Friday, Jul 25, 2008
You may have thought Webvan and Kozmo were just dot-com delivery boys. But their demise has left their customers deeply scarred and cast adrift in a suddenly meaningless universe.
Jul 11, 2001 | In recent months, newspapers have devoted hundreds of column inches to the economic, social and sartorial impact of the dot-com collapse. Top-flight reporters have been dispatched to Silicon Valley to document the pathos of the boarded-up lofts, the shuttered trattorias, the boy millionaires who have gone back to working at Starbucks. But one aspect of the crash has gone unexplored: the effect of the death of so many brands on consumers themselves.
A year and a half ago, at the height of the e-commerce spending spree, Internet companies invested enormous sums of money in making an impression on the public. Over $3.1 billion was spent on offline advertising alone, a land grab for consumer "mindshare" unprecedented in marketing history. Unlike traditional companies, which build brands over time through a combination of advertising, in-store experience and product quality, the dot-coms attempted instant branding. As Brian Mulhern, advertising director for Outpost.com, told the New York Times in 1999, "First and foremost, the job of dot-com advertising is to gain top-of-mind awareness."
What happens when so many high-profile brands go from top of mind to the bottom of the sea? Does the landscape of the consumer psyche change? To explore that question, our advertising agency, Mad Dogs & Englishmen, convened some focus groups in New York among people who had started making these dot-coms part of their lives. They weren't venture capitalists, information technologists or experience architects. They hadn't lost jobs. They hadn't lost fortunes. They had just lost some of their favorite Web sites.
These days, it's fashionable to ridicule the dot-gones as chimerical ventures, a meaningless blur of great parties and overhyped press releases. And indeed, almost everyone we talked to had read the stories about the sheer profligacy of it all -- the on-site massages, the Herman Miller chairs, the copious cocktails and piles of jumbo shrimp. But enough grave-dancing, our respondents said. They liked these companies. They missed these companies. They wished they'd come back. "It's like the people who love to hate Gwyneth Paltrow," said a young man from Brooklyn. "The term 'dot-com' has become something that people love to hate. But you know, a lot of those companies were great. And my life is worse now that they're gone."
What was particularly stunning, respondents said, was the unprecedented speed of the meltdown. In ordinary times, high-visibility advertising is an indicator of robust good health. Brands on life support don't advertise on the Super Bowl. But suddenly, "there was no connection between a company's marketing image and what was really going on," said one woman, a corporate lawyer. "The month they went down, Eve.com [a beauty-products Web site] had big two-page ads in all the women's magazines." She was left with a jar of hair wax and 200 useless Eve points.
In hindsight, the respondents felt they should have seen the danger signs. These companies weren't behaving the way companies are supposed to behave. Like an overzealous suitor who shows up with diamonds and a string quartet on the second date, the dot-coms were pathological in their munificence. One respondent said she knew it was all over when she accidentally kept a DVD from Kozmo two weeks past the due date. She called the company to ask what she owed. They informed her they had no system for collecting late fees. "It was great," she said. "But it also made me realize: Their days are numbered." Others started biting their nails when Urbanfetch dropped by with free cookies, or when Amazon started selling Palm Pilots below cost. "You just wanted to say, 'Stop it!'" said one young man, a medical student. "It was too much. There was something scary about that kind of transaction."
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