Egghead.com, with an agency on board, intends to rebuild its brand and will test media this fall to see what drives sales most efficiently.
The Web-based computer software and hardware retailer named Digital Pulp, New York and San Francisco, as agency on an account that Chief Marketing Officer Jon Brodeur said will start at $10 million.
Spending could be boosted, Mr. Brodeur said, given Egghead's mandate to ratchet up sales and pump up the name during the Web's manic "land grab." Just where the budget will end up is to be determined: Mr. Brodeur said Egghead will balance its need to grow with its need to think about the bottom line, saying "a day of reckoning" is ahead for Web commerce sites that are spending like mad to build franchises.
Egghead early this year shuttered its struggling 80-store chain and refocused its efforts entirely on the Web with retail site Egghead.com, closeout site Surplusdirect.com and auction site Surplusauction.com.
SALES, MARKETING TO INCREASE
The company spent $5.8 million, or 19.5% of its $29.5 million in revenue in the quarter ended June 27, on sales and marketing expenses, and expects that percentage to "increase significantly," according to a filing with the Securities & Exchange Commission.
Revenue included $21.1 million in online orders; the rest came from phone and catalog orders, areas on which Egghead is cutting back. Egghead lost $5.5 million during the period.
DIGITAL PULP PLUS OUTSIDE HELP
Egghead had handled advertising in-house. Digital Pulp will work with Egghead's in-house group on Web, print and broadcast creative and media, though Mr. Brodeur said the client and agency at times will bring in other resources.
For example, Western International Media Corp., West Hollywood, Calif., is expected to buy some traditional media for the agency, Mr. Brodeur said
Egghead may look to broadcast outlets to produce Egghead commercials with input from the agency.
Mr. Brodeur said Egghead this fall will begin to test various media--including online, print, radio, TV and possibly outdoor--to see what proves itself to be most efficient in driving sales.
NEW-MEDIA EXPERIENCE ESSENTIAL
Digital Pulp prevailed over three other agencies in the review on which Rockey Co., Seattle, was the consultant. Digital Pulp resigned the account of Web commerce client OnSale to take the Egghead business.
Though it hasn't set the split of online and offline spending, Mr. Brodeur said Egghead wanted to hire an agency steeped in new media and electronic commerce.
The 3-year-old Digital Pulp specializes in online-only brands and e-commerce companies; clients include DoubleClick and Genesis Direct, the catalog giant that is transferring its sales books to the Web.
Said Wendy Warren, the agency's director of business development: "Egghead's shift from bricks and mortar to online is historic and it fits perfectly with our own focus of building online businesses."
Contributing: Beth Snyder
Copyright August 1998, Crain Communications Inc.