But that hasn't dimmed Exec VP-Chief Marketing Officer Michael McCadden's confidence in Priceline's Internet shopping model. Priceline claims it will soon be able to make a profit on its name-your-price e-commerce platform that sells most goods and services at a 20% or more discount. A growing number of critics, however, say the site is taking consumers for a ride.
" `Name your own price' is not intuitive -- I can't say it's for all consumers," Mr. McCadden said. But "once the consumer understands one category, the consumer can move to other categories," he said.
Indeed, Priceline hopes to grow its business by offering consumers plenty of categories. Launched in April 1998 to sell airline tickets, Priceline has added new cars and groceries, home mortgages and rentals of cars and hotel rooms plus an auction service.
In mid-May it kicked off sales of prepaid phone cards for long-distance service.
At a recent analysts' meeting -- headlined in a Goldman Sachs report "Bullish analyst day reinforces confidence in Price-line.com's model" -- Priceline announced it would enter 18 categories including auto and life insurance and consumer electronics
It also announced it would make a significant business-to-business play. Among the planned offerings are media buying as well as office supplies and freight shipments.
Mr. McCadden, 41, made his mark with the successful launch of Calvin Klein's unisex fragrance CK One and later struck it big at The Gap, heading an in-house marketing team that produced a one of 1998's most heralded commercials, The Gap's Khaki spot featuring swing dancers. He left late last year to return to the East Coast where he soon started his current post.
Mr. McCadden said he believes the branding formula that worked for The Gap will work for the new Internet shopping model as well. At The Gap, he demanded a consistency of marketing images. All ads -- whether print, TV or outdoor -- featured a clean, white background and ended with The Gap's blue box logo.
At Priceline, he inherited a campaign featuring William Shatner, best known as Capt. James T. Kirk of "Star Trek" fame, whose minilounge performances tout the virtues of the site in varying styles, ranging from rap to reggae.
Ironically, when Mr. McCadden took over at The Gap, the last TV spot the company produced featured beat poet Max Blagg in a similar coffee-house setting. This time, Mr. McCadden stuck with the existing look and applied his formula.
Mr. McCadden, noting the 2-year-old effort is one of the longest-running dot-com campaigns, said it will expand with more than a dozen spots created by Hill, Holliday, New York, that are aimed at specific audiences . "I don't think we live in the era of one spot" fits all audiences, Mr. McCadden said, adding that Priceline doesn't expect viewers to see each spot.
Last year, Priceline spent $29 million on measured advertising, according to Competitive Media Reporting; it lost $1.1 billion on revenue of $482.4 million.
Priceline, which says it anticipates turning a profit by the end of this year, faces challenges even Capt. Kirk may be unable to fix.
An article in the June Smart Money, headlined "Taken for a Ride," detailed unhappy consumer experiences with Priceline. Its name-your-price model was featured in a "Saturday Night Live" parody in which an actor said he wasted an hour to save less than 25›.
The company also has indicated in filings with the Securities & Exchange Commission that it is now in a position with consumers to offer fewer discounted air fares, hinting the company may be offering few bargain deals. Priceline also said it's beginning to charge marketers slotting fees to participate in its bidding services.
At the same time, new competitors, such as Respond.com and eWanted.com, are taking the name-your-price model to new cyber heights. On those sites, suppliers bid via e-mail on each customer's business.
"In every category, there's competitors," said Mr. McCadden. "It's no different than fashion. Somebody's always there, every week."