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Internet Branding Expert Laura Ries

Say goodbye to generic domain names, ad-based revenues and secondary category leaders. Branding expert Laura Ries introduces the new rules of the Internet.

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It's difficult to say, with a straight face, that the rules of the Internet have changed: After all, e-commerce, B-to-B, ASPs and all the other buzzword business opportunities on the Web are about as new a business concept as you can get. How can there already be rules involved? But once you start thinking about all those Internet bandwagons filling up with this company and that, you realize that rules are in the making-whether it's the use of generic names like Buy.com and Furniture.com, or the faith that banner ad-revenues are a cure-all.

And then Al and Laura Ries decide to chuck the new rules out the window in favor of the new, new rules.

"The most successful companies on the Internet are the small entrepreneurs who don't do research. They just go with their gut instincts and fix it along the way. And they're the ones who are now multimillionaires."

The father-and-daughter team are no strangers to developing the rules of branding. They previously co-wrote The 22 Rules Immutable Laws of Branding, a Business Week bestseller; Al also co-wrote The 22 Immutable Laws of Marketing. In their newest book, The 11 Immutable Laws of Internet Branding (HarperBusiness, $21), the Ries explore the concept of building a strong brand name on the Internet and how businesses are getting it right-and getting it wrong-in areas from company names to interactivity to vanity, the hubris of successful net companies.

We've asked Laura Ries, who's also a partner with her father in the marketing strategy firm Ries & Ries (http://www.ries.com), to talk with us about how these rules are changing the face of business.

Entrepreneur.com: You say the Internet can be a business or a medium. Why is this distinction important to branding?

Laura Ries: Whether the Internet is going to simply serve as a medium for your existing business or whether it's going to be a completely new business is the key decision you need to make when you're developing an Internet business.

In many cases, the big thrust of attention has been on creating a new business, and in that case, the first thing you need is a new name. You need to identify [your new business] as an Internet brand because it's a separate business. It's a different type of business. Things run differently on the Internet. The Internet is based on interactivity, for example. So many companies that have existing businesses, like The Gap or Barnes & Noble, they really need to throw out their old book and start over with a whole fresh new way of seeing things on the Internet. And the best and easiest way to communicate that [change] with consumers is with a new brand name.

Entrepreneur.com: Why does the "foot-in-both-camps" strategy-not choosing whether the Internet will be a medium or a new business-undermine consumer trust?

Ries: I think it's confusion, not only from the company standpoint of "Which direction are we going in? Is it the Internet or is it a traditional business?" but for consumers as well. It confuses them in terms of what you stand for.

In the long term, the Internet is going to be focused on low price and selection. We believe the future of traditional [business] is going to be the opposite. It will be focused on service and availability-not on the lowest price. In fact, they might have to raise their prices and offer more to consumers in terms of the shopping experience. The biggest problem with retail these days is that their emphasis on low prices [means they're] out of stock many times because they don't want to buy too much. They're going to have to change this, and they're going to have to be customer-centered focused and service-oriented.

Entrepreneur.com: A large part of your book is devoted to the discussion of brand names. How has the Internet affected the importance of a brand name?

Ries: The most important thing for a brand on the Internet is its brand name. The Internet has a lack of visibility as opposed to the "outernet," the real world. In the real world, you drive by and see signs. You see buildings. You see a bank. You see a bookstore. But on the Internet, it's completely different. You actually have to type in and correctly spell the brand name or the company name in order to get [to the site.] Your brand name is the sole connection and the way that anyone is going to find you. So that means it's going to be extremely important long-term in establishing what that brand is and what it stands for.

Entrepreneur.com: What are other laws regarding Internet brand names?

Ries: One is "The Law of the Common Name," which says that the kiss of death for an Internet brand is a common, generic name. We feel a generic name is so damaging because it's very hard to place [a generic name] in the mind because it has very little meaning for consumers. Many companies, while having good business strategies and great execution perhaps, are going to be doomed by the fact that they have lousy names. One problem is there's so much confusion with so many generic names in each category. Are you Car or Cars or eCars or iCars or CarNet? It's going to be impossible to differentiate yourself from the competition.

You can imagine a conversation: "Where'd you buy your new car?" "I got it at Cars." "You got it where?" It doesn't lend itself well to conversation and, as a result, doesn't build a brand in the consumer's mind. The mind doesn't really know what to do with a generic name.

On the other hand, we have "The Law of the Proper Name." Because your name stands alone on the Internet, you'd better have a good one. The proper name has a much better, long-term, strategic effect because you can build that space in the mind of the consumer where your brand can stand for something. And it doesn't have to be a made-up word; it can be a real word used out of context. For example, Amazon.com, we feel, is a very strong brand name, linking the idea of the world's biggest river and the world's largest bookstore.

Entrepreneur.com: Another interesting law you introduce in your book is "The Law of Singularity," where you say there's really no room on the Internet for secondary category leaders. What does this mean for smaller companies that can't offer the breadth of what a leader offers?

Ries: The idea of singularity is that there's going to be a leader in every category. And there is a tremendous opportunity for smaller companies to narrow their focus and compete very effectively against the leader. You know, in terms of Amazon.com, they are many specialty book e-tailers. For example, VarsityBooks.com sells books to university students and has done very well and has a promising future. And they did so by narrowing their focus.

You can't go against the leader by offering the same things that they do. It's going to be very difficult to beat them on price. The only way you're going to have success is by narrowing the focus and becoming a specialist in something and taking, perhaps, a smaller piece of the pie. Or going to a new category, one that's not so heavily dominated by a leader, and setting up another business. The dust hasn't settled on the Internet. There are actually very few categories that have a dominant leader. There are lots of opportunities in those areas where the dominant leader hasn't shown itself yet.

Entrepreneur.com: You reject the notion that the Internet will be dominated by advertising. Why?

Ries: The original theory was that the Internet would be much like television: You would give away the content and make money by selling advertising. The thing is, the Internet is a completely new type of medium. Television is a passive medium; you sit there and watch it. The Internet is the opposite-it's completely interactive. And studies have shown that when you give people the opportunity, they will turn off advertising immediately. The Internet allows people to choose what they want to watch and where they want to go, and they've chosen to turn off that advertising.

So we feel the advertising model is not one that's going to be effective on the Internet. And we're seeing that happen-click rates have declined. Initially, people had some success with the idea of advertising and banner ads because the medium was so new. People were interested and excited about everything and tended to click on everything. But now that it's a part of our everyday lives, you have to face reality that people aren't interested in actively seeking advertising and will, in fact, go out of their way to avoid it.

On the other hand, there has been a tremendous amount of advertising off the Net. All the dotcom companies, because of their lack of real-world visibility, are forced to use advertising in other mediums to get attention and to remind people about their brands and to visit their sites.

Entrepreneur.com: In your "The Law Of Time" chapter, there's a very interesting quote: "Getting it right makes no sense from a branding point of view. Anything worth doing is worthwhile doing in a half-assed way. Anything not worth doing is not worth doing in a perfect way." This really seems to buck conventional business rules.

Ries: Specifically for the Internet, this is very important because time is of the essence and it's so important to be first in the mind. Many of the initial Internet companies-Yahoo! in particular-essentially launched without having a product. Yahoo! outsourced [the construction of their search engine], but they were able to build that all-important brand in consumers' minds. Later on, they fixed the product and now it works quite well.

But time is so important and many companies have been bogged down by trying to get their product perfect before launching it. There's such a limited opportunity to build that brand. You need to be at the right place at the right time. You need to be first. You need to generate the publicity surrounding you and your brand-that's really the key ingredient. That doesn't mean crappy brands will make it on the Internet. But you shouldn't wait too long.

I think the reason the big companies haven't had much success on the Internet is their internal thinking says, "We have to wait until it's perfect, and we have to do research." But the most successful businesses on the Internet are the small entrepreneurs who don't do research. They just go with their gut instinct and fix it along the way. And they're the ones who are now multimillionaires.