Jet Blue Helped Me See the Light – Brand Does Matter!

Over the past year, I’ve written a lot of scathing articles about branding. For the record, I still believe that spending $10 million to brand your truck as “tough” on the Super Bowl or tens of millions trying to convince Americans that American beer really isn’t that bad is still incredibly dumb and wasteful.

But while I am still a fierce opponent of brand advertising, I must admit I am starting to understand the value of a brand. Simply put, creating a brand that associates your company with a certain product, service, or ‘lifestyle’ can create a lot of value.

For example, irregardless (I know, not a real word . . .) of how hard MSN, Yahoo, and Ask try, the brand associated with “search engine” is Google. End of story. It doesn’t matter how clever the advertising campaign Ask creates is, or how cool live.microsoft.com eventually will be, in the minds of consumers, when you think “search” you think “Google.” That’s worth billions of dollars a year.

Other valuable brands that come to mine: Coca Cola (‘cola’), Volvo (‘safety’), MySpace (‘social network’), Ritz-Carleton (‘luxury hotel’), Starbucks (‘coffee’), Craigslist (‘online classifieds’), and eBay (‘online auctions’). Don’t bother trying to steal this brands, it’s unlikely to happen.

Unlikely, but not impossible. It should be noted that just because you establish a brand association doesn’t mean that you can’t lose that brand association. It’s difficult, but it does happen. For example, in 1970 when you thought “big box retailer” you thought “Kmart” but today you think “Walmart“. In 1985, you might have thought “IBM” for “personal computer” whereas today you’ll probably say “Dell.” And in 2000 most people would have associated “Yahoo” with “search engine” but today of course Google has that brand.

This raises an interesting question: if branding is so valuable and so difficult to disrupt, how is it that major companies like Yahoo, IBM, and Kmart manage to lose their branding?

Well, my sense is that there are generally three reasons, with number three being the most likely: 1) a competitor emerges with a truly amazing rival product/service; 2) gross brand mismanagement or; 3) both.

How Yahoo Lost the Search Brand to Google

Consider Yahoo. In 2000, Yahoo was the default search engine for around 56% of the world. Second place was AltaVista, with 11%. Google was a struggling start-up without a business model. Google began to get some buzz about their new “page rank” algorithm and their singular focus on search results. Yahoo, as the leader in search, could have pretty easily squashed this competition in one of two ways: 1) copy Google’s strategy exactly or 2) simply buy Google and integrate the technology into Yahoo.

Instead, Yahoo took an almost polar-opposite approach. They began by basically declaring that search was dead as a business model and focused their efforts on everything but search (jobs, entertainment, content, ISP services, etc). Yahoo basically told consumers “yeah, we do search, but our brand is much more than that – we are your one-stop destination for everything you want to do online. Search is just a little part.”

To make matters worse, Yahoo also outsourced their search functionality to Google. Now, when consumers actually did do a search on Yahoo, they saw this “powered by Google” messaging. So even if a user was loyal to Yahoo search, the message Yahoo was sending was that Google search was better.

Combine a better product from a competitor, loss of your singular focus, and an utter disdain for your brand’s status and, yes, it is in fact possible to very quickly lose your brand’s positioning.

Now About Jet Blue

Which brings me to Jet Blue. For those of you living in a monastery without any media access other than this blog, let me give you a quick news update: over the last week, Jet Blue has stranded thousands of customers on the East Coast, kept some passengers on a planes on a runway for ten hours, lost hundreds of bags, and generally gotten a very bad rap from the media and consumers.

Jet Blue you say? Surely you must be talking about United, American, or one of the other hapless big American carriers that have been getting their lunch eaten by the likes of Southwest and Jet Blue? Nope, Jet Blue. The folks with leather seats, free DirecTV, and hip flight attendants.

Jet Blue, the airline who’s brand up until this week would probably be associated with “cool air travel” or “hip airline.” Jet Blue was an anti-establishment multi-billion dollar company. Talk about a juxtaposition! I actually felt like I was ‘sticking it to the man’ when I flew Jet Blue.

You can’t maintain a hip, customer-friendly brand if you don’t walk the walk. And I’m sorry to say that Jet Blue’s handling of this crisis may have destroyed that brand forever. When you have Web sites popping up like JetBlueHostage.com, David Letterman blasting you with a top ten list and news articles with comments like “A lapse in judgment during last week’s winter storm on the East Coast has damaged a brand that for the most part has been an industry darling” and “The cost they would have incurred to unload the planes, while high, they could have written off as goodwill. Now they have no goodwill,” you know you are in trouble.

If thousands of passengers were stranded at airports or on planes, or without luggage, a hip, customer-friendly airline would have sprung into action immediately. My brand perception of Jet Blue (pre-crisis, that is) would have involved sending customers to swanky hotels, providing thousands of free tickets, and seeing Jet Blue executives working behind counters to help relieve the chaos. Heck, maybe even getting a few Indie bands to go to JFK Airport and play free concerts for the stranded travelers.

Instead, Jet Blue did what most big corporate companies do in times of crisis: 1) deny responsibility; 2) offer meek compensation when pressured; 3) finally realize the magnitude of the crisis after the damage has been done.

Looking at the Jet Blue Web site, you see this pattern in the press releases it created. The first release, issued on Valentine’s Day, has no apologies or much special consideration for passengers. It simply says “JetBlue Airways (Nasdaq:JBLU) will waive its change fees and any fare differences to allow customers with reservations for travel on Wednesday, February 14, to or from Northeast area airports, to postpone their plans provided they rebook and travel on or before Friday, February 16, 2007.” That’s nice: travel in the next two days and we won’t charge you extra. Otherwise, you’re out of luck.”

Later that same day, Jet Blue did issue an apology – sort of: “JetBlue apologizes to customers who were impacted by the ice storm at our home base of operations in New York, specifically at John F. Kennedy International Airport . . . These flights were a combination of scheduled departures from JFK that were not able to take off due to the ever-changing weather conditions, and arrivals that we were unable to move to a gate within a reasonable amount of time, due to all gates being occupied.” Sorry, but it wasn’t our fault.

A few more press releases over the next two days didn’t do much more to make people feel warm and fuzzy about Jet Blue. There was this one apparently written by lawyers: “the benefits of this action were mitigated by further operational constraints at JFK, including a one runway operation on Feb. 15, which resulted in long delays that flowed into Feb. 16″ and one sent out a few hours later with the exciting news that “In a release issued earlier today under the same headline, the phone number for rebooking travel was incorrect.”

Who Are You?

You can’t be the world’s leading search engine if you don’t focus on search and you can’t be a counter-culture airline if you act like Delta or Northwest. I get it now – a brand is a terrible thing to waste.

Which does bring me to one other company’s brand worth discussing: Google. It’s worth considering whether Google is falling into the same trap Yahoo fell into at the start of this decade. After all, Google is no longer just about search; it’s now about Gmail, Blogger, Picasa, Base, YouTube, Checkout, etc, etc.

My lesson from all of this: do one thing really well, associate your company with that one thing in the minds of consumers, and don’t rest on your laurels once you’ve succeeded. Oh, and when in doubt, don’t buy Super Bowl ads.

 

How Much is $60 Million Worth? About 25 Cents . . .

Right now I’m sitting at home watching game five of the NBA finals. Mind you, it’s not because I like the NBA or have watched any of the prior playoff games, I’m just bored and there’s no World Cup games on at the moment (other than the replays on the Spanish channels).

According to Ad Age, the marketing story of the NBA Finals is the fact that both the Dallas and Miami arenas are sponsored by American Airlines. As the story notes: “American Airlines could reap more than $60 million in brand exposure as a result of the National Basketball Association Finals between the Miami Heat and Dallas Mavericks that begin tomorrow night.” This is apparently quite a windfall, because American Airlines “only” paid something like $20 million for the naming rights for these areas over the course of something like 10 years.

So $60 million minus $20 million – that’s a $40 million profit, and 200% margins. Surely some vice president of branding is getting upgraded to a corner office at American Airlines’ headquarters.

Ah, if only it was that easy. Let’s think about this for a minute. American Airlines sells air travel. Most people I know base their air travel on three factors: 1) price; 2) schedule; 3) frequent flyer membership. In other words, in the event of equal price and schedule, people will opt for the airline where they can get the most frequent flyer benefits, but for the most part, air travel is a commodity, like table salt, electricity, or paper napkins.

That begs the question: what exactly is the “benefit” American Airlines receives from all of this branding? Will travelers opt to pay higher fares to fly on American Airlines (instead of a competitor) as a result of seeing their name emblazened on NBA Arenas? Will viewers flock to American Airlines’ Web site to learn more about the company products and offerings? Will frequent travelers switch to the American Airlines frequent flyer program as a way of supporting their favorite NBA team?

Of course not. In short, I doubt that American Airlines will reap any financial benefit from the increased exposure from the NBA Finals. I suppose branding works when you are marketing a car, or perfume, or something that people make an emotional connection to prior to a purchase. But no one cares what airline they use. Assuming the seats are about the same width, the safety record is fine, the schedule works, and the price is right, it just doesn’t matter.

So let’s revisit that $60 million of branding exposure. If that’s how much it would cost to buy advertising during the finals, I guess that’s a good deal if you really wanted to buy that much advertising for your commodity-product (can you imagine Morton’s Salt paying $60 million for branding? I can’t). But you aren’t going to see an additional $60 million of profit or even revenue on the American Airlines quarterly earnings report.

Which would you rather have: a) exclusive branding rights to two arenas, or b)120,000,000 clicks on Google and Yahoo? If you answer “a”, I’ve got a bridge to sell you in New York . . .

 

Postscript: MSN Isn’t Listening to Me (They Aren’t the First)

Is it OK to say “I told you so” before I am proven correct?

Just this morning I posted about MSN’s branding conundrum – MSN can’t be the best portal – consumers already perceive Yahoo as the ‘portal brand.’ Similarly, MSN can’t be the best search engine – that perception clearly goes to Google.

As I noted in my earlier post, “Yahoo and MSN can hire the best and brightest search engineers, but consumers will still think ‘Google’ when they need to do an Internet search.” Just like consumers will always think of “Hertz” for rental cars (even though Enterprise is actually a bigger company these days), “Walmart” for low prices, and “Starbucks” for coffee. Thus, I concluded, MSN’s branding strategy should be to give up trying to be the best search engine or portal, and rather create a new category in which MSN can be #1.

But did MSN listen to me? Of course not. Instead – contrarians that they are – they once again confidently predicted that they will soon overtake Google in search. To quote Neil Holloway, Microsoft European President: “What we’re saying is that in six months’ time we’ll be more relevant in the U.S. marketplace than Google. The quality of our search and the relevance of our search from a solution perspective to the consumer will be more relevant.”

So one of two things will happen – Microsoft will come out with a better search experience, or they won’t. Irregardless, this will mean virtually nothing when it comes to MSN’s marketshare of the US search market. The battle is over. Consumers have already spoken – Google is the best search engine. Even if someone else creates an uber-algorithm, in the minds of consumers, Google will still be #1.

So congratulations to Microsoft on their cool technology – maybe it will be useful in improving the search functionality of Outlook, Microsoft Help, and so on. Google, however, is not in peril from such developments. A year from now, when Google is still #1, I’ll be saying the same thing: I told you so.