Sock Puppet joins homeless

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Interested observers were less than surprised when Pets.com announced its shutdown last week. Analysts had been watching the pet supplies e-tailer struggle as it tried to raise new capital and attract a buyer.

What's left to salvage from the Pets.com brand?

Pets.com said it plans to sell its assets, including its URL and Sock Puppet icon, which is being sold as the Talking Pets.com Sock Puppet at high-end toy retailer FAO Schwarz.

Another potential asset is TV time. Walt Disney Co. took an equity stake in Pets.com in January in return for $11.8 million in future advertising on Disney's ABC. ABC TV Network President of Advertising and Marketing Mike Shaw declined comment. It's unclear how much of that ABC time has been used, though Pets.com listed prepaid advertising expenses of $10.5 million on its June 30 balance sheet.

Pets.com's stock market capitalization late last week stood at $6.4 million, less than its prepaid TV time might be worth.

In addition, Amazon.com holds about a 30.4% stake in Pets.com; Amazon has been burned before, via its stake in now-closed furniture e-tailer Living.com.

Pets.com's Sock Puppet has fallen from his glory days in the Super Bowl and Macy's parade.

FAME DOESN'T AID BOTTOM LINE

The subject of a major Advertising Age story Aug. 7, Pets.com was lauded as creating the first standout dot-com advertising celebrity with the Sock Puppet. The puppet, created by TBWA/Chiat/Day, San Francisco, has appeared in 13 TV spots, including a $2 million commercial on the Super Bowl. It was also a featured float in last year's Macy's Thanksgiving Day Parade.

"We're sorry to see them go," said a TBWA spokesman, adding that the dot-com doesn't owe the agency any money.

"The infamous Sock Puppet hasn't been that successful for the company in driving sales," added Greg Kyle, president-CEO of Pegasus Research International.

He said Pets.com spent $14.7 million in the third quarter alone on sales and marketing expenses, yet it gained only 93,000 new customers. Even so, that spending rate has plunged from the $19.30 in sales and marketing spending per dollar of revenue it registered in the third quarter of last year, dropping to $1.57 in this year's third quarter.

Out of more than 50 prospects contacted by Merrill Lynch & Co. to buy Pets.com, fewer than eight were prepared to meet the dot-com. This fact, Mr. Kyle said, is another indication of how tarnished the dot-com's brand has become.

VALUE BET

Yet it's premature to dismiss the Pets.com brand without conducting research to determine its worth, said Andy Pierce, VP at Mercer Management Consulting.

"I bet the brand does have value," Mr. Pierce said.

Rather than evaluating Pets.com's bottom line or its market capitalization, he said it's necessary to look at the brand from a customer and employee standpoint. For instance, he said, customers could be polled to see what other pet supply sites they already know.

"Yes, they've created a lot of awareness and I bet that awareness has translated to equity. The business design failed, not the brand."

Contributing: Alice Z. Cuneo, Laurie Freeman, Wayne Friedman.

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