Dot.com Mania Sparks Debate

Half.com Joins the Fray, Advances Partners & Simons to Finals
By David Gianatasio and Lauren Wiley
BOSTON–The dot.com explosion continues unabated, with New England agencies winning some $250 million in assignments this year.
Executives at shops both large and small agree on one thing: There’s no sign of the activity falling off anytime soon. What is not so certain is whether the potential risks–venture-funding problems and payment issues, for example–are worth the sometimes hefty rewards.
“We are seeing a fundamental change to the face of business,” said Mullen president Joe Grimaldi. “Not temporary movements, permanent ones.” Dot coms, mostly won in the past year, account for an astonishing 25 percent of the Wenham, Mass., shop’s $310 million in billings.
“For traditional agencies, this [dot.com activity] could be a salvation,” said Judy Habib, president of midsized Boston shop Kelley Habib John Integrated Marketing, where dot.com billings have grown to 20 percent this year, compared with 5 percent in 1998.
“This is just the beginning,” predicted Pat Harpell, chief executive of Harpell/Martins & Co., Maynard, Mass., where dot coms make up 40 percent of billings, compared with just 15 percent last year. “It’s a business phenomena, a channel” that’s not going to disappear.
The region’s largest traditional ad shops–Arnold Communications and Hill, Holliday, Connors, Cosmopulos, both in Boston–have seen similar surges.
Arnold’s dot.com billings have grown from an estimated $15 million in 1998 to $50 million in 1999. Managing partner Ken Umansky, who oversees interactive accounts, predicts dot.com billings will quadruple in 2000. The agency claims about $1 billion overall.
Two years ago, less than 1 percent of Hill, Holliday’s $600 million-plus billings stemmed from dot coms. In 1999, that number has grown to almost 10 percent, or $74.5 million, of projected billings.
Inevitably, however, some agencies are still playing catch-up. Holland Mark Edmund Ingalls in Boston, for example, is still trolling for its first significant online account, said agency official Gayle Nyre.
Mintz & Hoke in Avon, Conn., just got in the game with Nowlending.com.
RDW Group in Providence, R.I., has won three dot coms this year, but their combined billings account for less than 5 percent of the shop’s $75 million overall, said president Michael Doyle.
Despite some gaudy numbers and heady predictions, there are risks for players of all sizes looking to hop on the dot.com bandwagon. For the most part, these clients are newly launched, venture-funded companies run by entrepreneurs who often have scant knowledge of the advertising process.
Jeff Winsper, president of TFA/Leo Burnett Technology Group in Boston, said his shop receives a phone call a week from a dot.com company. “We don’t even want most of those calls,” he said. “They come with lots of money, but many of them are not mature brand believers.”
Two reviews–for utilities retailer Essential.com and e-commerce site IWant.com, both in Burlington, Mass.–began over the summer but have since stalled. Essential.com, said by sources to have selected four undisclosed finalists, has been dogged by management shifts. The IWant.com search, on the other hand, has been hamstrung by slower-than-anticipated funding.
Conversely, dot.com reviews can proceed at an astonishing clip and require final work soon after. One example: Half.com, a Philadelphia-area e-commerce company launched just four months ago, has $15-25 million to spend on advertising. The client launched a review six weeks ago, with Partners & Simons in Boston, Odiorne Wilde Narraway & Partners in San Francisco and Margeotes/Fertitta + Partners in New York emerging as finalists.
Half.com founder Josh Kopelman expects to pick a winner within a week, and a national branding campaign will be launched in January. “We do everything fast,” Kopelman said.
This “let’s-hurry-up-and-brand-our-site mentality can be dangerous and expensive,” warns review consultant Skip Pile, who has run numerous agency searches for dot.com clients, though he is not involved with Half.com.
These dangers, however, are the price agencies must pay if they are serious about adding dot.com clients, Pile said. “If they’re going to talk the talk, they have to walk the walk. You can’t have it both ways.”
–with Judy Warner
NEW ENGLAND AGENCIES: TOP DOT.COM WINS 1999
CLIENT AGENCY BUDGET (in millions)
LendingTree Mullen 50
MyWay Arnold 25
Dow Jones Cos. Arnold 20-25
ToySmart Arnold 20
Cozone Mullen 15-20
Webstakes Heater Advertising 15-20
Tradeout Greco Ethridge Group 15-20
eCredit TFA/Leo Burnett 15
Priceline Hill, Holliday 15
Direct Hit Gearon Hoffman/Carat Freemen 12-15
Northern Light Mullen 12-15
SmarterToy Mullen 10
Hifi Mullen 7-10
Sixdegrees Pagano Schenck & Kay 6-10
RoweCom McKay Communications 5-8
Oracle e-Travel Harpell/Martins 3-5