CVS Takes Conservative Approach Toward Building Online Traffic

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CVS.com, fresh from a test-phase ad campaign, will roll out a larger marketing push next month that bucks the Internet industry trend of throwing bundles of money at advertising to increase site traffic.


"We have the luxury of doing [our marketing] rationally, not spending $50 million just to see what happens," said Mike Hartmann, vice president of marketing at CVS.com. "The site's not going to be an overnight sensation."


It isn't that the company, which spends roughly $200 million in advertising annually, is being stingy. Instead, the Seattle retailer wants to "see what kind of commitment is necessary to really move the needle for the dot-com business and to find out what markets we need to be and at what spend levels," Hartmann said.


The online arm of drugstore chain CVS Corp. is in the middle of a three-month test campaign in Raleigh-Durham, NC. It began experimenting with three commercial spots that emphasize CVS as an established company that consumers can trust.


The commercials, created by Goldberg Moser O'Neil, San Francisco, began their run in mid-November and will air until the end of this month.


In the meantime, CVS.com has been using the company's 4,200 stores to reach its primary market of women ages 25 to 54. The address is promoted on register tapes, broadcast on in-store radio and printed on store bags. It is mentioned during the interactive voice response system that customers use to get prescription refills and also reaches 35 million households via the pages of the CVS weekly circular.


"We're leveraging all of the current customers through the stores," Hartmann said. "[CVS.com] is looking to convert these customers efficiently and effectively."


CVS is smart to avoid a knee-jerk reaction to all of the new online competition, according to H. Peet Rapp, senior research analyst at ActivMedia Research, Peterborough, NH. "They're not going to get lost in the noise by jumping into a market they're not prepared for," he said.


The company also has moved cautiously with its online marketing. It has 10 pieces of banner advertising spread across 20 sites, many of which are niche health sites. In2, New York, is handling the online creative.


CVS is in the process of generating e-mail addresses for future marketing efforts. "Hundreds of thousands of customers have made their e-mail addresses available," said Hartmann. "[E-mail marketing] is an important arsenal as we move forward."
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