Many e-tailers find holiday consumer buying not so merry

By Published on .

No more wild animals attacking high school marching bands. Not as many big bucks thrown at TV advertising. Expected dot-com bankruptcies and layoffs. And a dwindling of the dot-com marketing bonanza for advertising agencies.

Those are some of the not-so-happy returns from the most recent holiday online marketers' blitz, which analysts said did not drive consumers or build brands as much as had been expected.

Online marketers "didn't get the return on investment in terms of the number of eyeballs per dollar spent on television advertising," said Carl Steidtmann, chief retail economist with PricewaterhouseCoopers. "Ultimately, [Web retailers] have to engage consumers and become part of their lives--it's a lifestyle product--instead of trying for in-your-face advertising," he said.

E-tailers "used borrowed or investors' money to pour millions into advertising shot into the cyberspace wind," said Kurt Barnard, president, Barnard's Retail Trend Report.


Not only will the message tone change, but the medium might as well. Burt Flickinger III, managing director of consultancy Reach Marketing, said retailers will be moving ads from TV to out-of-home media such as trains, buses, airports and other gathering places. "The advertising that really paid off was mobile advertising," which caught customers on the move, he said.

Retailers also learned that "prime portal partnerships define success or failure in the marketplace," said Mr. Flickinger. For example,, which announced a $40 million primarily TV holiday ad campaign, placed 12th in Media Metrix's top 25 e-commerce sites for the five-week holiday shopping season, far behind No. 3 eToys and No. 5 Toys "R" Us., with its America Online anchor status, and an advertising budget in the $50 million range, continued to dominate the charts.


Some brick-and-click retailers discovered efficiencies of some aspects of the new technology. Petsmart, for example, was happy with an e-mail system that notified owners when their pets were due for flea repellent devices or medicines. "We had great success with e-mails," said Tom McGovern, president, Petsmart.

Petsmart, a strong performer in terms of online shopping, was among advertisers that opted for a less outrageous holiday advertising campaign, pushing, among other things, an ornament whose purchase resulted in a donation to pet charities. Publicis, Seattle, is the agency.

Lands' End, hoping to give its catalog business a firm online footing, ran spots describing new features of its Web site, particularly a service allowing a consumer to talk with a sales rep while both navigate the same pages, and one allowing a customer and a friend to see the same pages at the same time. Overall, the strategy succeeded in bringing new customers into the fold, with about 20% of names added to its mailing list coming from Web site customers, said Lee Eisenberg, exec VP-creative at Lands' End. Its site ranked second in traffic to The Gap among apparel sites. However, in December, Lands' End reported sales were off 18% for the late October through early December period compared to the previous year.

When was garnering headlines because it could not fulfill holiday orders in time for Christmas, Lands' End, fearing a backlash against online shopping, moved with a print campaign in newspapers such as USA Today emphasizing its service story with the headline, "We deliver." Biederman, Kelly, Krimstein & Partners, New York, handled.

Lands' End is planning an overhaul of its marketing message this year--one that is more merchandise-specific and emphasizes the retailer's updated selection of colors and fashion-foward merchandise, said Mr. Eisenberg.


In a restructuring move, online retailer Value America in late December laid off 47% of its staff and saw its two co-founders, Rex Scatena and Craig Winn, depart. Value America, which said it expected fourth-quarter losses to exceed analysts' expectations, said it would focus on the consumer electronics category.

Dot-coms have to move more to a customer retention mode, said Lauren Freedman, president of the E-tailing Group, a Chicago e-commerce consultancy. "Advertising helped get people there and raised awareness of e-commerce as a general way to shop," she said. But "not as many new customers are going online," she said. Those online now "have even higher expectations than [e-tailers] thought."

Click-and-brick retailers, such as Victoria's Secret and The Gap's Old Navy, didn't push their Web sites in holiday advertising, instead simply adding their Web address to in-store or promotional materials.

"Always build your brand first and then give the customers as many venues to touch it as possible," said Ed Razek, president, The Limited brand and creative services, calling the Web "one more arrow in the quiver." He also oversees Victoria's Secret.


Advertising agencies, however, don't believe the dot-com boom is over quite yet.

Dot-coms must advertise, said Scott Marshall, president, Publicis & Hal Riney, San Francisco, agency for one of the big holiday '99 retail winners, eToys. "These businesses have to be launched and established in people's minds."

Indeed, as Petsmart's Mr. McGovern noted, Mr. Marshall and others executives at the online toy seller must come to recognize the challenges that lie ahead as Toys "R" Us repairs its image and its customer service problems. "EToys has their work cut out for them once Toys "R" Us is operating on all cylinders," he said.

Copyright January 2000, Crain Communications Inc.

Most Popular
In this article: