Wednesday, June 8, 2011

Successful Ingredient Brands - A 3 Part Recipe...and a Cloudy Future?

vs A Showdown!!!

In 1992 I began work on the Intel Inside brand team, when I started as Brand Strategy Manager, Intel Inside working on then Dennis Carter's team with Karen Alter, Sally Fundakowski and Anne Lewnes, an unheralded but amazing innovative team. Whatta ride! In the ensuing years, we built a monster brand, the world's first technology mega ingredient brand.

In 1995, I left Intel to join a fledging, high profile start-up called Netscape. Mike Homer, the legendary (and sadly late..) VP of Marketing at Netscape and Jennifer Bailey hired me and tasked me with building "Intel Inside" for the Netscape brand. The resulting "Netscape Now" program helped us build the Netscape brand and business and served as a prototype for every Internet affiliate program that came after it.

However, when put side by side, it is easy to see why Intel Inside is now legendary in marketing history and Netscape Now is not. What sets Intel Inside, Gore-Tex, Dolby, Nutrasweet, Teflon and other run-away ingredient brands apart is that they built the brand on a basic and powerful recipe of three parts, 1) End user value 2) Brand Investment and 3) OEM or Host Financial incentive.

Let's do a quick comparison of Netscape Now and Intel Inside on these 3 criteria.

1) End Use Value
Netscape Now - The promise of Netscape Now was that the host website was "best viewed" with Netscape. This was a relatively strong proposal at the time, given Netscape's then pre-eminent ability to drive and ship support for web standards. However, it proved unsustainable from the Microsoft onslaught, a topic for another blog - Ken's Score 6/10

Intel Inside - The promise of Intel Inside was Performance and Compatibility. This was a relatively strong proposal which proved incredibly hard to communicate. However, Intel had the resources to drive this value prop into the market, and was in the enviable position to "brute force" this value - Ken's Score 6/10

Verdict: Even

2) Brand Investment

Netscape Now - Netscape rode the PR wave of 1995-1999 with expertise and abandon. Bold, innovative and compelling. HOWEVER, the investment in Netscape Now as an ingredient brand was essentially limited to my salary :). There was NO attempt to build this as a separate brand, it was a viral and community driven effort. While print and TV was out of reach financially, there were plenty of missed opportunities to syndicate the Netscape Now brand with targeted investment in sites like Yahoo, Amazon and others...despite my advocacy, never happened. Ken's Score - 3/10

Intel Inside - Intel made a conscious decision to invest in direct to consumer brand building. In an era before the Internet, this meant massive spending on TV, Print and outdoor ads, target directly at the end user. Intel was looked at by many as "Crazy" for doing this. But the results really do speak for themselves - Score 10/10

Verdict: Intel Inside by a mile!

3) OEM/Host Business Model

Netscape Now - When I wrote the program, I proposed two aspects to drive incentive for the hosting websites to display the Netscape Now brand logo. The first was to build an Internet directory of great sites that were displaying the brand, and to promote this as the place to find the best Web content. The second was to pay sites for each download they generated. Say even a modest amount like $0.25 per download. Both of these ideas were rejected for "sound" business reasons. On the first, Netscape did not want to compete with its partner Yahoo and other media and Internet service providers. Jim Barksdale later called not competing for Internet media as one of his biggest mistakes. The second was that with a free product, Netscape could not pay for downloads. I think the second was a huge mistake. To this day, I believe we needed to invest in market share to drive the business. Ken's score - 0/10

Intel Inside - Intel invested 5% of microprocessor sales into an MDF fund to pay for OEMs to use and display the Intel Inside brand on chassis, boxes and ads. This is the BIGGEST reason for the programs success. In some cases, it was the biggest margin contributor for PC manufacturers. HUGE, and not well understood by most even today. At the time, this program was a $300M/yr investment, enough said! Ken's Score 10/10

Verdict: Intel againAs is clear from the evaluation above, Intel wired the Intel Inside brand for success through a well thought out strategy and financial commitment to it. As our entire industry is being re-juggled by the cloud, those who are contemplating ingredient branding strategies should understand this model and embrace and adjust it to their needs.