Ad boom fun, but start-ups are more fun

January 3, 2000

BY MICHAEL KRAUSS

"Making advertising is the most fun you can have with your clothes on."

That’s what Jerry Della Famina used to say.

As the industry adapts to the new Internet technology, will making advertising still be as much fun? Sure, but it will be more fun if you’re working at a start-up.

To be sure, an advertising boom is underway in all media. Big ad agencies, broadcast television networks and magazines have never had it so good. Record fourth- quarter ad spending will spill over into the new year, with 30-second Super Bowl spots going for $2 million.

Much of that largesse is due to the dot.com start-ups are fighting to build brand awareness and trial through advertising, and that spells huge short-term profits for traditional agencies and media.

"The spending boom will probably continue into the next quarter," agrees Bill Perkins, sitting in his Silicon Valley conference room.

Perkins, a Madison Avenue émigré and veteran "big agency" executive, is vice president of marketing at Visto Corp. (www.visto.com), a Silicon Valley start-up. His company provides "virtual briefcase services" to mobile professionals at its site enabling online updating, synchronization and integration of e-mail, calendars, files, photos and music. Visto’s business proposition is immediate access to your data online from anywhere at anytime. Anyone who’s ever tried to synchronize their Palm Pilot with their office computer while staying at an out-of-town hotel will understand the value of that.

Its challenge, like those of most Internet start-ups, is attracting an audience. Perkins must build Visto from one million subscribers to 10 million subscribers or more in order to achieve his aims.

Perhaps because the experienced Perkins is at the helm, Visto is running a targeted print, online and direct-mail campaign to attract users. And like many experienced marketers, Perkins laments today’s advertising clutter. Even after the gold-rush fourth quarter, he expects more spending and more clutter in the following quarter.

"Some people are probably waiting for the Holiday noise to die down. There’s been so much IPO money raised, and there is such a strong demand for broadcast media," he adds.

With the Olympics and the political campaigns up ahead, media spending likely will likely remain high, masking a lack of adaptability within the traditional agencies who have, after all, been fairly late arrivals at the interactive-marketing feast. Most arrived at the table via acquisition, not through organic growth, weaving a crazy quilt of holdings that makes more sense from an investment perspective more than from a client-service perspective.

"I think the big agencies are still catching up," Perkins says. "The real challenge is going to be integration. How will Madison Avenue integrate all the agencies they’ve acquired?"

Although an alum of several world-class Madison Avenue shops, Perkins avoided a traditional agency competition (or "bake-off") when he sought an agency for Visto’s launch campaign. He went with San Francisco-based Left Field (www.leftfield.org), which demonstrated a clear understanding of direct marketing and branding.

"I’ve been exposed to some parts of the industry where they make a big deal about concepts that have been around in marketing for a long time. (Left Field) didn’t try to make it sound more complicated than it is," he says.

Perkins’ remark reminded me of a recent visit to @d:Tech.New York (the quarterly online advertising forum) at the New York Hilton in November. A standing room-only crowd and I heard a representative of an online media-buying service make his pitch.

The presenter played off fears that traditional agencies would either take advantage of their clients or wouldn’t be effective in the area of online buying, thereby positioning his buying service as firmly on the client’s side: His firm could do a better job buying your media because of their experience, their ability to aggregate buys, and they used complex buying algorithms to achieve buying efficiencies. His claim’s basis was similar to many I’d heard from traditional agencies over the years, only updated for the Internet.

It sounded like old wine in new bottles to me.

After his presentation, he told me his online media buying service commanded 20% of the media budget.

"Nice work if you can get it," was Perkins’ reply as I related the story to him in Silicon Valley. In the old days, a traditional agency was lucky to get a full 15% commission, and that was for account service, research services and a full suite of creative services, not just media buying. "Things will come back into balance and equilibrium," was Perkins’ level response.

Just don’t be the dope who pays 20% off the top, was my thought.

Another new-but-really-old-idea¾ or perhaps mistake¾ is the notion that quirky, arresting, "high-concept" creative will do more to break through the clutter than well-crafted benefit-feature statements.

"There are far more dollars than good creative ideas," laments Perkins. "Getting attention is only one element. Once you get their attention, you’ve got to communicate something that is meaningful, that helps drive the brand and is persuasive so that over time, the advertising impressions have a bearing on the marketplace."

After listening to Perkins, here are ten tips to follow if you find yourself in charge of advertising and communications at a start-up:

  • Stay focused. Define your objectives, and don’t be distracted. Know your target audience and understand how your plan is going to reach and affect them.
  • Build an experienced team. Bring in qualified professionals with proven track records. Blend online and traditional experience if you can. Meet daily with colleagues across the start-up.
  • Speed is critical. It’s better to be quick than 100% right.
  • Agency selection. Pick an agency whose work you know, whose principals you trust, and that excels in the areas in which you need support.
  • Design the right creative for the job. Don’t follow the herd; intrusiveness isn’t the only aim of advertising.
  • But think unconventionally. Creativity and breakthrough thinking should extend beyond engineering. Breakthrough-marketing thinking is as important as breakthrough product-development thinking.
  • Select your media mix wisely. You don’t necessarily need network television to build a brand against a targeted audience.
  • Capitalize on the new technology. Use the new technology where it makes sense; discard it where is doesn’t. Online businesses needn’t advertise only online.
  • Beware the charlatans and pundits. Trust your own common sense and good judgement; the Wild West is rife with snake-oil salesmen.
  • Consider the net impression. Ask yourself, "What will my communication achieve? Will it shift target audience attitudes and behaviors? Don’t spend unless the business benefit is there.

We’re still in the earliest stages of dot.com marketing and brand-building. The good news is there’s lots of experimentation and lots of resources to fuel the start-ups. The bad news is that a lot of the money invested in the start-ups is being wasted. The challenge is figuring out which investments are worthwhile and which ones are wasteful when you’re moving at Internet speed.

As you move ahead, remember, a lot of the principles of traditional marketing are alive and well and applied in the new space. Don’t lose site of the marketing fundamentals while taking advantage of what the new technologies make possible.

Does Perkins regret his move to a dot.com start-up? Not a chance.

"It’s an incredible amount of fun. It’s about conquering a space and creating something. To be doing that in such a wide open, booming part of the economy is more fun than I’ve had in the last 15 years," Perkins says.

I suspect Jerry Della Famina would agree.

Michael Krauss is a partner with Diamond Technology Partners in Chicago. He can be reached at news@ama.org.

 

 ©2004 Marion Consulting Partners