The Online Conundrum: The Need for a Sensible Digital Strategy

The Internet vs. The Outernet

Ries argues that companies often fail to distinguish between the internet and what he calls "the Outernet," or everything outside the web. He believes that simply transferring a real-world brand name to the internet is a fundamental mistake.

While some may disagree with Ries' views on the digital economy, it's worth noting that his insights on branding have proven accurate time and again over the past 35 years.

The Importance of Branding in the Digital Age

According to Ries, branding is even more crucial on the internet than in the Outernet. This is because the internet lacks visual cues that can draw consumers to a site.

Brand Invisibility

On the internet, brands remain invisible until their names are typed into the keyboard. If consumers don't know or can't spell a brand name, no sale can occur. In contrast, in the Outernet, consumers can be drawn into a store by an eye-catching window display, make a purchase, and leave without even remembering the store's name.

Ries also challenges the notion that traditional brick-and-mortar companies can successfully sell online or that luxury items can be effectively marketed on the internet. He predicts that the internet will primarily be a platform for finding low prices, not high-quality service.

Despite the internet's ability to automate customer service and provide a convenient shopping experience, Ries asserts that consumers will always want to physically interact with products before purchasing them.

The Role of Advertising and PR in the Digital Age

Ries identifies a common misconception that advertising can be used to establish online brands. He argues that unless a site can generate news, advertising will be ineffective.

He also disputes the belief that search engines can significantly increase site traffic. While search engines are currently necessary due to the lack of strong brand recognition, Ries predicts that their importance will diminish as people become more familiar with the internet and start visiting specific sites directly.

Instead of advertising, Ries advocates for public relations (PR). He believes that PR should precede advertising, as it can establish a brand's presence in consumers' minds.

The Need for Strategic PR

Ries emphasizes the importance of strategic PR. He criticizes traditional PR firms for focusing solely on media coverage, arguing that they should instead question and advise on aspects such as name, price, distribution, and slogan.

Adapting Business Models for the Digital Age

Ries warns against traditional companies attempting to establish an online presence without altering their business model. He suggests that these companies should instead create a new name or function for their online venture.

For instance, he proposes that Home Depot could shift its store strategy from price to service, offering classes in plumbing and carpentry. They could then launch a website under a different name, allowing suppliers to sell both to Home Depot and on their own websites.

The Limitations of the Internet

Ries agrees with the findings of a study by the London-based Economist Intelligence Unit (EIU), which concluded that while consumers use the internet for research, they prefer to make purchases in physical stores.

Despite the convenience and low prices offered by the internet, it cannot replicate the tactile experience of trying a product or the reassurance of a traditional handshake.

In conclusion, while some may argue that internet businesses can provide low prices, convenience, and service, it would be unwise to ignore Al Ries' insights.