NEW YORK For Tony Hsieh, CEO at Zappos, meeting up with a customer at a bar in midtown Manhattan was perfectly natural. Most execs with 1,600 employees and doing over $1 billion in annual sales would probably pass on having drinks with an individual customer, but Hsieh is not your typical CEO. In the past week alone he had given away shoes on Twitter, sent out an open invitation to a company barbecue and solved a service problem a customer left in a blog comment. If this seems exhausting, Hsieh sees it as part of a larger strategy to build Zappos into a brand on par with Virgin.
"We think our brand is going to be different because we want people to feel there's a real person they're connecting with, whether it's when they call us or through Twitter or any way they come in contact with us," he said.
The path Zappos is taking has been forged by some of the Internet's top brands, like Craigslist. It's part of a newer crop of companies, including T-shirt phenomenon Threadless, handmade-craft site Etsy and review destination Yelp, quietly building powerful brands online on the strength of communities. For these companies, community is not a tactic or marketing plan line item, but core to what they do. It means being hyper-responsive to customers, laser focused on usability, unapologetically human and OK with customers determining the course their businesses should take. The bonus: When they take off, these brands don't need to do much in the way of advertising, instead letting their customers spread the word.
Not that advertising was, at first, even a consideration. For the latest wave of Internet services that came of age after the dot-com bust, spending money on marketing wasn't in the game plan. These businesses, which saw how sites like Pets.com and Kozmo tanked fast and hard, typically ran far leaner operations. Instead, the paragon for online success was, and still is, Google, which has built one of the top brands in the world without advertising at all.
Yet Google obviously invests heavily in its brand. Its home page may have nothing but a search box and links to Google's services -- which means the company is forgoing tens of millions of dollars in advertising -- but it's doing something more important: putting its customers first. Untargeted ads, even simple text links, goes the rationale, would put too steep a cost on its users.
This decision is "revolutionary," wrote Havas Media Lab director and London economist Umair Haque on Harvard Business Online in February. "By choosing to invest in consumers over advertising, Google is a living example of a deeper truth: The future of communications as advantage lies in talking less and listening more."
Craigslist has made a similar calculation. The 13-year-old company would hardly seem a brand icon, yet a Brandchannel survey in 2007 ranked it as the No. 7 brand. The site has such a bare-bones appearance that it doesn't even have a logo. Its worth was recently estimated at $5 billion. Not bad for a 25-person company. For Craigslist CEO Jim Buckmaster, the decision to forgo ads on the site wasn't a tough one because it didn't fit into the simple rationale he and founder Craig Newmark have for the site.
"All we do is try to respond to what users are asking for," he said. "That's how we set our priorities. Users aren't asking us to run ads, so it doesn't come onto our radar."
At the heart of these decisions is a simple fact of life with the Internet: Everyone is connected, and hiding behind glossy images won't work when a Google search can turn up the good, bad and ugly of your company. In the analog world, it was different. Haque believes brands thrived on how difficult it was for people to get information. Logos, spokespersons and slogans combined to give consumers a way to make choices. But now, the Internet has turned that on its head. "The entire economic rationale for brands is gone," Haque said in an interview. "Interaction is too easy now for brands to have power."
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