The Consolidation of Brands on the Internet

Brand warehousing on the web? Now, more than ever, we’re seeing one URL host a smorgasbord of like-brands, giving visitors an abundance of information and options on a particular subject within just one site.

Wow … what a transition. What happened to taking advantage of segmenting, niche and micro-marketing on the web?

As the web grows and becomes THE go-to destination for news, sports, weather, entertainment and just about everything else, branding of online properties is taking hold, but many companies are choosing to roll their multiple brands under a single web property brand.

Following the lead of wildly popular brand consolidators like Time Warner’s www.CNNMoney.com, the trend today is toward merging multiple brands under one online “roof.”

When Time Warner created CNNMoney.com in 2005, it created a one-stop-shop for Fortune Magazine, Money Magazine and a host of other information-hungry money-topic audiences. While there were many reasons to consolidate, increasing traffic to the comprehensive site would justify increased advertising rates, creating a more profitable situation.

This trend is both interesting and risky because the Web inherently creates an environment perfect for super segmentation—and as a result, better, more measurable marketing. While a brand-blended site may significantly increase page views, audience wants/needs are ignored and sub- brands may lose their unique identities—and loyal followers—altogether. One or more brands will ultimately lose at the expense of the other. Segmentation is lost.

Before pursuing online brand consolidation, a business must analyze both the risks and benefits.

Brand consultants Latham & Co., say that brand consolidation offers a tremendous opportunity to rationalize costs, strengthen the best brand, and support profitable brand growth and expansion. However, at the same time, brand consolidation also has the potential to alienate loyal users, confuse prospects, and disenfranchise channel partners who may take a long and difficult time to adjust to fundamental change.

A decade ago, when mergers and acquisitions were the “in” thing, Lars Finskudi, founder of Vanguard Strategy, published a report that not only revealed facts about the large benefits of a successful brand consolidation, but pointed out that brand consolidation attempts have a high failure rate.

Finskudi’s paper explained how a successful consolidation might, for example, transform two brands each with a 15% market share into a single brand with a 32% share. In reading his 1998 findings, one can easily see how his insights and examples would support big-brand blending online today.

In one of his household brand examples, Finskudi reminds us that Procter & Gamble eliminated almost a quarter of the different varieties of its brands between 1991 and 1994 under the tenure of former CEO Edwin Artzt—who is on record as having said that in 25% of the companies, 2,300 brand varieties contribute only 2% to total sales.

The strategy continued through the end of that decade to reduce complexity not only for retailers and the company itself, but also to make it crystal clear what the best choices are for the consumer, creating a slimmed-down product roster about a third shorter than it was at the beginning of the decade. In hair care alone, it slashed the number of items almost in half, and grew its share by five points to 36.5% over the past five years.

In a recession, brand consolidation is an absolute necessity for some businesses, and cannot be avoided if the entity is to survive. GM’s consolidation plans for example will eliminate some of its brands altogether, like Hummer, making it necessary to reorganize what and how it sustains its brands online.

No matter what the state of the economy, a well-conceived merging of brands—on and offline—can result in successful branding, improved profitability, streamlined operations, simplified customer interface and a clearer, more distinct value proposition.

One final consideration to ask is this: Will the brand consolidation benefit the customer/prospect? If the answer is yes, it’s a no-brainer. If it’s a no, you may want to stick with a less robust, more specific site. The benchmark will, of course, be sales.

Grant A. Johnson is the Chief Measurable Marketing Officer at Brookfield, Wisconsin-based Johnson Direct LLC. He can be reached at 1-800-710-2750 or at grant.johnson@johnsondirect.com