You'd think that the Virgin empire would be pretty damned good at
this internet malarkey. The brand value territory inhabited by most
online brands - young, clean, irrepressibly optimistic - is in the same
ballpark where the Virgin brands like to play.
And the Virgin territory is also about utilities, big deals like
transport, gas and electricity, pensions - Sir Richard Branson's
alternative version of the Welfare State. These are utilities with
go-faster stripes, admittedly, but then what is the internet but a
utility with go-faster stripes?
And yet, as last week's announcements from Virgin.net only served to
remind us all, Virgin has been no better at this business than anyone
else. The Virgin.net operation is being restructured once again, ahead
of the launch (or relaunch, depending on the way that you look at it) of
an unmetered internet access package.
The internet service provider part of the business (run relatively
independently over the past couple of years) has been remerged with the
Virgin.net operation, resulting in four senior redundancies, including
Virgin.net's chief executive, Alex Heath. Painful, obviously - but will
it be worth it?
At first sight, one of Virgin's main big picture problems seems to be a
touch of schizophrenia, because as well as Virgin.net it also boasts
Virgin.com, which, after all, is the most obvious destination for
Virgin-bound surfers. Virgin.
net is a portal, Virgin.com is ... er, a portal too. Perhaps this serves
to illustrate the adage that there are portals and there are
portals.
Virgin.com is what is known technically in the trade as an extremely
drab portal - a directory of Virgin sites implemented in a dingy variety
of red. On the other hand, Virgin.net is a portal in the sense that it
makes a cheerful use of a whole spectrum of colours and there's the
added bonus that they are sourced from outside the Virgin empire as well
as from within the Virgin empire. It employs the services of journalists
who help lend it the aura of a magazine.
Virgin.net is also where you find a button tempting you to sign up with
Virgin as your internet service provider. And this is a clue not only to
the site's heritage but to Virgin's broader philosophical struggles with
the internet.
As one observer puts it: "Virgin badly scuffed its collective knees on
the tailboard trying to clamber aboard the internet bandwagon and I'm
not sure it's ever been clear about what it wants to do. More than most,
it's found itself in the position of having to react rather than
lead.
It was quite clear that it was going to dominate the internet service
provider world until Freeserve came along and then it was a case of,
'OK, we need to make more money, how do we attract advertising to our
internet service provider sign-up site?'"
Freeserve turned the internet service provider market on its head three
years ago by offering a subscription-free, but metered service. Virgin
was a serious player among subscription internet service providers.
Freeserve obviously changed the rules but, with broadband on the
horizon, those rules may need rewriting again.
Alex Dale, the managing director of Virgin.net, comments: "The new
package, called Virgin.net24seven, is an important product for us and we
are looking to convert a third to a half of our current customers within
a couple of years. We have looked at areas where there's been an overlap
between the portal and the internet service provider operation -
marketing, for instance, and product development. It certainly doesn't
change the site."
And, to be scrupulously fair, the site hasn't actually been too far off
the pace. There are only a handful of portals attracting decent
advertising revenues, after all. According to many sources, Virgin.net
has built up a more than decent customer relationship marketing
operation. As another observer puts it: "I think Virgin has always
believed that the internet service provider business is the safest way
to monetise the internet."
Which is a perennial problem, after all. Rob Norman, the chief executive
of Outrider, comments: "It's always been philosophically interesting
whether people you trust to do one thing can be trusted to do another.
Would you, for instance, like getting British Gas in to do your cooking
for you? Does Virgin want to be a telecoms company or not? Does it know
itself? Or does it want to be a content provider? I think it's a big
mistake to confuse the two - they are very different businesses."
Richard Wheaton, a managing partner at Carat Interactive, would agree
that Virgin.net hasn't ever really lived up to expectations as a
portal.
He states: "It has never really been edgy or challenging. It's a
difficult market because the leading portals don't rest on their laurels
and many of them have time-sensitive material that Virgin just doesn't
have. If you look at Lycos, for instance, which has been doing really
well in the UK especially, it has been developing fantastic services,
for instance mobile and SMS products."
But surely what Virgin.net does offer are some pretty healthy
numbers?
True, but that's not the point - and perhaps that's something Virgin.net
hasn't taken on board. In other words, the internet service provider
initiative is increasingly crucial to Virgin's online efforts. But as
for Virgin.net - the verdict is: "Could do better." It may boast some
decent traffic figures, but advertisers aren't always impressed by
that.
As Wheaton explains: "We have had lots of success with Ask Jeeves
because, by and large, mindset is an important factor. It helps if you
know what sort of mindset people are in when they visit a site. It's
something you can plan against. Advertisers are generally more
interested in that than in a broad and rather vague proposition."
