Internet companies browse and search for bigger market share

Once, Yahoo! was a plain old web directory. Now it is a radio station and an auction house.

Once, Yahoo! was a plain old web directory. Now it is a radio station and an auction house.

These developments are typical of Internet-based companies which can rapidly break into new electronic markets avoiding the usual hurdles that confront their counterparts on the ground.

But how far can you stretch an Internet company? Could Amazon, for example, lend its powerful brand name to any product or service? Or are there definite limits to the expansion of the new mega cyber brands?

Web analysts at Fletcher Research have just commissioned a survey to test how far Internet brands can be transferred. About 10,000 people in the UK have been asked questions such as whether or not they would be willing to buy car insurance from Yahoo! and Amazon.

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Many similar services are becoming available in Ireland.

Director Neil Bradford is keen to try to find out the extent of the UK public's appetite for products and services endorsed by Internet-based companies.

Such research could be extremely valuable to investors at a point when the UK stock market is preparing for its first wave of major Internet flotations. So how far does he think Internet-based companies can diversify into different markets?

"We don't know yet. There is definitely a limitation. There has to be some kind of appropriate use of an Internet brand so as not to dilute its value." He thinks the litmus test will be how much leeway the City of London is prepared to give them.

However, many new media marketeers are convinced that Internet companies are shaping up to become the mega consumer brands of the future, especially because of the hold they have on the young.

"Kids are certainly talking about Yahoo! as easily as they talk about Nike and Coke," says Jon Cousins, managing director of Fundango, specialists in new media learning programmes for children.

"Many kids do not know life prior to the Internet. It is already a key part of their lives."

Cousins reckons that in time the new mega cyber brands have the potential not only to dominate the web-based consumer scene but also the land-based marketplace.

Other new media marketeers agree, pointing to developments such as Demon Internet sponsoring Fulham Football Club and appearing on the team's strip alongside Adidas.

Web-TV will also help to make Internet companies household names and could facilitate opportunities for them to extend their businesses into off-line areas.

"In the same way as Waterstones feel they can migrate online, why could it not work the other way for Amazon?" asks Paul Brooks, creative director of multi-media company, pres.co.

"When a book is delivered to you, it is branded Amazon. It is not virtual anymore."

As well as conjuring up the idea of Amazon bookshops on the high street, Brooks and others think Yahoo! now has a brand name with sufficient appeal for it to be transferred to other consumer products similar to how Richard Branson has successfully attached the Virgin name to airlines and the Internet.

In the US, Yahoo! has a consumer magazine and branded clothes. But how far could it develop in the UK? What are the chances of a Yahoo! cola, for example - the "real thing" as opposed to the virtual thing?

A UK marketing manager, Iliane van Ees, says there is still a lot to be done online but admits the future development of the brand is pretty wide open.

"Yahoo is extremely powerful as brands on the Internet go in terms of consumer recognition and in terms of people who are not online yet. We do talk about how Yahoo! can make your whole life easier."

Some Internet analysts are sceptical about online brands going offline - particularly for web-based businesses like Amazon, as the electronic model which delivers the commercial advantages, such as freedom from the usual time constraints, is so different to the traditional high-street book-selling operation.

But the introduction of new technology which is enabling bookstores like Borders to download and bind titles in store might prompt a reappraisal of the viability of high-street book-selling. For the time being, the managing director of Amazon UK, Simon Murdoch, will not discuss any off-line business possibilities. But online expansion is a different matter altogether.

Typifying the brimming optimism of other Internet companies, he remains very confident that the UK public will accept an extension of the Amazon brand name into lots of different areas in the electronic marketplace. "We want to give people a wide selection of products," he says. "Currently we offer a large selection of books but there is no reason why that cannot be a large selection of anything."