BizRate's e-commerce goal: Be like J.D. Power

By Published on . is more than doubling its ad budget--and that's being conservative.

The e-commerce ratings service will spend about $20 million this year offline and online, up from $10 million last year, said VP-Marketing Gene Cameron.

But spending will be just half the $40 million or more BizRate was considering before the March Internet stock slump. BizRate, which next week introduces a redesigned site and logo, is having to adjust to a tough market.

"We think we can be more efficient, and frankly we are addressing the new market issues," Mr. Cameron said. "There's no question that the tech wreck has affected us."


While BizRate last year focused its budget on the fourth quarter, this year it may add radio in June, for dads and grads, and a back-to-school campaign. Most money still will be spent in the fourth quarter, with more radio, outdoor and cable ads. Mr. Cameron anticipates $4 million to $8 million for online advertising; the rest of the year's budget will go to traditional media.

One big difference this year: BizRate is able to focus its media plan where buyers live. BizRate mapped addresses of a sample from its database of 2 million online buyers. The map shows heavy online buying on the coasts; in Los Angeles, heavy buying can be seen in such areas as the Westside and a neighborhood of Asian immigrants. BizRate's ads probably will steer clear of certain areas--such as San Francisco--that Mr. Cameron said are priced too high."We think we can do a much better job because of this targeting," he said.

TBWA/Chiat/Day, Playa del Rey, Calif., hired last year, does the offline ads. BizRate added other resources this year: MarchFirst, Santa Monica, as online agency; direct shop Brierley & Partners, Los Angeles, for customer relationship management; and Bright Strategic Design, Marina del Rey, Calif., for corporate identity.

BizRate since December has recruited seasoned senior management, including Chuck Davis, a former Walt Disney Co. executive; and Mr. Cameron, a veteran Los Angeles ad agency executive. Founder Farhad Mohit, who conceived BizRate while getting his MBA, remains chairman.

The new group arrived just in time to see business-to-consumer dot-coms, and e-tailers specifically, fall into disrepute among investors. Fortuitously, BizRate closed a round of venture capital weeks before the March market implosion. Mr. Cameron said plans to go public are on hold. BizRate has re-evaluated spending to conserve cash.

"We're not going to be caught in a situation where we're on our last bucks," he said.

BizRate, to be sure, is expanding rapidly, taking more space in the headquarters it shares with a Marina del Rey, Calif., self-storage warehouse.

BizRate's primary business is compiling consumer satisfaction surveys, doing for e-commerce what J.D. Power & Associates does for cars.

About 1,000 merchants, including well-known sites such as eToys, put the BizRate survey on their order page. "It's the equivalent of buying a half a billion banners a year," Mr. Davis said.

BizRate attracted 4.1 million unique visitors in March and ranked No. 12 among shopping sites, according to Media Metrix.

The company receives about 30,000 surveys daily grading merchants on issues such as pricing, delivery and customer support. BizRate gives merchants a rating up to five stars.

For sites such as giant that won't distribute the survey, BizRate collects data from an online panel of more than 100,000 consumers. BizRate tracks data in 14 categories, such as toys and computers; it's adding categories such as automotive and brokerages. BizRate competes with sites such as research site as Gomez Advisors and CNET's comparison shopping site mySimon.


Till now, BizRate generated revenue mainly by taking a commission--typically 5% to 10%--on orders generated by site referrals. But BizRate this month begins moving to charging a fee--ranging from 50¢ for booksellers to $2 for computer e-tailers--for redirecting traffic to a site. Messrs. Davis and Cameron said merchants will pay because BizRate refers shoppers who are ready to buy. In March, BizRate said, 8.6% of visitors who linked to a merchant ended up buying with an average sale of $163.

BizRate also makes money selling research to merchants based on aggregate data from its users, and it's developing a consulting group.

In addition, BizRate this month begins accepting advertising on its site, though Mr. Davis prefers to call it "merchandising." BizRate will invite better-ranked merchants to list special deals in boxes next to BizRate's ratings.

The site also will test sending e-mail offers to consumers who opt in.

Finally, BizRate in June will integrate, a "shopping assistant" it agreed to buy last month; eBoodle is a "browser companion" that consumers can click on while shopping to see a merchant report card and prices at rival sites.

While BizRate makes its money off merchants, Mr. Cameron said the focus is on the buyer. "We know where we want to be," he said."We want to work for the consumer."

Copyright May 2000, Crain Communications Inc.

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