In one industry after another, aggressive Internet upstarts are putting established brands at risk, creating very strong brand recognition and enjoying explosive visitor growth (Exhibit 1). The reason may have less to do with the established brands themselves than with their managers.

Marketers know what a brand is in the physical world: the sum, in the consumer’s mind, of the personality, presence, and performance of a given product or service.¹ These "3 Ps" are also essential on the World Wide Web. In addition, digital brand builders must manage the consumer’s on-line experience of the product, from first encounter through purchase to delivery and beyond. Digital brand builders should care about the consumer’s on-line experiences for the simple reason that all of them—good, bad, or indifferent—influence consumer perceptions of a product’s brand. To put it differently, on the Web, the experience is the brand.

Consider an example. If a consumer buys lipstick from a retailer in the physical world and has an unpleasant in-store experience, she is more likely to blame the retailer than the manufacturer. But if the consumer purchases that same product from Procter & Gamble’s Reflect.com Web site, her wrath is more likely to be directed...