America's heartland is slowly living up to the "Silicon Prairie" nickname it adopted a few years ago.
Last week's @d:tech conference brought more than 1,000 interactive marketing executives into Chicago for one of the largest such gatherings the city has hosted in a while.
For a market that most consider a beat or two behind the more tech-savvy East and West coasts, Chicago finally appears to be picking up steam in interactive marketing.
FROM 5 TO 30
Spurring a lot of the action are the online ad reps, who have stormed into Chicago with visions of convincing big package-goods marketers to carve out a portion of their media budget for the Web.
Last year, there were fewer than five online ad reps in Chicago; today, the number approaches 30.
Excite and Infoseek are finalizing plans to open up shop there; they'll join Focalink, America Online and Yahoo!, all of which entered the market in the past six months, and DoubleClick, Softbank Interactive Marketing, Pointcast and Katz Millennium Marketing, which have been there slightly longer.
The tough part will be drumming up business. Chicago lags behind its coastal brethren in both the number of Web developers in the market and the amount of money spent on the Net.
FEW BIG SPENDERS
Of the top 50 Internet ad spenders last year, just four were based in the Midwest--and none in Chicago. Sprint Corp., General Motors Corp., Ford Motor Co. and Procter & Gamble Co. combined spent an estimated $5.8 million last year, according to Jupiter Communications' AdSpend. That's less than half of what Microsoft Corp. alone spent during the same period.
"As reps establish offices here, it helps to validate and justify our work," said Greg Koerner, Midwest regional sales manager for DoubleClick. "It definitely proves that business will soon be booming here."
DoubleClick's Chicago office usually contributes between 25% and 30% of the ad network's monthly revenue, said Mr. Koerner.
Raj Vaswani, interactive marketing manager at Northbrook, Ill.-based Allstate Insurance Corp., is thrilled by the influx of online media companies because they make his job easier.
"Initially, I made the calls to various networks and Web sites to discuss advertising possibilities," said Mr. Vaswani, who last year spent around $500,000 in online marketing. "Now I've got new reps calling me every day. . . . It's great for negotiating media rates."
Just three months after opening in Chicago, Gina Fratarcangeli, Pointcast's Midwest account manager, has signed three $100,000 contracts with Midwest marketers.
"The products initially wanting or needing to get online were the computer and technology products, which don't typically stem from the Midwest," said Ms. Fratarcangeli. "As the Net gets more mainstream and all-encompassing, more consumer-oriented companies will get online."
REVENUES A MYSTERY
That's the hope, anyway. While most reps are quick to tout the tremendous revenue potential represented by Midwest markets like Chicago, not a single one is willing to assign an actual dollar value to the market.
"There first needs to be greater consumer presence on the Web, which will drive more marketers there and in turn drive the bigger agencies [in Chicago] to start creating and developing more online marketing plans," said Kit Williams, Chicago sales rep for Focalink, a San Francisco marketer of online ad management tools.
BIG SHOPS TO BLAME
Some reps say the big agencies are partially to blame for the tardiness of the Chicago market in joining the interactive game.
"It's the smaller Web developers and garage-type shops that understand interactive marketing and are ready to hold their clients' hands," said Mr. Koerner. "We do work with the bigger Chicago-based agencies, but more business is probably coming from the smaller shops and even the more business-to-business oriented agencies."
Charlie Skuba, acting manager of TN Technologies' Chicago office, one of the giants in the new media industry, agrees that many agencies are more of a hindrance to new media's growth.
"Most big agencies don't really get it and consequently put interactive on a back burner," said Mr. Skuba, whose clients include S.C. Johnson & Son and Quaker Oats Co. "Oftentimes agencies will put people in charge who do understand interactive, but then they won't give them the authority or the power that they need to make an impact within their organization."
FINANCIAL, AUTOMOTIVE FIRST
Chicago-based reps agree that most of the revenue growth is coming from financial services and automotive sectors. The general consensus is that Chicago, Detroit and Minneapolis are the most lucrative markets.
"I'm actually surprised the Midwest is as up to speed as it is," said Rene Augustine, AOL's Midwest sales manager. "There's always a `wait and see' attitude there."
Some say the Midwest only appears slow because of the industrial differences between it and the East and West coasts.
"The genesis of the interactive industry was undoubtedly in San Francisco and New York, but Chicago will be quick to catch up," said Mr. Skuba. "We're on a long-term upward growth curve."
Copyright March 1997, Crain Communications Inc.