Egghead.com Hopes DR Campaign Will Boost Online Sales, Shed Retail Image

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A direct response campaign for Egghead.com Inc. is seeking to convert customers of the former brick-and-mortar retailer into online consumers and is helping the struggling company compile e-mail databases.


Egghead.com, Spokane, WA, which last year shuttered its national network of software outlets and became an online-only seller of branded computer software and hardware, said it had built an e-mail list of 2.8 million names by the end of 1997. The company compiles e-mail addresses of Web site visitors through a response window labeled "Join the Hot Deals mailing list."


Also, the company said its list of registered auction bidders for that component of its site increased 35 percent to 326,000 during the third quarter.


Neither the company nor its advertising agency of record, Digital Pulp, New York, would elaborate on how Egghead.com might use those databases to promote its site, saying that such plans were still in the developmental stages.


The current campaign, which was launched in November, helped boost Egghead.com from the 12th-most visited site for e-commerce in November to the seventh in December, according to Media Metrix, New York, which tracks Web site traffic. The site had about 2.93 million unique visits in December, up about 950,000 from November, making it the fourth fastest-growing site in that period, according to Media Metrix.


Before launching the campaign, Digital Pulp created a new logo and image for Egghead.com in an attempt to modernize the brand's appearance.


"To effectively have direct response in this medium, you have to pay attention to branding because people have to know you and they have to trust you," said Lee Nadler, who holds the titles of president, chief executive and lead sherpa at Digital Pulp. "They have to trust you if they are going to actually make a purchase on your Web site."


Although Egghead Software had been a well-known brand in the 1980s, the company had transformed itself into an online-only seller early last year and acquired two other sites, which it merged into its own site in late November. The company had been advertising online since it established the site, but it waited until it had relaunched the site to kick off an integrated online, electronic, print and outdoor campaign.


In addition to making consumers aware that Egghead.com had become an e-commerce company, the campaign also sought to explain to consumers what merchandise was offered.


"There were two major issues when we started with Egghead," said Steven Sacks, chief creative director at Digital Pulp. "First, we needed to convey to the consumer that they were not just software anymore; and second, they had to explain to people that they were now just online. A lot of people thought they went out of business."


The tag line in the branding campaign, "Shop three times smarter," communicates that there are now three e-commerce vehicles at the site -- an auction component, a discount superstore and a liquidation center. The ads also carry imagery from the 1980s to remind consumers that Egghead is an established, credible brand they might recall from the past.


Nadler said the ads that direct consumers to the Egghead.com Web site qualified them as direct response spots in some media, which enabled them to secure lower rates.


"We basically said the '.com' was the equivalent of having an 800 number in the campaign," Nadler said.


In addition to TV, radio and print, the campaign included an outdoor component during December, when the company aired TV spots on a giant screen in Times Square.


Egghead's third-quarter financial results showed that as an online-only retailer, the company had not yet replaced the sales volume it had tallied as a brick-and-mortar operator. Sales for the third quarter of fiscal 1999 totaled $41.86 million, down about 57.8 percent from sales of $99.12 million in the year-ago third quarter.


In the year-ago period, Egghead.com had generated $75.46 million from its retail stores and $23.66 million from online sales.


The company's losses deepened for the period, however. The loss for the recent quarter was $8.87 million vs. a loss of $6.63 million in the prior-year quarter.
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