Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [87]
The campaign centred around a lovable sock puppet, designed to be a ‘spokesdog’ for the Pets.com brand. There was a great PR story about the creation of the sock puppet, which apparently involved putting together a six-page biography for the character. The adverts featured the puppet in a variety of different situations, such as flirting with housecats and protesting against socks being used as Christmas stockings. They also featured Pets.com’s new strap line: ‘Because Pets can’t drive’. (No one pointed out that most pets can’t use computers either.) To ensure a maximum level of public awareness, the ads were aired during the Superbowl, the most contested and expensive of all advertising slots, as well as other commercial breaks with high audience figures.
The sock puppet became an overnight success. He appeared on Good Morning America and was interviewed by People magazine. He was floated down the streets of New York in Macy’s Thanksgiving Day Parade and starred in his own line of licensed merchandise. By now he was more than a brand mascot, he was an A-list celebrity.
However, while the sock puppet had successfully caught the public’s imagination, his popularity did not translate into sales. By the beginning of 2000, Pets.com was attracting fewer than a million visitors a month to its website.
The strategy of offering extreme discounts clearly wasn’t working. According to Dan Janal, author of Branding the Net, the cost per customer acquisition for Pets.com was about US $80. ‘There’s no way you make that back when you sell a product with a paper-thin margin – and have 10 other competitors doing the same.’ But its discount policy wasn’t Pets.com’s only problem. It had also introduced free shipping – which was proving increasingly expensive for the company to sustain, especially when customers were ordering heavy bags of cat litter.
As with many other ill-fated dot.coms, Pets.com spent too much money on building awareness, and too little time questioning whether its website was a viable business in the long term. As a result, the company was spending over US $3.50 on marketing and sales expenses for every dollar it made in sales.
According to its many critics, Pets.com was too focused on ‘going public’ on the stock market, so that it could issue stock to investors in an initial public offering or IPO. As John Cassidy explains in Dot.con, Pets.com provides a classic example of how the internet boom had inverted the traditional order of business:
Instead of using the stock market to build companies, venture capitalists and entrepreneurs were now using companies to create stocks. Costly marketing campaigns were launched not only to attract customers but, more importantly, to grab the attention of potential shareholders. The task of building the company was secondary – a chore that had to be performed before the IPO.
Perhaps the main problem was that internet users weren’t ready to order their pet food online. Unlike Amazon, where customers could order rare titles they couldn’t find in their local bookstore or record shop, Pets.com failed to offer real added value in terms of products. After all, dog food is dog food, and there clearly weren’t enough people searching for ferret hammocks and other rare pet items that they wouldn’t be able to find in their hometown. The only way the company could attract custom was to sell products below cost.
On 7 November 2000 Pets.com announced that it could no longer continue as a business, and as such became the first US dot.com on the stock market to close. In a statement made to the press on that same day, CEO Julie Wainwright explained the situation. ‘It is well known that this