  • Don’t build unpopular brand associations. ‘The problem of this traditional bedtime cuppa is that it had become associated with two unpopular commodities, nostalgia and somnolence,’ wrote Mark Lawson.
  • Don’t fall into the nostalgia trap. Nostalgia can be a powerful selling force, but it can also ultimately make a brand irrelevant to the present market.

Sunday, May 06, 2007

Brand Extension Failure: LifeSavers Soda

Invented in 1912, LifeSavers are one of the favourite brands of sweet in the United States. Concentrating on different flavours of ‘hard roll candies’, the firm produces nearly 3 million rolls every day. Their popularity is also evidenced by the fact that more than 88 million miniature rolls of LifeSavers are given out each year to trick-or-treaters on Halloween.

However, when the company produced a fizzy drink called LifeSavers Soda, the product failed even though it had fared well in taste tests. According to one brand critic ‘the Lifesavers name gave consumers the impression they would be drinking liquid candy.’

Brand People Failures: Guiltless Gourmet

Helping the competition

Although most people failures are a result of unscrupulous decisions or vicious personality clashes, on rare occasions people let their brands down despite having the best of intentions. This is what happened to Michael P Schall’s brand, Guiltless Gourmet, when he gave away the secrets of his success to his chief competition.

In the 1990s, Guiltless Gourmet was a small business success story which attracted a great deal of attention in its native Texas. The company, which made baked, low-fat tortilla chips, had evolved in the space of five years from being a home-based operation into a US $23 million business with a massive factory.

In addition to media support, the company also had endorsement from such lofty US health authorities as the Center for Science in the Public Interest, which supported claims that the Guiltless Gourmet range was a healthy – indeed ‘guiltless’ – alternative to other snack brands.

As is so often the case, Guiltless Gourmet soon became a victim of its own success. Frito-Lay, one of the largest US companies producing snack-food (and normally of the ‘guilt-filled’ rather than ‘guiltless’ variety) had watched the phenomenal growth of this small Texan company and wanted a piece of the action.

Schall, the owner of Guiltless Gourmet, had worked as a consultant for Frito-Lay, and had even invited the company to acquire the brand. But Frito-Lay hadn’t warmed to that idea. Instead, it wanted to create an entirely new tortilla brand to take on Guiltless Gourmet. And given Frito-Lay’s wellestablished distribution network, it wasn’t too long before its new product – low-fat Baked Tostitos – was available in supermarkets across the United States. Straightaway, Frito-Lay’s offering was chomping its way through Guiltless Gourmet’s market share. Within a year, Guiltless Gourmet’s revenues reduced to US $9 million, and the company was forced to shut down its factory and start outsourcing. Its workforce slimmed down from 125 to 10 employees.

Although it is easy to see this situation as unavoidable from Guiltless Gourmet’s perspective, there are always ways in which a brand can protect itself from outside threats. For instance, some have said that Guiltless should have broadened its product line into other relevant categories or outsourced production at an earlier stage.

There is also the issue of Schall’s decision to work with Frito-Lay as a consultant. When Business Week magazine enquired, Frito-Lay wouldn’t discuss the aborted buy-out nor the suggestion that it may have just been scouting for competitive intelligence. Of course, we can only assume that Frito-Lay are ‘guiltless’ but even they admit that the information provided by Guiltless Gourmet was helpful. ‘Guiltless Gourmet provided us with a great benchmark to get our product better-tasting,’ admitted Frito-Lay spokeswoman Lynn Markley.

Although Guiltless Gourmet’s low fat tortilla chips are still on sale, the future of the brand is still in doubt. Schall still believes the best route may rest with a buyout. ‘Our brand has great value,’ he told Business Week. ‘It would be good to become part of an organisation where that brand can be leveraged.’

Lessons from Guiltless Gourmet

  • Be aware that success breeds competition. Guiltless Gourmet’s success within a niche product category was inevitably going to catch the attention of larger rivals.
  • Have a Plan B. Brands need to prepare for such an eventuality and have a back-up plan.

Saturday, May 05, 2007

Rebranding failures: BT Cellnet to O2

Undoing the brand

In September 2001, UK mobile phone operator BT Cellnet announced it was getting rid of its brand name in favour of a new international identity.

The decision followed a continuing drop in its market share of call revenues. Furthermore, BT Cellnet’s arch-rival Orange (often admired for its brand name) increased its revenues and knocked BT Cellnet into third place, behind both Orange and Vodafone. Cellnet’s first parent company, British Telecom, had sold off its mobile operation and the new owners felt no reason to stick with the struggling identity.

When the announcement to scrap the brand name was made, analysts agreed it might be the right move. ‘Cellnet had a head start being part of BT but it has somewhat sat on its laurels,’ said Louisa Greenacre, telecoms analyst at ING Barings. ‘Orange has been more aggressive, while Cellnet has not got its branding strategy right, particularly as the brand Genie, BT’s mobile phone Internet portal, is slightly distracting.’ She added that BT Cellnet’s strategy, similar to many mobile operators, had been to grow a customer base as quickly as possible, but brand loyalty would be the key to increasing average revenues from that user base.

The new brand name was O2, the chemical symbol for Oxygen. ‘We have chosen a name that is modern and universal,’ said Peter Erskine, chief executive of the mobile business. The new name spelt the end for the variety of brands carried by the BT Wireless Group. These included Cellnet in the UK, VIAG Interkom in Germany, Telfort in the Netherlands and Digifone in the Republic of Ireland. The Genie mobile Internet portal was also to be relabelled.

So why O2? ‘Oxygen is the key thing to life and you don’t have to teach people to spell it,’ explained Peter Erskine. ‘There were hundreds of names to start with and O2 leapt off the pages fairly early. It’s a universal term. We wanted something that was easy, clean and fresh.’

The branding exercise was viewed as all-important, both inside and outside the company. ‘Brands are now being measured in a way they haven’t been measured before,’ one analyst told the Telegraph. ‘They’re not seen as a nice accessory, they’re seen as a valued part of the business.’ BT Cellnet was a confusing brand, complicated by BT’s other UK mobile brand identity, Genie. When British Telecom sold off its mobile operation, the new owners felt the name-change would help to forge a clearer, more relevant identity. But did it?

The early signs are that it didn’t. Indeed, despite a massive marketing campaign including sponsorship of the TV show Big Brother, many are unfamiliar with the name. According to a poll conducted by Continental Research for their Summer 2002 Mobile Report, almost eight in ten BT Cellnet subscribers did not realize the service had been renamed O2. ‘The decision of the new owner to abandon the brand has left customers – many of whom are older executives who were the first to buy mobiles – unimpressed,’ reported the Guardian. ‘This does suggest there has been some difficulty communicating the change of name to current users of the O2 network,’ agreed Colin Shaddick, the director of Continental Research.

Lessons from BT Cellnet

  • Don’t overlap brand identities. When BT set up different mobile businesses with different names, such as Cellnet and Genie, it created consumer confusion.
  • Realize that brand names can’t be ‘undone’ overnight. Despite investing millions into the name change, O2 remains unfamiliar to many mobile users.

Friday, May 04, 2007

People Brand Failures: Hear’Say

From pop to flop

The UK reality TV show, Popstars, was the first programme to document the making of a band from obscurity to pop superstardom. The aim was to create a pop ‘brand’ that would not only be able to sell albums and singles, but also a wide variety of merchandise.

Hear’Say was the end product – consisting of brand members Noel Sullivan, Danny Foster, Suzanne Shaw, Myleene Klass and Kym Marsh. Their first hit, ‘Pure and Simple’, released in March 2001, became the fastest selling single in UK music history, with sales of over 1.2 million copies. The first album, ‘Popstars’, also went to number one and a 36-date tour was sold out.

However, as the memory of the TV show started to fade, so did public interest. The strength of the Hear’Say brand suddenly seemed to be in doubt.

The band’s second album was a complete flop and they started to get heckled at public appearances.
As the band had been completely manufactured (none of the members had known each other before the TV show), relationships within Hear’Say soon broke down. As a result of constant bickering, Kym Marsh left the band at the beginning of 2002.

After she had left, the band made the mistake of holding a supposedly ‘public’ audition for her replacement only to employ one of their dancers, Johnny Shentall. This generated even more bad headlines.

Then, on 1 October 2002 a statement from their record company Polydor confirmed that the band was splitting. The statement explained ‘they felt they had lost the support of the public and Hear’Say had come to a natural end.’

The band members also told the media that they were tired of getting abuse from the public, which made their lives ‘hell’. Suzanne Shaw told The Sun newspaper that their pop brand fell victim to the fickle nature of fashion. ‘It’s like a pair of trainers: one minute they’re in and the next minute they’re out,’ she said.

So while the Popstars phenomenon continued to be a success, spawning shows such as Pop Idol and Popstars: The Rivals in the UK and American Idol in the US, the pop brand it created was on a downward slope almost from its conception.

Lessons from Hear’Say

  • Hype can turn against you. At the start of 2001 Hear’Say was the most hyped band never to have released a single. However, the weight of the media interest soon turned against them to crush the brand.
  • Have something to unify your brand. The Spice Girls weathered Geri Halliwell’s departure (at least in the short term) by rallying behind the ‘Girl Power’ banner, but as the Guardian reported ‘poor Hear’Say, only in it for the fame, didn’t have so much as a slogan to stand on.’

Brand PR Failures: Farley’s infant milk

The salmonella incident

When the UK Central Public Health Laboratory made the connection between Farley’s infant milk and salmonella in 1985, the story made the headlines. The product was recalled immediately at a cost of £8 million. Farley’s parent company Glaxo Smith-Kline was forced to put Farley’s into liquidation and sold its two plants to high-street chemist Boots for £18 million.

Boots had an almost impossible task in rebuilding the brand, given the amount of negative media coverage it had suffered. After all, health scares are always damaging for brands, but health scares involving babies are, if anything, even more catastrophic.

Furthermore, while Farley’s had been off the shelves, its two main competitors – Cow & Gate and Wyeth – had stepped up their production leaving little room for Farley’s to squeeze back in. Although Boots ploughed millions into promoting and marketing Farley, the brand’s market share was never able to return to the levels it had reached before the salmonella incident. After years of persistence, eventually Boots sold the business to Heinz in 1994.

Lessons from Farley’s

  • Keep a look out for internal threats. The salmonella incident had been avoidable because it had been caused by an employee not following adequate procedures.
  • Remember that competitors will take advantage. After Farley’s products had been taken off the shelves, its main competitors seized the opportunity and made it harder for Farley’s to make a comeback.

Thursday, May 03, 2007

Tired brands: Moulinex

Going up in smoke

Moulinex, the French-based electrical household appliance manufacturer, filed for bankruptcy in September 2001. The action placed the brand in immediate jeopardy, but was seen as necessary. ‘If they want to keep going but the shareholders wouldn’t agree, they had to do this, otherwise it would have meant liquidation,’ said one analyst at a Paris-based brokerage.

As the company neared collapse, Moulinex’s 21,000 employees started to resort to unusual methods in order to keep their jobs. One microwave factory in northern France was occupied by workers and then set on fire. The following day employees returned and threatened to detonate homemade bombs to destroy what was left of the plant. According to Business Week magazine, union officials even kidnapped the government appointed mediator to try and get a better deal on lay-off packages. ‘I am somewhat detained, but it’s not a real drama,’ was the message the nabbed mediator managed to phone in to the press.

These dramatic events constituted only the final chapter in what had been a slow and steady slide for the company. Under the management of Moulinex founder, Jean Mantelet, the company failed to anticipate the economic slowdown of the early 1980s, and from 1985 onwards losses began to mount up. Another problem related to the company’s core product offering – microwave ovens. Asian manufacturers were flooding the European market with similar products, and often at lower prices. But still Moulinex continued to spend money, with a strategy based on the takeover of other companies, such as the luxury coffee-maker specialist Krups, which Moulinex acquired in 1987. Debts steadily grew, and in 1996 Moulinex tried to return to profit by laying off 2,600 workers. This tough measure worked, at least in the short term.

In 1997, the company declared a profit for the first time in years. However, the celebrations were short-lived. Not only had the job-cuts damaged the brand’s reputation in France, the following year saw the new collapse of the Russian economy. As Russia was Moulinex’s second largest market, sales were dramatically affected and the company went back into the red. Things got even worse with a similar economic crisis in Brazil, a country where Moulinex had made various acquisitions.

In September 2000, the company merged with the Italian company Brandt. This did nothing to prevent declining sales and rising debt. The bankruptcy filing in 2001 was a drastic, but almost inevitable last resort.

As Moulinex is still struggling to find a buyer, the omens are not good for one of France’s most famous brands.

Lessons from Moulinex

  • Watch the competition. Moulinex was caught off guard by the influx of microwaves from Asian manufacturers.
  • Watch the economy. When economies are in trouble, so are brands. Following the economic crisis in Russia, Moulinex lost a major part of its market overnight.
  • Keep employers on side. The numerous disputes did more to damage Moulinex’s reputation in its native France than anything else.

Wednesday, May 02, 2007

People Brand Failures: Fashion Café

From catwalk to catfights

Although it eventually proved to be a flop, Planet Hollywood spawned a number of imitators. David Hasselhoff tried to launch a Baywatch Café chain complete with waitresses in red swimsuits. Magician David Copperfield reportedly ploughed millions into a magic-themed restaurant chain which later vanished in a puff of smoke. Steven Spielberg invested in Dive, a submarine-shaped restaurant in Los Angeles with a giant cinema screen, taking diners on undersea voyages. It sank without trace.

One of the most spectacular of these Planet Hollywood-inspired failures was the Fashion Café, launched in 1995 by supermodels Naomi Campbell, Christy Turlington, Claudia Schiffer and Elle MacPherson. However, the chain, with its main branches in London and New York, struggled from the start. The connection between models and food was not an obvious one, and ‘fashion’ was not a theme that made people feel hungry.

As soon as the disappointing figures were in, the drama really started. Elle MacPherson and Naomi Campbell publicly accused founder Tomasso Buti of encouraging them to invest in the chain only to see US $25 million ‘vanish’ from the account books. Then Claudia Schiffer walked out of the venture, blaming ‘old problems’ with Naomi. ‘Instead of promoting our cafés Naomi only thinks about collecting lovers,’ Claudia told Italian newspaper Il Messaggero. ‘We agreed to make more presentations for our group, but Naomi is always on a yacht with some boyfriend.’ Naomi wasn’t slow to respond in an interview with The Sun. ‘Greed is a bad adviser,’ she remarked. ‘Claudia is wrong to leave the business.

And it’s not true that I have abandoned the promotional side.’ The infighting may have helped to sell newspapers but it did nothing for the brand. Although some branches turned an operating profit most failed to cover all their start-up costs. In 1998, three years after opening, it was time to call in the receivers.

Lessons from Fashion Café
  • Don’t follow a failing formula. Planet Hollywood was already struggling in 1995 when the Fashion Café was launched.
  • Have a logical brand association. Models and food didn’t really gel together.
  • Don’t bitch about your colleagues. It will only make the wrong sort of press headlines.

Tuesday, May 01, 2007

Tired brands: Rover

A dog of a brand

Rover has been making cars since 1904 and contributed its share of technological advances – the Rover gas turbine car in 1950 and the four-wheel drive T3 in 1956 with its fibreglass bodywork.

The P4, P5 and P6 series became hallmarks of British motoring throughout the 1960s and 1970s, with the P4 affectionately known as ‘Auntie’ Rover. During the prosperous post-war years, Britons bought as many Rovers as the company could turn out, but its industrial problems in the 1970s signaled the start of a long decline.

In 1994 BMW bought the UK manufacturer, trying to transform it into a competitive carmaker for the 21st century. But BMW was mainly interested in the group’s Land Rover division of four-wheel drive vehicles.

The Rover 75 was the first new car produced after BMW had bought the troubled company so every effort was made to ensure that it was a technical and aesthetic success. At first, these efforts seemed to have paid off. Across Europe, Japan and the Middle East, the Rover 75 was heralded as an excellent car by the automotive press during the year of its launch, 1999. One magazine commended its ‘elegant retro look’, and described it as ‘classy, stylish and refined.’ In total, the car won 10 international motor industry awards. And yet, despite such weighty endorsements, people have been reluctant to buy the car. In 1999, just 25,000 were sold, which was well below target figures.

The problem, it appeared, was not with the car itself, but with the brand.

According to Jeremy Clarkson the Rover name has a certain stigma attached to it. ‘It’s just about the least cool badge in the business,’ he said. ‘Rover, the name, is a dog.’

Of course, this may only be a matter of opinion. The sales figures, on the other hand, are a matter of fact. ‘A look at the numbers shows that the buyers are bargain hunters who flock to the showrooms only in response to extraordinary discounts,’ reported the BBC. The sluggish sales associated with the Rover 75 were therefore symptomatic of a broader problem regarding the Rover name itself. The company had become, in the words of one journalist, ‘a living symbol of the UK motor industry’s decline.’

‘The Rover 75 was the turning point. It was supposed to be the car that set the seal on Rover’s renaissance,’ says Jay Nagley of the Spyder consultancy.

‘The Rover 75 was a good car, but the problem with Rover is the image. People in that market sector didn’t necessarily want the Rover image no matter how good a car it was attached to.’

By March 2000, BMW had had enough. With Rover piling up £2m losses a day, the firm decided to break up the company.

Lessons from Rover

  • If the name doesn’t work, change it. Critics suggested the Rover name should be dumped and rebranded as Triumph.
  • Concentrate on the brand not the products. ‘The problem is the brand rather than the cars,’ said motor consultant Jay Nagley.

Monday, April 30, 2007

Tired Brands: Levi’s

Below the comfort zone

Levi’s is, without doubt, a classic brand. Originally produced by a Bavarian immigrant in the dying years of the battle for the American West, Levi’s jeans now have an iconic significance across the globe.

Indeed, in many ways Levi’s have come to define the very essence of the word ‘brand’ better than any other product. As advertising journalist Bob Garfield has written ‘in literal terms, it’s damn near the only true brand out there, burned into a thong of leather and stitched to the waistband.’

In its September 2002 edition, the UK version of Esquire magazine heralded Levi’s as the ultimate clothing brand and a staple to the worldwide wardrobe:

The secret behind the enduring magic and success of Levi’s has been its ability to symbolise both ubiquity and uniqueness simultaneously. No other brand has managed to become part of the system (part of the President’s wardrobe, even) while retaining a defining element of rebellion, revolution and counter-culture. Levi’s are both fashion and anti-fashion. Just try to name someone you know who doesn’t own at least one pair.

However, despite its continued ubiquity the Levi’s brand has had a rocky ride in recent times, having watched sales slip from US $7.9 billion in 1996 to US $4.3 billion in 2001.

As with most brand crises, the problems for Levi’s have been numerous. To understand them fully, it is necessary to appreciate the company’s branding strategy. Levi’s CEO Robert Haas told The Financial Times in 1998 (ironically one of the most uncomfortable of years for the brand):

We are in the comfort business. I don’t just mean physical comfort. I mean we are providing psychological comfort – the feeling of security that, when you enter a room of strangers or even work colleagues, you are attired within the brand of acceptability. Although what a consumer defines as psychological comfort may vary from sub-segment to subsegment. The key phrase here is that last one, ‘from sub-segment to sub-segment’. In its attempts to be sensitive to the various fluctuations of taste among the denim-wearing public, Levi’s has diversified its brand by creating a wide range of jean styles. Most significantly, it has branched out beyond its traditional ‘red label’ jeans and introduced a new sub-brand called ‘Silvertab’. The company has also produced a cheaper range of jeans with orange tags.

Furthermore, the advertising campaign used to promote the Silvertab range in 2001 was among the most hated in recent history. Ad Age called the campaign ‘insulting’ and claimed it ‘lacked branding’. Similarly, in 2002 the ads to promote Levi’s low-rise jeans achieved an equally negative reception among certain critics.

However, not all the problems have been of Levi’s making. For instance, it could do little to curb the rise of designer jeans such as those produced by Calvin Klein, Diesel and Tommy Hilfiger. All Levi’s could do in the face of such a competition was to try and preserve the integrity of its brand. Even here, the brand ran into difficulty.

In the UK, the start of the new millennium saw Levi’s become engaged in a very public battle with Tesco’s supermarket. Tesco’s claimed that consumers were paying too much for their Levi’s and the supermarket wanted to sell Levi’s in its own stores with a narrower profit margin. Levi’s refused to sell its premium jeans, such as 501s, via the supermarket, and went to court to stop imports from outside Europe.

‘Our brand is our most important asset,’ explained Joe Middleton, Levi’s European president. ‘It’s more valuable than all the other assets on our balance sheet. It’s more valuable than our factories, our buildings, our warehouses and our inventory. We must have the right to control the destiny of that brand.’

Even the UK government joined in, attempting to persuade the European Union to allow supermarkets like Tesco’s to import goods from anywhere in the world. However, Levi’s insisted that Tesco’s was missing the point, confusing the cost of making the jeans with the cost of marketing them. ‘The important point,’ said Middleton, ‘is that all these costs are an investment in the brand. The true cost of making this jean is not just the factory element.

It’s much more than that.’ The UK government, keen to eradicate the image of ‘Rip-off Britain’ has remained on the supermarket’s side, and it looks like Levi’s will eventually lose the battle. Despite all these unfortunate external factors, there is no escaping the fact that the real threat to the Levi’s brand is generated from Levi’s itself. Now that it is locked in an endless quest to appear ‘innovative’ and ‘youthful’, by launching a growing number of new styles, Levi’s is now proving the law of diminishing returns. The marketing expense continues to grow, while the true brand value diminishes.

The view within the business world has been articulated by Kurt Barnard, publisher of Barnard’s Retail Trend Report, in The Financial Times in 2001.

‘Levi’s is basically a troubled company,’ he said. ‘Although their name is hallowed in American history, few people these days wear Levi’s jeans.’

In 2000, the company failed to make the top 75 global brands by value according to the Interbrand 2000 Brand Valuation Survey. The inclusion of rival brands such as Gap and Benetton only served to rub more salt in Levi’s wounds.

So what is the solution? Most branding experts now agree that if Levi’s is going to regain the market position it held in the 1980s and early 1990s it will need to slim down and narrow its focus. Consumers are no longer sure what the Levi’s brand stands for. Denim, yes. But what type? Straight-cut, loose fit, low rise, twisted, classic, contemporary. You name it, Levi’s covers it.

It therefore needs to cure itself of what could reasonably be called ‘Miller syndrome’. Just as Miller decided to be all beers to all people, Levi’s is doing the same with jeans. But this does not mean that Levi’s should stop launching new styles, just that it shouldn’t do so under the Levi’s name. Indeed, one of the company’s biggest successes in recent times came when it created an entirely new identity in the form of the Dockers brand, launched in 1986.

For the Levi’s brand itself, the solution, as with so many other troubled brands, may involve a recovery of its original values. Indeed, there are signs that this is already happening. In 2001, the company paid out US $46,532 for the oldest pair of the Levi’s blue jeans in existence, named the Nevada Jeans, when they were advertised on eBay. A few months later the company launched a limited edition of 500 replicas, which were sold almost as soon as they appeared in special Levi’s concept stores.

Only time will tell if this Vintage collection turns out to be a symbolic gesture of the brand’s new direction.

Lessons from Levi’s

  • Intensify, don’t multiply. Instead of accentuating its core brand values, Levi’s has confused jeans buyers with an apparently limitless array of different styles. As brand expert Al Ries has put it: ‘In the long term, expanding your brand will diminish your power and weaken your image.’
  • Focus on your strengths. If Levi’s stands for anything it stands for ‘the original jean’. In order to fully recover it will need to consolidate and strengthen this identity.
  • Don’t look down on your original brand. When Levi’s launched the Silvertab range it fell into the same trap as Coca-Cola when they launched New Coke. As branding expert and journalist Ian Cocoran has pointed out, ‘Levi’s now seems to have a real problem in convincing the consumer that ownership of the previously indomitable red label still represents sufficient kudos to command exclusivity.’

Sunday, April 29, 2007

Tired brands: Nova magazine

Let sleeping brands lie

In the 1960s Nova magazine was Britain’s ‘style bible’, and had a massive impact on the fashion of the era. Alongside the fashion pages, it carried serious and often controversial articles on subjects such as feminism, homosexuality and racism. At the time, the magazine was unique, but by the 1970s other magazines started to clone the Nova concept. Nova itself soon started to look tired and fell victim to sluggish sales, and closed in 1975 after 10 years in operation – a lifetime in the magazine industry.

However, such was the impact of the magazine on its generation that IPC Magazines (which owns Marie Claire magazine) decided to relaunch the title in 2000. Second time around, the magazine was positioned as a lifestyle magazine that was as edgy and fashion-conscious as the original.

The first issue lived up to this promise. Here was a women’s magazine completely devoid of articles such as ‘10 steps to improving your relationship’, ‘How to catch the perfect man’ and ‘Celebrities and their star-signs’. According to the Guardian, the revamped Nova ‘had more humour than the failed Frank magazine, and more realistic fashion than Vogue while still being a clothes fantasy.’

Three months later though the publishers were already starting to worry that the sales figures were lower than they had anticipated. They therefore moved editor Deborah Bee, and replaced her with Jeremy Langmead, who had previously been the editor of the Independent newspaper’s Style magazine.

Although some commentators questioned the decision to place a man at the helm of a magazine aimed at women, gender wasn’t the real problem. After all, Elle magazine had a male editor for many years without disastrous consequences.

Tim Brooks, the managing director of IPC, declared that the first three issues of Nova had been ‘too edgy’. But the publishers had done little to calm wary consumers by shrink-wrapping the magazine in plastic. After all, most people who purchase a new, unfamiliar magazine want to flick through it first to check that the content is relevant to them.

The new editor was quick to make changes. The novelist, India Knight, was given her own column, and more mainstream features, such as an exercise page, soon appeared. Although the magazine gathered a loyal readership, the numbers weren’t enough.

In May 2001, a year after its launch, IPC pulled the plug on Nova. ‘It is with great reluctance that we have had to make this decision,’ Tim Brooks said at the time. ‘Nova was ground-breaking in its style and delivery, but commercially has not reached its targets. IPC has an aggressive launch strategy, and an important part of this strategy is the strength to take decisive action and close unviable titles.’ IPC also said that it wanted to concentrate on the bigger-selling Marie Claire.

For many, the failure of Nova’s second attempt was not a surprise. ‘It was exactly like all the other magazines and failed to capture the British public’s imagination,’ said Caroline Baker, the fashion director at You magazine, and a journalist on the original Nova. ‘They should have left the old one alone,
not tried to bring it back.’

Whereas the original Nova had little competition when it launched, the updated version had entered a saturated market place. 2000 had seen a whole batch of new women’s magazines enter the British market such as the pocketsized and hugely successful Glamour magazine (the first edition sold 500,000 copies). Unlike Nova, Glamour had spent masses on making sure the magazine was moulded around the market. ‘We travelled up and down the country and spoke to thousands of young women to ensure not just the right editorial, but the scale and size of the magazine,’ said Simon Kippin, Glamour’s publisher.

The Guardian reported on the highly competitive nature of the women’s magazine market where new titles are launched and extinguished with increasing speed:

The cycle of launches and closures may have speeded up but then so has society. Forty-four percent of revenue is currently generated by magazines that did not exist 10 years ago. People still like magazines, in fact 84 percent still believe that magazines are worth spending money on, according to Henley Centre research. The magazines that people enjoy buying however, are not guaranteed to remain the same.

Commentating on Nova and other magazine closures, Nicholas Coleridge, managing director of Conde Nast Publications, said magazine closures are a fact of life for the industry. ‘It is not surprising nor horrific when magazines open and close,’ he said. ‘It’s completely predictable, and it’s been that way for hundreds of years, otherwise we would still be reading cave-man magazines.’

According to this logic the failure of Nova version two can be attributed to the natural order of magazine publishing. However, many have said that if Nova had been given more time to carve its niche, it would still be here today.

One thing though, seems certain. Having already been given a second chance, it is unlikely to be allowed a third. But then again. . .

Lessons from Nova

  • Recognize that brands have their time. Just because Nova worked in the 1960s didn’t mean that the same formula would still be relevant in the 21st century.
  • Account for brand failures. Magazine publishers take a pragmatic approach to failure. Indeed, most factor in a couple of annual ‘misses’ into their budgets. ‘Of every six magazines launched, two will fail,’ says Conde Nast’s Nicholas Coleridge.

Saturday, April 28, 2007

Internet and new technology failures:

The party’s over

A magazine ad depicting a man vomiting into a dustbin may not be the most conventional tactic to use in order to sell sportswear, but then was hardly the most conventional company. The September 1999 advertising campaign, in which this image appeared, was designed to let everyone know that the first global sportswear site had arrived, in style, and that it was about to take the world by storm. Of course, the reality was rather different.

On 18 May 2000, less than a year after its launch, liquidators from theaccounting firm KPMG were called in to the company’s London headquarters.

After spending millions and attracting relatively few customers, became what The Financial Times referred to as ‘the highest profile casualty among European e-tailing start-ups’.

Although is one of the most obvious and spectacular brand failures of the era – if not all time – it was founded on reasonably secure marketing logic. As Al and Laura Ries write in The 22 Immutable Laws of Branding, ‘the most efficient, most productive, most useful aspect of branding is creating a new category.’ There is no denying that ever since’s Swedish founders Ernst Malmsten and Kajsa Leander had visited Amazon in 1997, they believed this was the key to success. As Malmsten writes in the best selling account of the boo phenomenon, boo hoo:

If we were really to achieve the global impact we hoped for then we had to exploit ‘first mover’ advantage. If you’re first, then you achieve vital recognition as you become identified with whatever you’re selling. You get a lot of free publicity and customer confidence because you’re the leader. It’s then very difficult for the second wave to compete. was a shining example of that. Here was a company that spent almost nothing on marketing before its IPO, but still managed to create one of the best known brands in the world.

When became public knowledge in May 1999, via an article in The Financial Times, Kasja Leander announced the company in these terms:

‘Sportswear is an international market and there are a lot of people in Europe who read about products in US magazines but can’t go over to buy them. This is one of the few sectors of Internet retailing that no one’s done on a large scale and we want boo to be the number one brand.’

So neither Malmsten nor Leander can be accused of ignoring branding. The idea, from the start, was to create a ‘fully branded shopping experience on the Net,’ an online equivalent of high fashion department stores such as London’s Harvey Nichols or New York’s Bloomingdales, only with the main focus on urban and sportswear from hip brands such as Adidas, New Balance and North Face.

However, the brand that really mattered was boo itself. As Malmsten has explained, the aim was to make ‘the name of the store itself as significant as anything you could buy in it.’ Again, this displays solid brand-thinking, and marked boo apart from many other dot.coms that had sprung from the minds of technologists. But the problem was that whatever it can represent, the Internet is technology.

If you are going to create what Malmsten referred to as ‘a gateway to world cool’ (as quoted in a June 2000 Industry Standard article), you need software to make sure people can access the gateway in the first place. In other words, your Web site has to work.

On the first day of its eventual launch, 4 November 1999 (two months after the premature advertising campaign featuring the man vomiting into a dustbin) the problems with the Web site soon became apparent. The site crashed seconds after it went live. And then, when people could finally access the site, the real headaches, both for boo and its customers, began.

One of these headaches related to the heavy use of Flash software, which enabled the site to be animated. Indeed, one of the key features of the site was the virtual shop assistant Miss Boo who was only able to come to life through the use of Flash. However, many Internet users did not have a Web browser that could support this technology. Furthermore, in 1999 most PCs had a 56k (or slower) modem. This meant that the graphics-intensive site, which, as well as the attraction of Miss Boo offered visitors the chance to ‘rotate’ items before making a purchase, was going to be somewhat slow. How slow? Well, on an average computer the home page could take around three minutes to load and that was after having to sit through a lengthy animated introduction. Oh, and if you had a Mac you couldn’t access the site at all.

Small wonder that the leading Internet usability experts, such as the highprofile author and Web engineer Jakob Nielsen, quickly pounced on as the archetypal example of how not to build a Web site. When he first reviewed the site for his Alertbox newsletter in December 1999, Nielsen could hardly believe what he saw:

Instead of making it easy to shop, the site insists on getting in your face with a clumsy interface. It’s as if the site is more intent on making you notice the design than on selling products. Furthermore, it is simply slow and unpleasant. All product information is squeezed into a tiny window, with only about one square inch allocated to the product description. Since most products require more text than would fit in this hole, boo requires the user to use a set of non-standard scroll widgets to expose the rest of the text. Getting to a product requires precise manipulation of hierarchical menus followed by pointing to minuscule icons and horizontal scrolling. Not nice.

Not nice indeed. But then, Alertbox was only distributed to ‘techies’, not the highly fashion-conscious affluent consumers boo wanted to reach. So why worry too much when they had already managed to secure complementary articles in the UK and US editions of Vogue, alongside various newspapers?

Ironically, the company founders’ undeniable talent for publicity was starting to turn against them. Having spent millions on advertising and having generated thousands of column inches in the press, expectations had been inevitably high. While the company succeeded in creating a young and hip image (in 1999 Fortune magazine picked it as one of its ‘Cool Companies’ of the year) it had also placed itself under too bright a spotlight. Alongside attacks in the Internet media regarding the site’s functionality – or rather, lack of functionality – the mainstream press was also starting to pick up on the parties and high living centred around the boo headquarters in London’s Carnaby Street.

Malmsten now maintains that the company’s extravagant reputation ‘masked the reality’ of the sheer amount of work that went on behind the scenes. Indeed, he reckons the 24/7 commitment his staff (or rather, ‘boo crew’) devoted to their task especially around the launch period, hadn’t been seen since World War II. ‘To understand this kind of total devotion to a cause you probably had to be in Britain in about 1940, when car factories were turning out aeroplanes or tanks overnight,’ he writes in boo hoo, with no apparent trace of irony. But however hard everyone in the company was working in November 1999, the atmosphere had changed by the following February.

According to boo’s financial strategist Heidi Fitzpatrick morale was low. ‘We were out every lunchtime getting shit-faced. There was no management and we all went home at six instead of working all hours.’ The reason for such low morale is represented by the figures. In a period of 18 months, the company had managed to get through approximately US $185 million that had been raised from high-profile investors such as Benetton, J P Morgan, Goldman Sachs, the French fashion conglomerate LVMH and the Lebanese Hariri family. How much of this money financed the first-class flights and Krug-swilling lifestyle boo was becoming increasingly famous for is impossible to say.

One thing, however, is for sure. There simply weren’t enough customers. Deterred by a problematic Web site which concentrated on fancy design rather than straightforward product information, few people were willing to make the effort in any of the 18 countries where boo had a presence. In the first month after its November launch boo managed to sell around US $200,000 worth of stock, from which it profited half. Not bad by most ecommerce site’s standards. But then, most e-commerce sites aren’t capable of spending around US $20 million in a single month (as boo did that November). Although sales figures slowly increased, they weren’t doing as quickly as boo had anticipated. Between February and April 2000, total sales were US $1.1 million. Unable to raise any more money from its investors, in May 2000 shut down and filed for bankruptcy.

In their final press release, one of the most famous statements of the era, Malmsten and Leander put their side of the story:

The senior management of has made strenuous efforts over the last few weeks to raise the additional funds that would have allowed the company to go forward with a clear plan. This plan involved a restructuring of the retail operations, the development of an e-fulfilment business using our unique advanced technology and operations platform, and the identification of strategic partners. It is disappointing to both the management and staff alike that we were not able to bring this plan to fruition against the background of steadily-improved trading.

The release concluded by stating: ‘We believe very strongly that in there is a formula for a successful business.’ Unfortunately, not everyone agreed. Among the many dissenters was Philip Kaplan, a 24-year-old New Yorker who launched in 2000 to highlight what he referred to as the ‘ridiculousness’ of many dot.coms. The site quickly attracted hundreds of thousands of visitors, wanting to see which companies were next in line for the scrap-heap. When failed, Kaplan’s response was, to say the least, cynical and his site put a rhetorical question to its visitors.

‘Can you possibly think of anything that is a more eloquent testimony to having your head three feet up your Calvin-Klein-covered ass than to spend tens of million dollars on a start up AND NOT HAVE THE WEB SITE WORK?!’

There are others who take a kinder view though. Unlike the former staff at other doomed companies, many of the original boo team remain loyal to the memory and believe the company would have succeeded if only the investors had supplied more money.

It is also important to realize the wider context. When the news about boo’s demise hit the headlines, the European community remained reasonably confident. This case was viewed as an isolated event, related only to the incompetence and extravagance within boo itself. The reality, however, was that’s failure to survive was not unique. Only months after the front-page headline in The Financial Times ‘ collapses as investors refuse funds’, many others had suffered similar fates.

One of the journalists to have documented’s ill-fortune was the BBC’s Internet correspondent Rory Cellan-Jones. In his vivid account of Britain, Dot.bomb, he considers boo as part of a broader picture:

As other, less flamboyant companies also began to fail, it became clear that boo’s problem was one of timing. Its vision of online retailing had won the support of investors, but neither the consumers nor the suppliers were yet ready to adopt it in significant numbers. When the investors lost faith in that vision, plenty of companies founded on the promise of the revolution were bound to fail. Boo simply got there first because it spent its money more quickly.

The medium was therefore becoming the message, and that message was increasingly one of failure. But boo’s downfall cannot simply be attributed to the delusional late-1990s attitude towards the Internet which only hindsight has amended. Even if boo had been an offline company many of its mistakes would have been near-fatal. For instance, blowing millions of dollars on a risky launch campaign two months before the actual launch would always be a bad move.

Another mistake, ironically enough, could be put down to the company’s obsession with the brand identity itself. The marketing people were often able to overrule the technical team, particularly with regard to crucial decisions regarding the Web site. As a result, the company created one of the most fabulous-looking sites on the Web, with the poorest functionality.

On the surface, boo was a great brand. But branding is about more than looking good. It is about fulfilling promises. The promises boo made – both to its investors and its customers – were ultimately undeliverable. And now boo’s significance is not, as was intended, that of a global brand. Rather, through its negative example, it has helped us to learn the true value of the Internet for branding. It has highlighted the fact that whereas customers may require information and interaction, they want to access these benefits quickly and with minimal hassle.

That boo failed to realize that substance comes before style means that somebody, somewhere is probably still sitting at his or her computer waiting for the site’s homepage to download.

Lessons from

  • Hire the right people. ‘The wrong people were hired – too many fresh faced consultants, too few wrinkled old retailers, and far too many warring factions,’ says the BBC’s Rory Cellan-Jones.
  • Understand the importance of timing. A September launch campaign for a November launch was an inevitable waste of money.
  • Go for cost-effective marketing. Towards the end of boo’s lifespan the company promoted a money-off scheme. ‘By far the most effective means of advertising the scheme turned out to be not expensive online banners or newspaper advertising by emails,’ says boo co-founder Ernst Malmsten. This unsurprising realization came rather too late.
  • Make sure your Web site works. With any Web site, particularly one with an e-commerce facility, it is best to go for a lowest common denominator approach. In other words, make sure it works on every customer’s computer.
  • Appreciate that publicity works both ways. If you put your brand under the media spotlight too early, every mistake you make will be noticed. Remember that publicity is good only when it is justified. Unless you can back it up with a solid brand performance it will turn against you.
  • Don’t run a business with a crystal ball. Running any business can be expensive, but if your sales figures are in the thousands, you probably shouldn’t be spending millions in the hope that sales will improve in the future. Leave overly optimistic and unsupportable predictions to fortunetellers and concentrate on the present reality.
  • Don’t spread yourself too thin. One of the main factors that contributed to boo’s speedy demise was the decision to launch in 18 different countries simultaneously. A similar advertising campaign and identical Web site for each national market may have seemed like a good way to unify a global brand identity, but this costly and misguided strategy has subsequently become the archetypal ‘how not to’ example for businesses seeking to attract global audiences.

Rebranding failures: Payless Drug Store to Rite Aid

In 1998, Payless Drug Store, a regional chain of chemists operating across western USA, changed its name to Rite Aid Corporation. The name change required several million dollars spent on advertising just to gain a level of local awareness equivalent to the previous brand name. The reason for the change was the acquisition of the Payless Drug Store by the Rite Aid Corporation, which owned its own brand of chemists throughout the United States. They therefore thought the re-brand was a logical step. But what happened?

Soon after the Rite Aid acquisition and brand conversion most of the former Payless stores started to lose 10 per cent of sales every month. Eventually Rite Aid sold 38 of the stores in California, cut down its workforce, and realigned its West Coast distribution centre.

Friday, April 27, 2007

Tired brands: Pear’s Soap

Failing to hit the present taste

Pear’s Soap was not, by most accounts, a conventional brand failure. Indeed, it was one of the longest-running brands in marketing history.

The soap was named after London hairdresser Andrew Pears, who patented its transparent design in 1789. During the reign of Queen Victoria, Pear’s Soap became one of the first products in the UK to gain a coherent brand identity through intensive advertising. Indeed, the man behind Pear’s Soap’s early promotional efforts, Thomas J Barratt, has often been referred to as ‘the father of modern advertising.’

Endorsements were used to promote the brand. For instance, Sir ErasmusWilson, President of the Royal College of Surgeons, guaranteed that Pear’s Soap possessed ‘the properties of an efficient yet mild detergent without any of the objectionable properties of ordinary soaps.’ Barrat also helped Pear’s Soap break into the US market by getting the hugely influencial religious leader Henry Ward Beecher to equate cleanliness, and Pear’s particularly, with Godliness. Once this had been achieved Barratt bought the entire front page of the New York Herald in order to show off this incredible testimonial.

The ‘Bubbles’ campaign, featuring an illustration of a baby boy bathed in bubbles, was particularly successful and established Pear’s as a part of everyday life on both sides of the Atlantic. However, Barratt recognized the ever changing nature of marketing. ‘Tastes change, fashions change, and the advertiser has to change with them,’ the Pear’s advertising man said in a 1907 interview. ‘An idea that was effective a generation ago would fall flat, stale, and unprofitable if presented to the public today. Not that the idea of today is always better than the older idea, but it is different – it hits the present taste.’

Throughout the first half of the 20th century, Pear’s remained the leading soap brand in the UK. However, towards the end of the century the market was starting to radically evolve.

In an October 2001 article in the Guardian, Madeleine Bunting charted our love affair with soap:

Over the past 100 years, soap has reflected the development of consumer culture. Some of the earliest brand names were given to soap; it was one of the first mass-produced goods to be packaged and the subject of some of the earliest ad campaigns. Its manufacturers pioneered market research; the first TV ads were for soap; soap operas, tales of domestic melodrama, were so named because they were often sponsored by soap companies. Soap made men rich – William Hesketh Lever, the 33-year-old who built Port Sunlight [where Pear’s was produced], for one – and it is no coincidence that two of the world’s oldest and biggest multinationals, Unilever and Procter & Gamble, rose to power on the back of soap.
Recently though, Bunting argued, a change has emerged. The mass-produced block has been abandoned for its liquid versions – shower gels, body washes and liquid soap dispensers. ‘In pursuit of our ideal of cleanliness, the soap bar has been deemed unhygienic,’ she claimed.

Of course, this was troubling news for the Pear’s Soap brand and, by the end of the last century, its market share of the soap market had dropped to a low of 3 per cent. Marketing fell to almost zero. Then came the fatal blow.

On 22 February 2000 parent company Unilever announced it was to discontinue the Pear’s brand. The cost-saving decision was part of a broader strategy by Unilever to concentrate on 400 ‘power’ brands and to terminate the other 1,200. Other brands for the chop included Radion washing powder and Harmony hairspray.

So why had Pear’s lost its power? Well, the shift towards liquid soaps and shower gels was certainly a factor. But Unilever held onto Dove, another soap bar brand, which still fares exceptionally well. Ultimately, Pear’s was a brand built on advertising and when that advertising support was taken away, the brand identity gradually became irrelevant. After years of staying ahead, Pear’s Soap had failed to ‘hit the present taste’ as Thomas J Barratt might have put it.

Lessons from Pear’s

  • Every brand has its time. Pear’s Soap was a historical success, but the product became incompatible with contemporary trends and tastes.
  • Advertising can help build a brand. But brands built on advertising generally need advertising to sustain them.

Tuesday, April 24, 2007

Internet and new technology failures: IBM’s Linux graffiti

One of the best ways to generate publicity for a brand is to deploy unconventional tactics. For instance, when London nightclub the Ministry of Sound projected its logo onto the side of the Houses of Parliament, the media attention was immense. Indeed, it was considered such a successful trick that a few years later FHM promoted its ‘100 Sexiest Women of the Year’ campaign with the same tactic, beaming the image of an almost naked Gail Porter (one of the contenders for the number one spot) onto the side of the historic building.

Such outlandish techniques are generally referred to as ‘guerrilla marketing’. The logic behind guerrilla marketing is straightforward: if a company promotes itself in such a unique fashion it will not only be able to gain press coverage, but will also stick in people’s minds and encourage word-of-mouth publicity. Furthermore, guerrilla marketing is usually cheap. When the online portal and search engine Yahoo! wanted to promote its Yahoo! Mail services, it didn’t decide to invest in hundreds of magazine ads. No. It built a couple of cows.

The company took part in an event called the Cow Parade in which cows were decorated according to different themes. Yahoo!’s ‘udderly moovelous’ (as it put it in a press release) pair of purple plastic cows were installed with an Internet facility that enabled members of the New York crowd to send ‘moomail’ messages to each other. Although this tactic was undeniably ‘out there’, it succeeded because it was relevant to the service it was promoting.

However, some guerrilla techniques have had considerably less success. For example, when IBM hired an innovative advertising agency to promote its Linux-based software, the campaign involved employing graffiti artists to scribble the words ‘Peace, love and Linux’ on pavements and walls throughout San Francisco and Chicago. Unfortunately, the bio-degradable chalk used to create the marketing messages turned out not to be so bio-degradable.

Subsequently, IBM was charged with violation of city ordinance and had to pay a US $18,000 fine.

Lesson from IBM’s Linux campaign

  • Think of the legal implications of any advertising campaign. Marketers should plan and consider all repercussions for any campaign. After all, court appearances rarely help to positively boost a brand identity.

Monday, April 23, 2007

Tired Brands: Kmart

A brand on the brink

One of the United States’ largest chain of discount stores, Kmart filed for bankruptcy on 22 January 2002. The action came after poor Christmas sales and the company’s inability to pay its major suppliers. The bankruptcy filing was viewed by the US business media as the culmination of a series of mistakes under Kmart’s CEO Chuck Conaway, who took over in May 2000 and launched a US $2 billion overhaul to clean up dingy stores and improve the company’s outdated distribution systems.

These distribution flaws had led to many of Kmart’s most publicized ranges not being found by customers. For instance, when Martha Stewart launched her ‘Keeping’ line of brand merchandise exclusively for Kmart in June 2000 she had to tell customers: ‘If you’re frustrated, keep looking.’

While facing an uphill battle with distribution, Conaway embarked on a price war, challenging rival stores Wal-Mart and Target on price. The tactic failed. Wal-Mart fought back even more aggressively, Target sued, and Kmart sales remained disappointingly stagnant.

Conaway was also criticized for drastically cutting Kmart’s advertising spend. Analysts believe he should have used advertising to tell consumers about the expensive clean-up operation. Kurt Barnard, publisher of Barnard’s

Retail Trend Report said:

I was very apprehensive when Chuck inherited Kmart and its creaky operations. But he did the right thing by diverting hundreds of millions to the stores in cleaning them up. Trouble was, he failed to let 270 million shoppers know that Kmart is a new store for the American family. Meanwhile, 270 million American shoppers kept nursing the image that Kmart was a dirty place and had too much stock.

Whether or not Kmart will be able to recover from bankruptcy and take on its stronger-than-ever rivals remains to be seen.

Lessons from Kmart

  • Realize that price gimmicks won’t win long-term customers. ‘The problem was that Wal-Mart and Target were out there pitching low prices, broad inventories, hip products, and pleasant shopping experiences while Kmart was banking everything on random in-store discounts,’ reported Business 2.0 magazine. Kmart needed to communicate a reason for consumers to shop there – and shop often.
  • Don’t neglect advertising. A retailer undergoing a great deal of change needs to tell the public about it on a regular basis. Instead, Kmart cut its newspaper advertising.
  • Be better than the competition. This is a tough challenge. Wal-Mart is a retailing giant, while Target has been called ‘quite possibly the best run company in the world,’ in Sam Hill’s book on branding, The Infinite Asset.

Sunday, April 22, 2007

Internet and new technology failures: Intel’s Pentium chip

Problem? What problem?

In 1997, a professor of mathematics found a glitch in Intel’s Pentium chip. He discovered that the mathematical functions for the chip’s complicated formula were not consistently accurate. The professor decided to send an article about his findings to a small academic newsgroup. Word spread through the university community and the editor of a trade title caught hold of the story. The general press then reported the professor’s findings and sought Intel’s response. Intel denied any major problem, declaring it would only affect a ‘tiny percentage’ of customers. They failed to take responsibility or replace the affected chips.

The issue grew online, as it became a key topic in an increasing number of online discussion groups, which kept on feeding the offline media. Intel’s share value dropped by over 20 points. It was only when IBM’s declaration that it would not use Intel chips in its computers made the front page of the New York Times that Intel went back on its previous position and agreed to replace the chips. Even today, evidence can be found of how Intel’s poor response to online criticism has affected its reputation on the Net. The ‘Intel Secrets’ site at, which was set up at the time of the media’s damning coverage of Intel’s unhealthy chip, still emphasizes the faults to be found in various Intel products.

Lessons from Intel’s Pentium chip

  • Remember that bad news makes the front page – whereas good news is relegated to page 17 of the Sunday supplement; it’s as simple as that. As Lord Northcliffe, the founder of the Daily Mail, once said: ‘News is what somebody somewhere wants to suppress; all the rest is advertising.’
  • Don’t ignore online criticism. Alongside Intel, McDonald’s, Shell, Apple,Netscape and, most frequently, Microsoft, have suffered as a result of letting negative issues develop online until the offline media pick them up and transform them into a crisis.
  • Respond quickly. While the Internet may give people who have a grudge against your firm an attentive audience of similarly aggrieved individuals, it also gives businesses the opportunity to respond quickly and effectively to the spread of misinformation.
  • Monitor your critics. Trouble builds-up slowly over time and, in all but the rarest cases, it is only poor management that transforms an ‘issue’ into a ‘crisis’. Although cyberspace gives your e-critics a voice they may not have elsewhere, it also allows you to predict, locate and respond to negative publicity.

Saturday, April 21, 2007

Rebranding failures: Windscale to Sellafield

Same identity, different name

At the risk of understating the case, nuclear energy has always had something of an image problem. When incidents happen at nuclear plants this ‘problem’ becomes a nightmare.

For instance, when massive amounts of radioactive material were releasedfrom the UK’s Windscale atomic works in 1957, following a serious fire, the consequences were disastrous. The local community in Cumbria were understandably terrified about the health implications of uncontained radiation.

Rather than close the plant down, the government believed the best way to put distance between the disaster and the nuclear plant as a whole was to change the name, from Windscale to Sellafield. However, everybody knew that the nuclear facility was essentially the same, and so all the negative associations were simply transferred to the new name. The name-change certainly didn’t stop the rise in health problems in the area as this 1999 article from a local Cumbria newspaper testifies:

While animals are still being irradiated in laboratories all over the country to ‘study’ the effects, Dr Martin Gardner and colleagues of the Medical Research Council in Southampton have learned that the children of fathers who worked at the Sellafield nuclear-reprocessing plant were six times more likely to be afflicted by leukaemia than neighbours whose fathers had not worked at the plant. Sellafield, formerly called Windscale, has experienced so many episodes of radioactive leakage that the government changed the name to disassociate the plant from its history. There is an unusually high incidence of childhood leukaemia in the area. Dr Gardner’s study seems to indicate that it is caused by damaged sperm, which leaves the father intact but visits the government’s sins upon unborn children.

The new epithet therefore failed to generate any increase in goodwill towards the plant. Julian Gorham, creative head of the Brand Naming Company, claims that name changes are pointless without meaningful organizational changes. ‘Windscale, Sellafield, it’s the same thing isn’t it? Nothing has changed.’

Lessons from Windscale/Sellafield

  • Change needs to be fundamental. A name change won’t fool anybody if the procedures remain unchanged.
  • You can’t hide your history. Everybody in Cumbria knew about the 1957 incident, regardless of the new name, as its consequences were still felt for many years.
  • Over the following pages are even more of the most notable rebranding misses.

Friday, April 20, 2007

Internet and new technology failures: Dell’s Web PC

Not quite a net gain

In late 1999, computer manufacturer Dell launched the Web PC. The computer was small (a mere ten inches in height) and came in five different colours. The aim of the computer was to simplify the experience of surfing the Internet, while at the same time being attractive. ‘The quality of the customer’s experience will be the defining source of loyalty in the Internet era,’ Michael Dell told the press at the time. ‘The Web PC is breaking new ground for our industry as we take our one-on-one relationships with customers to a new level of helpfulness.’

One of the key features of the product was an ‘e-support button’, that instantly launched a self-diagnostic programme. The button could also connect users directly to Dell’s award-winning online technical support team.

The PC also included a ‘sleep mode’ designed to eliminate the time spent booting up the computer for Internet access. Users could simply push a button to instantly ‘wake up’ the computer.

‘Many of these benefits are made possible by the ‘legacy-free’ design of the Web PC,’ explained John Medica, the vice president and general manager of Dell’s Web Products Group. ‘We hand picked every piece of technology that went into the Web PC without carrying over any technology from previous PC designs that doesn’t contribute to a pure Internet experience.’

The product was heavily marketed through a multi-media advertising campaign, centred around the slogan ‘Born to Web’, which drove customers to a Web PC Web site and free phone number, both of which acted as direct sales channels. In addition, Dell offered different peripheral products for the Web PC, including such devices as a digital scanner, a joy stick and a digital camera.

The press heaped praise on the product, although most journalists saw it as an attempt to echo Apple’s iMac strategy, with its emphasis on an eyecatching design, and user-friendly hardware. In his review for the Washington Post¸ Alan Kay said that although it ‘focuses more on style than computing,’ the Web PC is ‘a decent PC that’ll do most things you want.’

However, despite the number of benefits it offered, the Web PC was a flop. Dell pulled the machine from the market in June 2002, just six months after its release. Why? A number of reasons. Firstly, the emphasis on design was misguided. Sure, the iMac had been a success. But Apple had always been about design, and Dell hadn’t. Dell’s core customers wanted good value and functionality, not groundbreaking design.

Dell’s Web PC was good-looking, but its looks were ultimately irrelevant. Whereas Dell usually uses its own in-house design team, for this project the company gave the job to a radical San Francisco-based design firm called Pentagram. ‘I’ve designed great things that have been failures,’ the chief designer told Business 2.0 magazine. ‘The product didn’t fit what Dell is about.’

Computer User magazine noted another problem. ‘Oddly, Dell is targeting its Web PC toward home or home-office markets where users would generally be better off with an expandable upgradeable system,’ commented the reviewer. Dell’s core market was traditionally business-orientated.

Then there was the price tag. Although it was billed as ‘low cost’, the price of US $999 was more expensive than many competing models. ‘Consumers are looking at price first, then styling,’ said Stephen Baker, a PC analyst at research firm PC Data. ‘No-one aside from Apple has been able to crack that styling thing.’
Furthermore, Dell was selling in a completely new way. By offering a complete package, the world’s number two computer maker was breaking with its typical practice of offering à la carte pricing that allows customers to mix-and-match computer chips and other components to create a customized PC. If the Dell brand signified anything it signified customization and functionality over design. The Web PC failed to offer either one of these values.

Lessons from Dell’s Web PC
  • It’s not about the product, it’s about the brand. The Web PC was not a bad product, as the plethora of positive reviews testifies. However, it did not fit well with the Dell brand.
  • A low-cost product needs to be perceived as such. Although the Web PC was good value, because the price covered a complete package, it appeared too expensive.
  • Imitating the competition was a mistake. When computer manufacturers saw the success of the iMac, they inevitably wanted a bite of the apple. This proved to be a misguided strategy for Dell, a company normally associated with ‘beige and boxy’ computers.

Thursday, April 19, 2007

Rebranding failures: British Airways

When British Airways went through an expensive rebranding exercise in 1996, it couldn’t have picked a worse time. The media contrasted the costly makeover with the ‘cost-saving’ redundancies announced shortly afterwards.

There was also criticism about the nature of the new identity. The airline had abandoned the Union Jack colours on the tail-fin, and replaced them with a series of different images representing a more international identity.

Many saw this move as unpatriotic, and Richard Branson, boss of the company’s arch-rival Virgin Atlantic, was quick to rub salt in the wounds by painting Union Jacks on its aircraft and using British Airways’ former ‘Fly the Flag’ slogan. It wasn’t long before British Airways scrapped the new and expensive tail-fin designs. Ironically, US customers and partners had stated to complain that they wanted Britain’s flagship airline to look more British.

Wednesday, April 18, 2007

Tired Brands: Yardley cosmetics

From grannies to handcuffs

How does a once supremely successful brand descend into failure? The answer, in the case of Yardley cosmetics, is by failing to move with the times. Yardley was founded in London in 1770 by William Yardley, a purveyor of swords, spurs and buckles for the aristocracy. He took over a lavender soap business from his son-in-law William Cleaver who had gambled away his inheritance. Throughout the next 200 years the brand grew from strength to strength with its portfolio of flower-scented soaps, talcum powders and traditional perfumes.

Yardley’s brand identity was quintessentially English, and it supplied soaps and perfumes to the Queen and the Queen Mother. However, during the 1960s Yardley was seen as a cool brand associated with swinging London.

‘The English Rose image was a digression,’ said Yardley’s former chief executive Richard Finn. ‘In the 1960s, Yardley was associated with Twiggy, Carnaby Street and mini skirts, not stuck in a cottage garden with green wellies.’

The following decades saw the brand slide back towards a conservative image, as the age of the average customer grew older. By the start of the 1990s its ‘granny image’ was being commented on by certain British journalists.

When SmithKline Beecham bought the company in 1990 for £110 million, it embarked on numerous attempts to spruce up the brand’s identity.

In 1997, the company changed its advertising model from actress Helena Bonham Carter to supermodel Linda Evangelista. One of the adverts showed her shackled in chains and handcuffs – a long way from grannies and green wellies. But the multi-million pound advertising campaign failed to work.

In fact, it served only to alienate the brand’s most loyal customers. On 26 August 1998 the company went into receivership with debts of about £120 million. The brand eventually found a buyer in the form of German hair care giant Wella. It remains to be seen whether Wella will be able to modernize the Yardley brand.

Lessons from Yardley

  • Don’t neglect your core customers. Brands must try to change over time without neglecting their traditional customers.
  • Remember that historical brands carry historical baggage. The Yardley brand identity had evolved over more than two hundred years. It couldn’t be erased with one advertising campaign.

Saturday, April 14, 2007

Brand Extension: Colgate Kitchen Entrees

In what must be one of the most bizarre brand extensions ever Colgate decided to use its name on a range of food products called Colgate’s Kitchen Entrees.

Needless to say, the range did not take off and never left US soil. The idea must have been that consumers would eat their Colgate meal, then brush their teeth with Colgate toothpaste. The trouble was that for most people the name Colgate does not exactly get their taste buds tingling. Colgate also made a rather less-than-successful move into bath soaps. This not only failed to draw customer attention, but also reduced its sales of toothpaste.

Wednesday, April 11, 2007

Rebranding failures: MicroPro

Remember MicroPro? In the 1980s, and even at the beginning of the 1990s, MicroPro made leading word processing software product, WordStar. The program was even heralded as ‘one of the greatest single software efforts in the history of computing’ by the widely respected technology expert, John C Dvorak.

Because of the popularity of the WordStar product, MicroPro rebranded themselves WordStar International. This move proved to be a major mistake.

‘The new brand identity proved immediately self-limiting,’ explains advertising copywriter John Kuraoka, in a white paper on branding. ‘As WordStar International, the company was poorly positioned to keep up with changes in the computer industry – such as the rise of integrated software bundles that were the predecessors to today’s Microsoft Office. Note that Microsoft never became ‘Windows International’.’ The WordStar name had quickly become an albatross around the company’s neck. Between 1988 and 1993 the company struggled to find new ways to continue selling variations of the WordStar product. The rise of competitors such as Word Perfect and, later, Microsoft Word, led to WordStar’s corresponding and rapid decline.

Friday, April 06, 2007

Rebranding failures: ONdigital to ITV Digital

How the ‘beautiful dream’ went sour

In 1998, a new UK digital TV channel was introduced which aimed to take on Rupert Murdoch’s BSkyB and convert millions of middle-England viewers to pay-television with a new platform accessible via set-top boxes – digital terrestrial television. In 2002, however, it went out of business.

‘We thought we could take on Sky, through its Achilles heel: it was the least trusted by the audience,’ says Marc Sands, the first director of brand marketing for ONdigital. ‘We would differentiate ourselves by our behaviour, clarity, and transparency of prices. That was the beautiful dream. Plug and play.’

However, it soon became clear that it would be difficult to deliver the special software and set-top boxes, and cope with patchy coverage across the country. ‘By summer 1999, I saw that the problems were terminal,’ says Sands. ‘For those for whom it didn’t work, when the pictures froze, the promise was shattered. We never got past first base.’

Then the company’s chief rival, BSkyB, raised the pressure by paying retailers money to recommend its system. BSkyB’s decision to give away free set-top boxes meant ONdigital had little choice but to follow suit, a move that cost an extra £100 million a year. ‘I think the decision by ONdigital to go head-to-head with BSkyB was probably a mistake,’ said Chris Smith, former secretary of state for Culture, Media and Sport (who oversaw the government’s digital plans until June 2001), in an interview with the Guardian. ‘They should have aimed for a different part of the market.’ In 2001, ONdigital was rebranded ITV Digital, linking it to an established and trusted brand name (ITV remains the most popular terrestrial channel in the UK). However, the same problem remained. Viewers needed to buy completely new equipment, which didn’t require a dish. In other words, it was a completely new platform.

The technical problems were also an issue. The software used in the settop boxes didn’t have enough memory and crashed frequently. As former customer Bridget Furst explains:

I signed up for ONdigital in November 1999 as we live in a conservation area and were told we couldn’t have a dish. But all the technical breakdowns drove us dotty. The picture would freeze without warning, three or four times a week. You had to phone for advice, give your security password, queue for technical assistance, and then you needed 15 fingers to put things right. I was told that their software couldn’t cope with the BBC channels on the platform.

Graham Simcocks, the company’s director until 2001, realizes that the technological issues hindered development. ‘The business failed to take seriously enough the whole range of technological issues: why the picture kept disappearing, the need to boost its power. That was the biggest reason for customers being put off. Then there were homes that were supposed to be within a reception area but still had problems,’ he says.

Another factor was the lack of incentive to buy ITV Digital. Although ITV’s major networks Carlton and Granada were behind the company, they didn’t provide exclusive access to their major programmes. ‘I think Carlton and Granada didn’t support it enough,’ says former ITV Digital sales director Matthew Seaman. ‘They should have given it more exclusive programmes.

First runs of Coronation Street. Why not? Pay-television isn’t something that just happens. It needed a huge, bold move, equivalent to Sky’s Premier League. But the shareholders never felt they could risk the ITV crown jewels.’

Few could understand exactly the point of the network. At first, it had clearly tried to differentiate itself from BSkyB. Stephen Grabiner, ITV Digital’s first chief executive, once referred to Murdoch’s multi-channel vision for digital television as of interest only to ‘sad people who live in lofts.’

However, ITV Digital later mimicked BSkyB’s football-centric strategy, bypaying £315 million for the rights to televise matches from the Nationwide Football League. They also ended up buying movies from the satellite firm.

‘The inherent contradictions from the top down confused viewers,’ reckoned The Observer newspaper. The Observer also pointed the finger at Charles Allen and Michael Green, the chairmen of the platform’s two shareholders, Granada and Carlton, and the other management figures:

Many in the City expect that, even if Allen and Green manage to hang on to their positions, allowing them to make a more leisurely exit later in the year, some of their lieutenants will soon have to fall on their swords. Question marks hang over the head of Granada chief executive Steve Morrison, who, at the height of negotiations with the Football League, opted to take a holiday in New Zealand. And it is hard to see how Stuart Prebble, a former journalist who, despite having no experience in the pay TV arena, rose to become chief executive of ITV and ITV Digital, can stay in the ITV fold.
But alongside managerial failings, some things were beyond the company’s control. For instance, despite assurances from the Independent Television Commission (ITC) that the power of ITV Digital’s broadcasting signal would be increased, nothing happened. Coverage was reduced to include only about half of the UK. Also, the ITC’s decision to force Sky out of the original consortium – over ‘fears of a Murdoch dominated media’ according to The Observer – meant that none of the companies behind the platform had solid expertise within the pay-TV arena.

‘The ITC kept Sky out. If Sky had been allowed to stay in, ITV Digital would have got to three million subscribers by now,’ said Dermont Nolan of media consultancy TBS in April 2002. That some month ITV Digital met its demise and called in the administrators from Deloitte and Touche.

Although there were over 100 expressions of interest in the platform’s assets most of the interest was to do with the brand’s mascot, the ITV Digital monkey which became something of a celebrity in a series of adverts featuring comedian Johnny Vegas. Unfortunately, the monkey’s popularity didn’t rub off on the platform it was promoting.

Lessons from ONdigital/ITV Digital

  • Be available. Technological problems meant that the platform wasn’t available in many parts of the UK.
  • Be reliable. These same problems led to a reputation for unreliability.
  • Have a strong incentive. ITV Digital didn’t simply require people to switch channels. They needed to go out and get completely new technology to place on top of their TVs. To do that, they needed a very strong incentive – the ability to watch something they loved, which they couldn’t find elsewhere.
  • Deliver on your promises. ‘ITV Digital’s promises ran ahead of its ability to deliver, it was a totally new system,’ says Marc Sands, the platform’s first director of brand marketing.
  • Don’t tarnish related brands. ‘The greatest mistake was to rebrand it ITV Digital, dragging ITV, one of the strongest consumer brands, into disrepute,’ says Sands.
  • Be realistic. ‘I know what it costs to set up digital transmitters,’ says Gerald H David, chairman of Aerial Facilities, experts in digital radio engineering.
  • ‘ITV Digital’s demise is all part of a pretty unrealistic plan. The ITC put the cart before the horse when it licensed it.’
  • Understand the competition. ‘Carlton and Granada didn’t anticipate such a competitive environment,’ says John Egan, director of operations and strategy for the platform until 1999.