The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
November 2, 1999
In this week's report. . .
Dot.coms Are Coming...
This wasn't supposed to happen. The hot, new internet start-up companies were expected to have their own medium for advertising their products and services.
In fact, some predicted that the internet would actually replace traditional media, like magazines, radio, television and outdoor advertising, as the "channel of choice" for inexpensive far-reaching campaigns.
Then something happened. The dot.coms realized that not everyone has a computer nor is everyone connected to the internet. In fact, only about 40% of all U.S. households have internet access today. Without those eyeballs, the internet as an advertising medium isn't half as attractive as was once purported.
Consequently, the dot.coms are turning to broadcast media for time and space availability, just in time for the critical fourth quarter. Their goal, of course, is to build consumer brand awareness.
And because internet advertising alone is insufficient for generating the necessary volume of "eyeballs," the competitive online companies have discovered that building a strong brand identity means having a forceful off-line strategy to drive consumers to their sites. And it looks like off-line advertising is just beginning.
Incredible Activity Reported
According to Competitive Media Reporting, A New York City advertising research firm, dot.com companies spent more than $750 million on advertising in television, radio, print, and direct mail in the first half of this year. That's three times (300%) the amount they spent in the same period in 1998.
Forrester Research figures the amount is even higher. Their figures indicate that internet companies are spending around $2.7 billion on ads this year, two-thirds of that in the real world. They also believe it's just beginning, suggesting that by 2004 the figures will be $2.2 billion online and $6.3 billion off-line.
"Here Comes The Barter"
A 24-year old bartender and his new bride gave a not-so-typical speech after the usual marriage toast. He was making good on a barter agreement that let him have his wedding cake and eat it, too!
To avoid draining his finances he had persuaded two dozen corporate sponsors to trade with him, providing $30,000 in goods and services in exchange for prominent plugs at his wedding.
For the "sponsors" he guaranteed 250 invitees and six mentions, including the gracious acknowledgments in his speech. A sponsor list was mailed with the invitations and placed on each plate. Each item donated carried a placard touting the giver. And the newly-weds even tucked a sponsor list in their thank you notes.
Reportedly, the sponsors were extremely happy with the trade, inasmuch as all the invitees also received a one-of-a-kind tee shirt listing every sponsor of the day's blessed event...providing long term advertising which went far beyond those at the wedding!
Fogdog Sports Cuts Barter Agreement With Nike
Nike has agreed to an alliance with Fogdog Sports which enables the internet retailer an exclusive internet access to Nike's full line of products for six months, along with volume discounts normally granted to manufacturer's top sales partners.
In return, Fogdog, which has filed for an initial public offering, will give Nike the right to purchase 6.2 million shares, or 12.3% of the company, for sightly more than $1 a share.
Ubarter.com Completes Beta Phase
Steven White, president and CEO of Ubarter.com, has announced that the 5-week beta phase for the Ubarter.com site was a success. The period ran from September 14 to October 22.
"It represents a significant milestone for us," White stated. "Both the media and investment community have begun to grasp and validate the concept of barter as a logical next step in e-commerce," he concluded.
AOL and Gateway Agree To Cash Blend Transaction
The "ubiquitousness strategy" of AOL took another step forward in a barter/cash deal with Gateway computers. Such "blends," where both cash and trade are used for a purchase, are increasingly common these days.
AOL invested $680 million cash and $120 million in barter (AOL shares of stock) for a 5% stake in Gateway. In exchange, AOL gets prominent placement on the desktop screens of all Gateway computers and will assume the operation of Gateway.net--which has 600,000 members.
Gateway not only gets an $800 million investment, but prominent positioning in front of AOL's 18 million users to promote Gateway computers.
Bartering Movie Stars Will Become Dot.com Owners
Film directors Steve Spielberg and Ron Howard are joining forces to create entertainment exclusively for the Web. The new company, POP.com, has $50 million seed money from high-tech entrepreneur Paul Allen, who will own 50% of the company.
POP.com plans to trade with various movie stars, exchanging an ownership stake for their participation. Which could be very valuable down the road, as POP.com proceeds toward an initial public offering.
Coming soon. . .
We welcome your comments, questions, and observations.
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