The day the brands died

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.


Robin Danielson HafitzRuth Shalit
July 11, 2001 11:53PM (UTC)

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."

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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."

But though all the pampering made them uneasy, it didn't stop them from taking advantage. And now, in the cold light of day, they blame themselves for being so piggish. "There was a looting mentality going on," said one respondent. "Now we all feel shame." Many loyalists of now-defunct Web companies are convinced that their favorite sites would still be in business -- if it weren't for their own selfish sense of entitlement. They wish they'd shown more restraint. "I was one of those people who wanted a candy bar, and had it delivered," said one man plaintively. "Now I feel depraved. Those low-dollar items -- that was what killed Kozmo."

It's not surprising that, among beneficiaries of the bubble economy, fixing culpability for "Who lost Kozmo?" has become a bit of an obsession. The online delivery firm, which folded in April after spending more than $120 million trying to find a profitable way to deliver movies and ice cream to couch potatoes, represented more to consumers than just a company. It was a symbol of what life was going to be like for members of the Internet generation. "We were already getting information and images in our homes, at any hour, at any time," said one woman, a production manager. "Now, it was three-dimensional stuff we were getting." Suddenly, life itself was as easy as sending e-mail.

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Even more than the silencing of the sock puppet, or the spectacular crash of Boo.com, the death of Kozmo was a painful event, a watershed moment in the psychology of the economy of diminished expectations. It meant an end to the dot-com dream of instant gratification, constant connection and free stuff. "After sitting at home in my bathrobe, and having some nice man hand me my movie, how can I ever go back to Blockbusters?" asked one woman. "It's like living in a Third World country." Said a young man, a retail clerk: "I'm just so tired now. I'm tired all the time."

Will the death of all these brands be a momentary blip, or will it affect the way people approach relationships with brands in the future? Among the men and women we spoke to, there was a sense of deflated confidence in new brands, and a neurotic anxiety about forming new habits they might have to unlearn. "I'm paranoid about other companies now, and whether they're going to make it," said a 30-year-old copywriter. "Particularly MyCornerDeli.com. I've got to guess its days are numbered." Webvan? Napster? Which would be the next to fall? (As it turned out, Webvan went out of business two weeks after our focus groups.) The concerns went beyond the usual snarky handicapping of the dot-com death watch. Our respondents were legitimately concerned about losing urban perquisites they'd come to rely on. "Once you incorporate these things into your everyday routine, it's really hard to see them disappear," said a editorial assistant who works in Midtown. "When I heard about Kozmo, I started worrying about Vindigo [an online service that allows mobile device users to call up the location of the best restaurants, coffee shops, bookstores, etc. in 20 cities]. Vindigo can't go away. It's a public service. People won't be able to function."

Of all the companies on the endangered list, Amazon.com is a source of particular worry. "I'm no real businessperson," said one participant, a 23-year-old graphic designer. "And I don't remember, two years ago, wondering about business models, or any of that. But I do lie awake at night, worrying about how Amazon stays in business."

She lies awake at night? Rarely have 20-somethings fretted about how Wal-Mart makes money, or whether Brooks Brothers can scale. But the dot-com psychodrama has enmeshed regular people in a morality play of capitalism. These days, art students with mehndi armbands talk about companies with the fevered earnestness of panelists on CNNfn. There is anxious talk of burn rates and business models, and of whether or not a popular online shopping site has blown through all its venture capital. And, to an unprecedented degree, people's relationships with brands are linked to their perceptions of these variables. "Every time I go onto eBay, I think to myself, 'This is a model that makes sense,'" one woman told us. For the new, ultra-wary consumer, a trip to eBay is a rewarding experience -- not just because it may offer a Pez dispenser she likes, but because each visit confers a sense of cozy complicity in a business model that works.

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It's strangely appropriate, in fact, that in this age of business-model fetishism, the last thriving Internet brand is not a brand in the traditional sense, but a pure, naked business model, the aggregate of millions of unbranded transactions. The antithesis of the classic dot-com marketing model, eBay built its reputation not out of ad dollars or free logo mugs, but out of users' actual experiences. It cultivated not mindshare, but habituation. As a result, as the great Internet land grab turns into a funeral march, this generic anti-brand is one of the last brands standing.

Today, in addition to its galleries of action figures and etched-crystal tumblers, eBay does a brisk business in the totems of dot-com bereavement. The site now functions as a virtual reliquary for the detritus of such heavily marketed ex-brands as Pets.com, eToys, and, yes, Kozmo. Distraught consumers seeking memento mori can buy the messenger bags, the motor scooters, the cycling jerseys, even a giant orange helmet. "This bright helmet, with a green Kozmo running man on each side, is in excellent condition," writes the seller, mth111@aol.com. "It is a thing of beauty for a devout Kozmo fanatic to behold. This is, without question, the best Kozmo souvenir I have ever come across. I doubt there are many in existence. Good luck."

Bidding opened at $100. More mindshare for Kozmo. Another $2.99 for eBay.

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Robin Danielson Hafitz

Robin Danielson Hafitz is the managing partner and chief strategic officer of the advertising agency Mad Dogs & Englishmen.

MORE FROM Robin Danielson Hafitz

Ruth Shalit

Ruth Shalit is an account planner at Mad Dogs & Englishmen, a New York advertising agency. For more columns by Shalit, visit her column archive.

MORE FROM Ruth Shalit

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