INTERACTIVE CATALOGS A TOUGH SELL ICAT FINDS MARKETERSAREN'T YET FLOCKING TO PUT PRODUCTS ON CD

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Interactive Catalog Corp. is learning a hard lesson: A lot of marketers just aren't ready to put their catalogs on disc yet.

Last June, the Seattle-based company introduced the iCat "engine," an elaborate software package simplifying the programming demands for CD-ROM catalogs.

Though response to the software has been favorable, Interactive Catalog's sales have been slowed by an overwhelming number of marketers that are not yet accustomed or equipped to nimbly digitize their collateral materials for transfer into a multimedia venue.

Interactive Catalog so far has completed only two products using iCat: a catalog for Amway Corp. and a sampler CD featuring mini-catalogs from four small companies.

The other part of its business, which produces CD-ROM consumer buyer's guides, called the Know-it-All series, has also been hampered by marketers that are not educated about the special production and strategic considerations of interactive advertising.

Interactive Catalog CEO Craig Danuloff said many potential clients were put off by the daunting task of digitizing their inventory of brochures, pamphlets, videos, photographs and other marketing resources.

"It's expensive, time-consuming and cumbersome," he admitted.

The cost to produce an iCat catalog is high: about $150,000 to $250,000 for a few hundred products, Mr. Danuloff estimated. But once a company has digitized its existing marketing materials, ensuing versions would cost roughly 80% less to create and take only a few days to produce, he said.

Amway has been pleased with the results of its iCat catalog, said Jim Blodgett, product manager at the Ada, Mich., company.

The catalog, Amway's first on CD-ROM, features the Amway product line and is designed to be used by Amway distributors.

"It looks great," Mr. Blodgett said. "And once people are in it, they'll have no problem using it."

Amway spent eight months on the project, much of it digitizing marketing materials. The iCat relational database automatically coordinates the design of the catalog and forms links among the various informational and graphic elements.

"In terms of time and effort, it was a lot of work on our part," Mr. Blodgett acknowledged. "It definitely was a major challenge for us."

Acknowledging that most companies aren't equipped to digitize information, Interactive Catalog recently signed on Quebecor Multimedia, a division of Quebecor, the second-largest printer in North America, as a value-added reseller. The company is also signing deals with advertising agencies, including Eisaman, Johns & Laws, Los Angeles.

Besides pulling in clients for Interactive Catalog, these partners will offer potential iCat customers the technical expertise and resources necessary for digital production.

Improvements in the next version of the iCat engine, which will be ready in May, include links to the Internet and options for online ordering systems.

Interactive Catalog's second product, the Multimedia Know-it-All, is the first in its series of CD-ROM consumer buyer's guides. But that product, too, faced difficulties getting off the ground.

Companies could buy space to place product descriptions, video demonstrations, catalogs, animated charts or other items which were linked to their logos or product listings in the main directory.

Interactive Catalog distributed Multimedia Know-it-All for free to roughly 250,000 Egghead Software customers. The company will mail its next title, Home Computing Know-it-All, to 200,000 consumers from a list of CD-ROM owners and home computing enthusiasts; another 100,000 copies will be sold via mail-order.

Sonny Spearman, director of advertising for Interactive Catalog, said many potential advertisers were daunted by multimedia technology.

"When selling interactive advertising, it's a huge educational process," she said. There were 150 advertisers on the first disc, but only six bought larger ad packages.

John Pollard, product manager at Microsoft Corp., one of the Multimedia Know-it-All's biggest advertisers, said he was generally pleased with the product but said his decision to advertise in the next edition depends on rates, results from market research and improvements which allow for more elaborate software product demonstrations.

Ms. Spearman said the Home Computing Know-it-All will include options for transitional advertising between screen sections, advertising in the product directory, sponsorship for its "Tips & Tricks" consumer advice section, and interactively linked floating display ads.

Ad rates vary from $1,500 to $15,000 depending on complexity.

The Know-it-All will also be more consumer-friendly, Mr. Danuloff said, focusing more on advising consumers and relying less on exhaustive lists of products. New titles will include "Buyer's Assistants," programming that will help consumers decide what product best suits their needs.

Though Interactive Catalog has been slowed by the marketing industry's lack of experience with interactive technology, the company isn't discouraged. Mr. Danuloff plans to add 11 employees over the next month, for a total of 30.

The company has three or four Know-it-All titles targeted for Christmas; subject areas might include participatory sports, automotive and electronics.

Mr. Danuloff should be accustomed to working emerging markets. Before starting Interactive Catalog, he served as business development manager at Aldus Corp. and before that operated one the country's first desktop publishing service bureaus.

Even though Interactive Catalog Corp. hasn't gotten up to speed as quickly as hoped, Mr. Danuloff says he's much more optimistic about the company's chances for success now that more people have computers.

"This is so much like my old days it's just incredible," he said. "How often are you going to be involved in the birth of an industry? This time, however, the environment is filled with believers."

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