In its third such announcement in nine months, Internet service provider EarthLink said it has selected a new advertising agency.
This time, it tapped BBDO West, Los Angeles, as its agency of record, handling EarthLink's branding efforts in what the agency said will be a $50 million national consumer marketing campaign. The advertising will target, as have other ISPs recently, America Online members looking for more direct Internet access.
The campaign will run in five undisclosed markets this summer. If the ads are successful, the effort will be expanded nationally in the fall. Media includes buys on TV, radio, outdoor and online, and will reflect the company's personality as a "genuine, down-to-earth, real company that's not pushy or exploitative," said Tom Hollerbach, president-CEO of BBDO West.
"The [EarthLink] brand is something people feel good about," he added.
TOUGH JOURNEY TO AOL
EarthLink wants its new advertising to nationally extend the strong brand recognition the company has developed in the Los Angeles area, said Brinton Young, senior VP-marketing.
"We have overwhelming brand recognition and intent to purchase here--we are close to AOL in awareness and only a little behind AOL in market share," he added. (Nationally, the ISP is still eons away from AOL: EarthLink has 1.1 million U.S. subscribers vs. AOL's 17 million worldwide.)
EarthLink chose BBDO West because it liked "BBDO's track record of building brands and developing a fairly simple message for what is a complicated brand/technology," Mr. Young said.
EarthLink's journey to an advertising agency relationship, however, illustrates some of the problems the tidal wave of new Internet and e-commerce companies faces as they move away from small interactive shops producing online banner advertising and into the world of traditional advertising with its emphasis on branding.
REVIEWING OVER 100 AGENCIES
EarthLink began last July by hiring Select Resources International, West Hollywood, Calif., a respected search consultant that has handled reviews for clients such as Hewlett-Packard Co. and Starbucks Coffee Co. As part of that process, EarthLink gained access to agency reels and promotional material from more than 100 advertising agencies. It came up with a long list of agencies and, after "chemistry check" meetings with agency executives, narrowed the contenders to Mendelsohn/Zien, Ground Zero and BBDO West, all Los Angeles.
Each was given an assignment and, based on that assignment, Mendelsohn emerged as the winner. For four months, that is.
EarthLink refused to sign an agency of record agreement with Mendelsohn, the agency said, instead insisting the shop work as if each day was the day it was going to be fired. EarthLink declined to discuss its relationship with previous agencies, including Mendelsohn and Ground Zero.
MOVING AT WARP SPEED
"Everything [Internet companies] deal with is in warp speed," said Richard Zien, whose agency's clients include Dole Packaged Foods, Carl's Jr. and BMW of North America.
"They are young, entrepreneurial and they have never done this before," he said.
He believes EarthLink and other dotcoms also are frustrated by the cost and time required to build a brand.
After Mendelsohn resigned in January, EarthLink looked to the second agency on its list, Ground Zero. That relationship lasted three weeks.
Jim Smith, Ground Zero managing partner, said he parted amicably with EarthLink, though he has had second thoughts about partnering with companies unaccustomed to dealing with advertising agencies.
"In the world they're living in, they don't regard the conventional approach [to marketing] as being necessary to their business, and they're not necessarily wrong," he said.
EarthLink apparently agreed. As a result of the review, EarthLink signed up with direct agency of record Direct Partners, Santa Monica, Calif. That 9-month relationship--resulting in the production of a direct-response TV spot promoting EarthLink's offer of 60 days for $1 and free setup--has worked very well, according to Wes Nichols, a partner in Direct Partners.
"They're a dream client," said Mr. Nichols, who can understand why the client wanted immediate results, especially since it's used to being able to measure all of its interactive ads. "Accountability is king," he said, adding his shop has a proprietary system of tracking results from every advertising message.
From Internet companies' point of view, signing an advertising agency entails more than gaining market share. It is also a way to get a bump in stock prices, as many of their public announcements do.
Dean Lubnick, director of new media services for Hampel/Stefanides, New York, whose clients include CDnow, said electronic commerce brands' reliance on venture capital or stock offerings also makes them a different breed of client. "The volatility of the Internet and Internet stocks makes it all the more imperative to show results quickly," he said.
AGENCIES FINANCING THEIR CLIENTS
Ad agencies also can help in more practical financial matters.
"We've asked our agency to literally finance us by not processing our media bills on time, to carry us for 90 days or more from time to time," said John McNamara, senior VP, GetSmart.com, a subsidiary of Providian Financial Corp., with a Web site providing information on consumer and business borrowing. His agency is Welch, Nehlen, Groome, New York.
It's a point not lost on ad agency executives. While EarthLink has built a solid brand, Ground Zero's Mr. Smith said many of what he called "the 200 other dotcoms" in agency reviews might not be in business by yearend. "It's quite seductive because all these guys talk in telephone numbers," that is, advertising budgets having as many figures as telephone numbers, he said.
For agencies, "It's a tricky time and quite an exciting time," he said.
Copyright May 1999, Crain Communications Inc.