Whatever happened to Beyond.com's naked guy? Cyberian Outpost's flying gerbils? The leggy models pitching More.com?
They're all casualties of an advertising about-face by Web businesses that is leaving many of the zany, costly campaigns of recent months in the ad archives. Web retailers, in particular, are forsaking splashy commercials for direct-mail promotions, deals and other oldfangled come-ons.
Behind the change is the rapidly spreading belief in Silicon Valley that much of the $3.1 billion that dot-coms poured into advertising last year-$1.79 billion in the fourth quarter-was wasted. To that state of mind add pressure from a cost-conscious and increasingly impatient Wall Street, and you have a slew of consumer Web sites suddenly getting serious about gross margins, marketing costs and other financial concerns.
"So much capital moved to the advertising market, but many companies aren't moving the needle that strongly," says Tod Francis, venture capitalist at Trinity Ventures in Menlo Park, Calif. "What we have are a lot of people jumping off the bandwagon."
Anyone with a radio or television set knows that dot-com advertising still abounds. In fact, dot-coms are expected to spend even more this year than last: Some analysts are predicting that ad sales for dot-coms will reach around $7 billion in 2000.
But the new mood is particularly apparent in the crop of online start-ups whose ads hit the airwaves just a few months ago. Exhibit A: health-and-beauty-goods retailer More.com.
One of the ads in More.com's fourth-quarter campaign showed a blond in a leotard moving relentlessly on a treadmill while an entourage of assistants bring her sushi, water, and a cell phone. "The average power broker has her own manicurist, a team of assistants, a personal trainer and a nutrition consultant. So after all that what does she want?" the announcer asks. "More," she replies. After a few months, More.com ended the campaign and parted ways with its creator, San Francisco ad agency Gardner, Geary, Coll & Young.
"It's no longer a matter of 'Here's $25 million and spend it on television to build a brand,' " says agency head Bob Gardner. "It's 'Here's $10 million and I want results quickly.' "
Mr. Gardner says the agency has recently taken a number of dot-com accounts that are taking a more bottom-line approach.
More.com's executives say they were happy with the campaign's results but add that the time had come to translate raw awareness into real sales. The company's new ad, created by Citron Haligman Bedecarre, focuses on the site's discount prices for contact lenses.
"At the end of the day, we are a retailer, and we want to make the reigster ring," says Bruce Mowery, More.com's marketing vice president. He adds: "We have to demonstrate we're a company capable of making a profit."
It's also time to say farewell to one of the most notorious dot-com ad stars: the ballistic gerbils of Cyberian Outpost. In one commercial, viewers saw a businessman, posing as the head of outpost.com, light a cannon, shooting "gerbils" (actually beanbags) into a backboard. Another showed a marching band on a football field, forming the words outpost.com. The band members (in reality, dummies) are then attacked by a pack of wolves.
"It's just not clear that type of advertising, unless you have $100 million, will really work," says Bob Bowman, the company's chief executive officer. He credits the two ads, which were shelved months ago, with helping to build the name awareness, but now seems more comfortable with the staid spots in which Martin Mull pokes fun at the gerbil ad. "What were we thinking?" the actor jokes. The company uses extensive online advertising because it is cheaper.
As for Beyond.com, the naked guy disappeared after the online retailer of software and computer-related products overhauled its business plan to focus on the now-hot business-to-business segment of e-commerce. Beyond.com's revenue was growing, but so were its losses, leading investors to question whether the company will ever reach profitability. "The naked man is wearing a suit and going to work," jokes the company's spokeswoman.
As has so often been the case with advertising, remarkable campaigns can grab the public without doing much for business. Super Bowl advertiser Pets.com, whose sock puppet was hailed as one of the most memorable campaigns of 1999, is a prime example. Created by TBWA/Chiat Day, the fast-talking Pets.com sock puppet became so popular it generated a mountain of e-mail.
Investors, however, focused more on the $30.7 million the company spent on marketing in the fourth quarter. That's nearly six times the company's fourth-quarter revenue, or roughly $213 for every customer who purchased something on the site that year. After going public at $11 a share last month, Pets.com's shares have since lost 44% of their value, hovering around $6. They fell yesterday to %5.50, down 40.625 cents in 4p.m. Nasdaq Stock Market trading.
Pets.com notes that its marketing expenditures include the cost of wholesale distribution and fulfillment. And the company's executives believe they are one of the few dot-coms to have created a brand in the fourth quarter and insist the sock puppet will go on. But the company will now be directing more of its dollars toward direct marketing tactics like e-mail newsletters to attract new customers.
"The early run up of e-commerce was filled with hopes and dreams about the Internet," says John Hommeyer, vice president of marketing at Pets.com. "People are looking for results."
Another casualty: Bob Newhart. The comedian appeared in a campaign for Stamps.com shot by one of the industry's best commercial directors. Stamps.com says the ads were great for awareness of its role as an online postage seller. But that wasn't enough. The company is focusing more on direct-response vehicles to slash its acquisition cost per customer to under $100 from $270.
Ellis Verdi, president of New York ad agency DeVito/Verdi, which created the campaign for online book retailer e-campus, blames the ad agencies for the online retailers' strategy shift. "Agencies...immediately saw a chance to get a 'creative' spot out." But many ad executive direct their criticism at Silicon Valley. In bombarding consumers all at once and then beating a hasty retreat, they argue, companies are giving up on branding before consumers have a chance to identify them.
"I think the world of interactive advertising has kind of put people in a knee-jerk kind of world," says Shane Ankeney, director of media strategy at TBWA/Chiat Day. "If they don't see the needle move within moments after the commercial airs, they're ready to pull the plug."
Other agency executives believe that the sudden reversal may indicate growing desperation. Eric Roos, partner at San Francisco-based Swirl, recalls the barrage of panicked calls from a former client that was changing its business model and targets almost every single day. The agency resigned the business.
"Panic tends to breed reactive behavior that can be very difficult to deal with," Mr. Roos says. "They end up chasing their tail around, and all objectives are lost."
Suein L. Hwang and Kathryn Kranhold, The Wall Street Journal. March 30, 2000.
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