Late last week, WebGenesis was still deciding between two New York agencies to handle the $5 million to $8 million account for its Web community site The Globe.
The Globe declined to name the agencies, but Kirshenbaum Bond & Partners, New York, is said to be in the running. But whichever agency wins the account faces the challenge of breaking the chat stereotype.
"It's something that we fight every day," said Susan Berkowitz, director of marketing and advertising at The Globe, which targets males 18-24 with chat, home page hosting and e-mail. "AOL is the biggest chat site on the planet, and nobody calls them a chat site."
Recently, The Globe grabbed attention when former Alamo Rent A Car owner Michael Egan sank $20 million into the startup, founded in 1994 by CEO Todd Krizelman and President Stephan Paternot, both of whom are now 24.
A FEE SUBSCRIPTION MODEL
"We believe The Globe to be the best community on the Internet," said Ed Cespedes, managing director of Dancing Bear Investments, Mr. Egan's investment company. After evaluating similar Web ventures, Mr. Cespedes said Dancing Bear found The Globe not only had a "formidable lead on the technology side," but it also offered a compelling experience.
It's also one of the few community sites that has a subscription model, charging $24.95 a year to be a VIP member, which lets users customize a home page, etc. It reports 600,000 registered users, which includes free trial memberships. (Many areas are open to nonsubscribers.) Competitors Tripod and GeoCities have free memberships.
Still, two-thirds of all activities at The Globe revolve around chat. It also touts the longest average chat session, 42 minutes, according to a report by Jupiter Communications.
In comparison, chat site Talk City has an average chat session length of 32 minutes; America Online's average chat session is 29 minutes.
"I'm honestly very confused why anyone would invest so much money in a site that was initially just chat," said Kate Doyle, a digital commerce analyst at Jupiter, of Mr. Egan's investment.
The fact The Globe has attracted national advertisers like Microsoft Corp., Sony's Playstation, BellSouth Telecommunications and K-Swiss shoes, amounting to monthly ad revenue between $120,000 and $150,000, is also a mystery to Ms. Doyle. "It has a lot of eyeballs and an impressive roster of advertisers," she said. But instant messaging and e-mail are becoming common value-added features, she said.
DOUBTFUL ABOUT BUSINESS MODEL
"I don't see how The Globe will pull all those things together and become the AOL of the Web," said Ms. Doyle. "I think a Yahoo! or Excite has a much better shot." Partnering with several Internet service providers is crucial for The Globe's survival, she added.
The Globe's Ms. Berkowitz said it is talking to several ISPs, from EarthLink to MCI. "Distribution is critical," she said, adding that it hopes to undercut AOL with an Internet account/Globe membership package.
One of The Globe's selling points is its subscriptions, which co-founder Mr. Paternot said enables it to send e-mail ads, and qualify its advertising and merchandising efforts. The subscription revenue also supplements advertising, which makes up 45% of The Globe's revenue.
Still, The Globe, like many Internet companies, isn't raking in revenue. Steve Klein, managing partner, director of media and interactive services at Kirshenbaum Bond, said in its pitch proposal for The Globe's account there's a clause that says Kirshenbaum will get a share of profits if The Globe performs well.
"So if we help them hit a home run," Mr. Klein said, "at least we can round the bases with them."
Copyright October 1997, Crain Communications Inc.