In what has to be one of the most glaring recent examples of a lifetime of brand equity shot spectacularly to hell, DrKoop.com has become a direct marketer of “nutraceuticals,” a highfalutin term for nutritional supplements and herbal remedies.
Vitacost.com, a direct-to-consumer marketer of nutraceuticals based in Boynton Beach, FL, said last week that it acquired defunct DrKoop.com's brand name, trademarks, domain names, its Web site and the e-mail addresses of 2 million registered users for $186,000.
The bottom of the DrKoop.com home page now displays the disclaimer “The drkoop.com URL and Web site is not associated with C. Everett Koop, M.D., former Surgeon General of the United States.”
$186,000. What a fall.
My 3-year-old orange tomcat Reuben has more brand equity built into his name than that.
DrKoop.com went public June 8, 1999. Its stock rose to $45 per share, and the company reached a market capitalization of $1 billion. But ad revenue from pharmaceutical companies failed to materialize according to the company's plans. The company declared Chapter 7 bankruptcy in December.
Vitacost.com said in a statement that it plans to update the mainstream medical information on the site and add information about natural and alternative medicines.
The DrKoop.com home page last week already was pitching Vitacost.com's offerings with the banner: “Vitamin shopping 101. Don't Pay Full Price!,” and two above-the-fold pitches for products from the “Nutraceuticals Sciences Institute.”
Click on the Nutraceuticals Sciences Institute button and one learns that Vitacost.com is the sole supplier of its products.
The margins on these products are probably high enough that $186,000 will be made up with a couple of online chats about sexual dysfunction.
Now, please don't take this as a shot against Vitacost.com. Its executives saw a chance to buy every ounce of brand equity Koop has been able to build into his name in his lifetime along with all the company's assets for $186,000. How could they pass it up?
However, the DrKoop name alone should be worth more than $186,000. Hell, for that kind of money, I might have taken a loan for it. Whatever one's feelings about Koop's stint as surgeon general, it is doubtful that anyone would have pegged the worth of his name as a medical marketing tool at less than $200,000.
In a keynote address at the DMD New York Marketing Conference at Jacob K. Javits Convention Center last month, John Costello, Yahoo's chief global marketing officer, compared brand equity to a bank account.
“I view brands as similar to banks where you make deposits and withdrawals,” he said. “The great brands, whether built one at a time through direct marketing or built through mass marketing, are brands where there have been great investments over time. Some of the companies we've seen fail are companies where there have been too many withdrawals.”
The DrKoop.com example, however, would indicate that brands are more like stocks: overvalued at times, undervalued at others, and probably overly subject to wild swings in market perceptions.
DrKoop.com in 1999 signed mega-million-dollar access-to-eyeball deals with Walt Disney Co. and America Online, helping ensure its demise. Stupid, but common back then.
Three years later, DrKoop.com's fire sale price indicates that traditional marketers' anti-dot-com backlash has yet to begin to subside.
This in turn would indicate that the current market offers a serious opportunity to gain ground on those who are still sneering down their noses at the medium.
Vitacost.com certainly thinks so.