NeoPets: Doug Dohring

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On a recent day when the Nasdaq slid more than 27 points as the U.S. prepared for war, the NeoDaq slipped 22 points. But business prospects remain strong in Neopia, the virtual world inhabited by 27 million NeoPets, as well as by marketers such as Kraft Foods and Procter & Gamble Co.

What began as the creation of two British college students has evolved into Gen Y-targeted NeoPets.com, which in July was ranked the "stickiest" at-home Web site by Nielsen/NetRatings. NeoPets Chairman-CEO Doug Dohring, 43, developed the two students' nascent site and debuted NeoPets.com in April 2000. It became profitable three months later, and Mr. Dohring expects 2001 revenue to top $10 million.

NeoPets' nearly 18 million registered members customize online creatures, play games, and participate in auctions and other activities including Neopia's stock exchange, the NeoDaq. More than 50,000 people register daily at NeoPets.

The coin of the realm is NeoPoints, used to buy NeoItems. There are no banner ads on NeoPets; the sole advertising is a form of product placement the company calls Immersive Advertising. For example, visitors can purchase Kraft Foods' Lunchables for their NeoPets. Members also can set up their own stores in which other members can shop, and stock Lunchables on the shelves. For Miramax Films' Dimension Films, NeoPets built an online theater that showed trailers of "Spy Kids." P&G's Sunny Delight is another NeoItem. "It's an extension of product placement," Mr. Dohring says, "but it's much more ... it's actually the content that the product is immersed into."

NeoPets runs ads in Primedia's Bop, Teen Beat and Tiger Beat. Some NeoPets sponsors' products have been incorporated into the ads, which were created in-house.

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