<< by on February 26th, 2007
Chris Anderson, author of the book The Long Tail, also has a blog of the same name that I enjoy. He recently expounded on a theme in his book in a blog post called “Why Niche Brands Rule“. He makes the point:
Once upon a time, big companies bought smaller companies and integrated their offerings into the larger product line. It made sense to sprinkle the better-known brand on the lesser-known products and leverage all that brand power. Hence
But now big is bad. Consumers are fleeing the mainstream for the authenticity and quality of niche products. Today, when a big company buys a little one, it hopes that nobody notices. The aim is to keep the indie feel of the niche brand, while applying the distribution and marketing advantages of the big acquiring firm.
There are lots of great examples mentioned by Anderson and the commenters to this post:
Nike owns Converse and Cole Hahn
Coors owns Blue Moon Brewery
Black & Decker owns DeWalt
Starbucks owns Seattle’s Best Coffee
Unilever owns both Dove and Axe Body Spray
Another example of this I’ve found recently are all the brands owned by Whirlpool Corporation. They now own Maytag, Kitchen Aid, Jenn-Air, Magic Chef and Amana.
But what happens when commonly held brands compete for the same online space? Nike and Converse and Whirlpool and Maytag are great examples of this. In Pay Per Click Advertising this can lead to conflicts over ad positions and added expenses.
I enjoy the “idea” of gardening – I’m trying to actually put theory into practice and actually grow stuff this year. The Giant of the mail order gardening industry is apparently an umbrella corporation called Scarlet Tanager LLC. Scarlet Tanager LLC and its apparent owner, Niles Kinerk, hold The Garden Store, The Michigan Bulb Company, Gurney’s, Henry Field’s, Spring Hill Nurseries, Breck’s Bulbs, Audubon Workshop, Flower of the Month Club, and Gardens Alive.
Those are a lot of different brands selling many of the same plants. Some of their websites have similar layouts, but they are all distinct brands with different catalogs – although it’s easy to spot some similarities among the catalogs also. Scarlet Tanager/Niles Kinerk are a marketing machine: The catalogs, the E-mail marketing, the mailers, and recently the automated phone messages. Buy from any of the brands and prepare to be inundated with mail – they don’t let up!
I snooped around the other day to see if I could find keywords that would pop up PPC ads from their many brands at the same time. It has got to be monstrous work to decide the hierarchy of ad placement – and a little bit wasteful to spend all the money competing against your self. Consider the online shopper that is clicking on all the ads to compare each offering – chances are they might make the sale with one of the companies, but even if they do the cost per conversion among three or even four commonly owned brands could make profitability a problem…
Consider this search for “toad lily” on Google (Note ad scheduling and a number of other factors can effect the current ad position you see.)
#3 ad position is held by Michigan Bulb (Blue Wonder Toad Lily 3 for $3.99)
#4 ad position is held by Spring Hill Nursery (Blue Wonder Toad Lily 1 for $5.99)
#5 ad position held by Gurney’s (No Blue Wonder, but a “Toad Lilly” 1 or 2 for $3.95 each, 3 or more for $3.65 each)
#10 ad position is held by Breck’s (Blue Wonder Toad Lily 1 for $5.99)
With the exception of Breck’s Toad Lilies, which are supposed to be grown in Holland, I would have to guess that all the other Toad Lilies are being grown in the same green house, probably side by side with no indication on if they belong to Spring Hill, Michigan Bulb or whoever.
Any Toad Lily “shopper” is going to compare prices among the pay per click ads to find the best deal and that has really got to cost Scarlet Tanager on it’s Toad Lilly profitability.
In conclusion, the name “Toad Lily Cannibals” is an awesome band name and I feel like I deserve a finders fee for whoever picks it some day. Perhaps a gift certificate for my favorite flower and seed catalog.