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Dot-Com Ads Reappear on TV, Signaling Advertising Rebound

Look who's back.

Dot-com advertisers are reappearing on television screens across America once again. Although the effort is modest, it is the latest sign that the struggling advertising market may be crawling back. Ellis Verdi, president of DeVito/Verdi in New York, notes that several Internet companies are now searching to hire ad firms, adding, "There is definitely greater interest now from dot-com companies interested in doing TV ads."

Recently, Hotels.com, an online travel site that is majority owned by USA Networks, kicked off a $10 million TV-advertising campaign. One commercial features two businessmen bumping into each other outside a trendy hotel. The pair share a cab ride and compare hotel rates, only to discover that the man who booked through Hotels.com paid less for his room.

The spots, created by Hotels.com's in-house ad department, are airing on Viacom's CBS, Discovery Communications' Discovery Channel and AOL Time Warner's CNN.

During the dot-com boom, Hotels.com, which operated under the Hoteldiscount.com name, relied on online advertising. No longer. "We are barely penetrating the market," says Bob Diener, Hotels.com's president, explaining the new TV-advertising strategy.

The recent increase of Internet companies using TV is a far cry from the glory days of 1999, when dot-com spending surpassed $2.5 billion, according to CMR, an ad-tracking unit of Taylor Nelson Sofres. While consumers won't see the return of the lovable Pets.com sock puppet or Outpost.com's flying gerbils anytime soon, other dot-com icons are re-emerging.

For example, Priceline.com ejected William Shatner into deep space when the dot-com bubble burst. But the Norwalk, Conn., travel-services Web site has renewed its relationship with the sci-fi celebrity. Mr. Shatner is now starring in the company's radio ads and is expected to do some TV spots later this year.

One of the best-known dot-com concerns, E*Trade Group, is boosting its TV ad budget by 20% this year to about $16.5 million. The online financial-services provider, based in Menlo Park, Calif., recently began a new TV campaign ballyhooing the change of its trade name to E*Trade Financial. The ads, created by Omnicom Group's Goodby, Silverstein & Partners in San Francisco, poke fun at the excesses of the dot-com era.

One spot shows a group of seasoned venture capitalists meeting with two young nerds. After they sheepishly acknowledge that their Web site is "under construction," the venture-capital guys reply: "I think we'd be idiots not to fund this!" The ad ends with a tagline: Times have changed.

E*Trade is increasing its television presence to attract new customers. "TV has become an important acquisition tool for new-customer growth," says Jerry Gramaglia, E*Trade's president. "It has become more of a share battle, and having strong brand presence and leveraging the right media vehicles help."

One reason that the dot-coms are coming back is that media rates have fallen. "We were able to negotiate ad rates that are much lower from what we would have gotten several years ago," says Hotels.com's Mr. Diener. "It cost half of what it cost three years ago. ... Most media companies today are much more negotiable." Adds E*Trade's Mr. Gramaglia: "If you have the dollars to spend, there are a lot of great values out there."

-- Vanessa O'Connell contributed to this column.


Suzanne Vranica, The Wall Street Journal. April 10, 2002

Copyright © 2002 Dow Jones & Company, Inc.. All rights reserved.