Portals offer alternative gateways

Even on a new medium, the old tenets of consumer marketing are being adopted by the big players.

Portals increasingly are pursuing multibranded strategies, in which they homogenize the sites they acquire to mirror themselves in an effort to attract a diverse audience base. As strategies go, this one is tried and true--consumer brand companies have done it for years, offering similar products with different packaging and advertising aimed at specific demographics.

In the same way Procter & Gamble can sell two types of shampoo according to consumer preferences, Internet companies are betting heavily that the same rules will apply to the Internet, said Abhishek Gami, an analyst at William Blair & Company.

"These companies are playing the traditional rules of a consumer market," said Gami. "As the market grows bigger, we will have multiple brands appealing to consumers as we have multiple brands that we buy for the home."

Take, for instance, yesterday's redesign of Lycos-owned Tripod. The once-chaotic appearance of the home page builder was toned down into the cookie-cutter navigation format made famous by its parent company and other portals. The site now incorporates the standard content channel navigation, and will begin to support popular portal offerings such as classifieds and auctions.

The move underscores the trend by many competing portals such as America Online, Excite, and Lycos to evolve their acquired Web brands into alternative portals that serve different audiences.

On its face, the strategy makes sense: Since portals are some of the most attractive services on the Web, the thinking goes, why not build these acquired brands into portals to reach the widest possible audience? And since many of these companies rest on a technology platform, they can leverage existing resources to turn the smaller brands into portals.

However, in the long run, the strategy to create even more portals competing for eyeballs may prove to be counterintuitive.

AOL has touted its own multibranded portal strategy. During a conference call after the company posted its quarterly earnings earlier this month, president and chief executive Bob Pittman reiterated that AOL would build out its acquisitions CompuServe and ICQ, along with its AOL.com Web site, into competitive portals. In doing so, each site in theory would cover a different demographic.

Pittman emphasized that AOL was at an advantage since it had acquired strong brands with very specific users, and that building out these acquired sites would fill in the gaps that the proprietary service still had open.

Excite is also pursuing the strategy with its WebCrawler property. In addition, Excite has tried to beef up WebCrawler from simply a search engine to a full-fledged portal offering to keep it in the game. After acquiring the service in November 1996, Excite has emphasized its plans to aim WebCrawler at families and users who access the Internet from home.

"The idea is to offer multiple brands that appeal to the broadest level of customer in order to capture an individual in a company's network of services," said analyst Gami.

Having many brands under a network also has opened up considerable advertising opportunities. With many properties, companies can strike exclusive deals with rival e-commerce partners, which can't be done on one site. For example, one site can to feature Barnes and Noble as its exclusive bookseller while at the same time offer Amazon.com exclusively on another property. This gives companies more options for generating revenues.

But the question remains whether large portal companies are shooting themselves in the foot by creating multiple portal brands under one roof. Given the already-cutthroat nature of the industry, is it wise for a company to risk spreading its audience thin over many platforms when it could focus its efforts on creating one hefty offering?

Observers say it is still too soon to tell.

"They are trying to make it as easy for consumers to find their brands as possible," said Derek Brown, an analyst at Volpe Brown Whelan. "Managing that is a difficult challenge, and there's a potential for it to dilute it. It's a little early to see if that's the case."

Notably, portal leader Yahoo has not joined the herd in the multibrand strategy. Unlike its competitors, the company has not acquired a smaller service that could stand on its own as a separate portal brand. Yahoo has instead incorporated many services into its own site and is relying on the strength of its brand to diversify its offerings.

"Yahoo was there the earliest and they built strong consumer appeal under their own brand name," said Gami. "Yahoo grows because it's Yahoo, Lycos grows because it's under a brand name."

For now, excepting Yahoo, many analysts agree that one brand isn't enough. In the current Net landscape, traffic means survival, and offering different portals for different tastes may be one way to attract the widest consumer base possible.

"I think in the end it's a smart move to cover any and all the bases," said Chris Charron, an analyst at Forrester Research. "The Internet will be extremely diffuse with many communities that survive on their own and have extreme loyalty with consumers, so with vast majority of players, the multibranded portal strategy makes sense."