Online services, Web sites rake in retail bucks in marketing deals
Last week's multimillion-dollar deals designed to bolster the visibility of World Wide Web sites may mark the end of the era of shoestring online budgets. In the early days of the Internet, a corporate Web site could be built with just a few information systems managers who worked evenings and weekends using secondhand equipment. Now, with so many sites online, corporations are starting to require full-scale business plans and are making big investments in staff, time and money to find their customer base. Online bookseller Amazon.com, Inc. and florist 1-800-Flowers, Inc. last week signed multimillion-dollar cross-promotion deals with major online services and popular Web sites. Their goal is to lev~erage the visibility of those services and sites to get Amazon.com and 1-800-Flowers in online consumers' faces. The deals are part of a trend emerging as companies find they have to devote extensive resources to attracting customers online. Many firms will choose to pay big bounties to America Online, Inc. and the major search engines because those companies have close relationships with customers and can deliver those customers to other companies, said Chris Stevens, an analyst at Aberdeen Group, Inc. in Boston. "There are a few gateways emerging that are controlling a lot of the traffic on the Internet," Stevens said. The Internet is slowly getting to the point where it has a critical mass of audience, and you have to have resources of a [certain] scale to reach that audience," said Jeff Morris, senior vice president of new media and technology development at Showtime Networks, Inc. in New York. The problem is noise, webmasters said. Everyone can go online, and everyone has -- more than 1 million .com domains have been registered. The common wisdom three years ago was that any company, no matter how small, could go online and find its customers around the world. Now it seems every company, no matter how large, is having difficulty finding its customers online. Because search engines and commercial online services consistently rank among the most popular on the Web, online merchants are cutting deals and paying big bucks to guarantee publicity on AOL and search engines such as those run by Excite, Inc. and Yahoo, Inc. Even the The Walt Disney Co. -- with one of the most recognized trademarks in the world -- has marketing deals with Excite in Redwood City, Calif.; Lycos, Inc. in Framingham, Mass.; and Yahoo in Mountain View, Calif., among other popular online sites. Jeff Bender, director of consumer advertising at Disneyonline, said Disney's brand may be well-known, but its fee-based Internet online service isn't. Disney is advertising the service through conventional media, but many of the customers it reaches don't have online accounts. To find Internet users, you look to the Internet -- especially to Excite, Lycos and Yahoo, the places many online users visit first and most often, Bender said. 1-800-Flowers announced a four-year contract with America Online to be the exclusive seller of flowers and plants on the online service. The contract is worth $25 million. It is a continu~ation of a three-year contract for the Westbury, N.Y., company. The company expects to generate the money from its marketing budget, fueled by the more than $250 million in sales it expects to do online in that period. Amazon.com also announced last week a multimillion-dollar advertising contract with Excite and a cross-promotion campaign with Yahoo for undisclosed sums. The deal will be a marketing expense covered by online sales and capital raised in its recent stock offering.
by Mitch Wagner |
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