SITESPECIFIC TO DABBLE OUTSIDE OF CYBERSPACE: WEB SHOP SHIFTS COURSE; STRUGGLES FOR PROFITS FROM CONTRACTS BASED ON PERFORMANCE

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Sitespecific hopes to get a little more specific about who it is this year.

The 35-person shop, led by President Seth Goldstein, 26, has in its one year of existence changed from a tools and design company to a direct marketing and content syndication shop to an agency aiming to handle brand-building and direct marketing both online and off.

PLAYING IN TRADITIONAL MEDIA

The New York agency will soon launch its first traditional media work for a client, Sabre Interactive. For the effort, SiteSpecific will draw on a partnership with direct marketing shop Harte- Hanks Communications, San Antonio, Texas. SiteSpecific won the $3 million to $5 million account late last year.

Last year, Harte-Hanks invested less than $1 million for a minority stake in the agency. While that marriage hasn't always been portrayed as an easy one, last week Harte-Hanks Exec VP Richard Hochhauser said he was pleased with the relationship but added that his company is "not planning to make an additional cash investment in SiteSpecific at this time." SiteSpecific handled interactive assignments for Harte-Hanks clients including 3M Co. last year.

SHARED RISK

Another practice the agency is employing is performance-based contracts for clients. While few Web shops have taken on this load, Mr. Goldstein said Duracell International, CUC International and Intuit's Turbo Tax are compensating the agency this way.

Both Mr. Hochhauser and Mr. Goldstein advocate shared risk.

"Say there's a client with a $40 per hour billing cycle," Mr. Hochhauser proposed. "Through shared risk you'd make it a $20 per hour billing cycle and share a smaller percentage of revenue with them, rather than make it a $0 billing cycle and take a larger percent of revenue."

Mr. Goldstein said Duracell is working with SiteSpecific on a shared performance basis, while CUC and Turbo Tax are entirely performance-based accounts. He freely admits the pay-per-lead model isn't making money yet.

"We haven't made any money from it yet," said Mr. Goldstein. `'We won't do [shared performance deals] for every client, certainly not right now for Sabre. But the knowledge from these online-based brand campaigns will, for instance, help us drive users to online travel services."

SEEKING NEW FUNDING

Mr. Goldstein is now looking for a second partner to help his agency grow its consumer branding capabilities; the shop is in talks with various traditional agencies, holding companies and venture capitalists. SiteSpecific is said to be seeking up to $5 million in additional funding.

Last year, SiteSpecific devoted significant resources to building a content syndication unit

While the shop brought in industry veteran Jeff Einstein, secured content from Quote.com and Star Chefs, and worked with DoubleClick to broadcast the messages, the program proved costly.

Now the agency is focusing on a combination of traditional branding and direct targeting through a program Mr. Goldstein calls Brand Banks. Mr. Goldstein said that the shop plans to do more "push" advertising by syndicating branded games for the client--a reversal of last year's model that focused on securing content partners before finding advertisers.

For Duracell, a National Hockey League sponsor, SiteSpecific is creating a game with the help of i-Traffic, New York.

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