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The growing number of Internet users has caught the attention of businesses both large and small, which are spending an ever-increasing percentage of their advertising dollar on this relatively new medium. According to the Internet Advertising Bureau, an industry trade group, Internet spending on advertising in the first quarter of 1998 rose to more than $350 million, an astounding increase of 271 percent from the same period in 1997.
There are some very good reasons advertisers are flocking to the Internet, says Pete Petrusky, director of entertainment and media at PricewaterhouseCoopers LLP. "Those motivations include the targeting potential of net advertising, its interactivity, the high levels of user involvement, and the metering systems that are able to measure the type of traffic being delivered," says Petrusky.
To get the best value for your advertising dollar, Petrusky says, you must first determine what your marketing objectives are. "There's no such thing as a typical return on investment in Internet advertising," he says. "The ROI really depends on what the company wants to achieve and what audience it's trying to reach. If it has a product or service targeting a specific demographic and it knows that demographic is online, then it can reach them. Internet ads can also help test market products and services. The unique interactivity of this medium allows businesses to get feedback, generate leads and even close sales. And, of course, they can sell products on this medium."
Petrusky suggests that small businesses that advertise on the Internet should leave expensive branding ads (ads intended to create or extend brand awareness, such as the "Think Different" campaign from Apple) to the big guys and concentrate on selling their products or services. "It's probably more cost effective to use the medium as a direct-marketing vehicle rather than a branding or advertising vehicle," Petrusky says. "There are many advantages to online direct marketing. There's no paper, no postage, call-to-action responses are shortened, and companies can be more responsive to their customers. In terms of selling products, it's a whole new ballgame."
An eye on the future: In July 1998, Binary Research sold the rights to the software to Symantec Corp. Innovative Software has since acquired a more powerful cloning software package, ImageCast IC3.
"Before, I had to go out and [promote] the need for cloning software because people didn't understand how it could be useful," Luty says. "But it should be easier now that people are familiar with the concept."
Name and age: Jim Luty, 44
Company name and description: Innovative Software Ltd. markets software utilities that allow network administrators to quickly copy and transfer applications from a network server to multiple PCs.
Start-up costs: $6,500
1998 sales: $25 million
Number of employees: 25
Ghost story: As a computer consultant, Luty often spent long hours loading software into each machine of a large network. On a friend's recommendation, he downloaded Ghost from its developer, Binary Research in New Zealand. Impressed, Luty bought 50 copies and canvassed computer outlets for buyers.
Despite its apparent usefulness, retailers found the utility too expensive, so Luty offered shareware demos of Ghost to members of AOL and CompuServe. "The demand was definitely out there," says Luty, a former computer retailer himself.
Luty then created his own Web site and began advertising the site in newsgroups frequented by computer consultants like himself. Once sales picked up, he signed an agreement with Binary Research to be the worldwide marketer of Ghost and opened Innovative Software Ltd., running the business out of his home.