ADVO Accelerates Its Internet Presence

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Shared direct mail giant ADVO Inc. last week formed a new online subsidiary called ShopWise.com. The move reflects a recent increase in dot-coms interested in marketing through direct mail, executives said.


The ShopWise.com subsidiary will handle all facets of ADVO's Internet ventures. To date, ADVO's largest effort was the acquisition of Netserts.com in March. Netserts.com is essentially the dot-com section of ADVO's ShopWise shared direct mailer -- formerly called Mailbox Values -- which reaches 60 million homes weekly.


ADVO changed the name of Mailbox Values to ShopWise earlier this year to reflect planned diversification. "Part of the thinking there was it expands the paradigm of what we're about outside of the mailbox," said Chris Hutter, vice president of investor relations for ADVO, Windsor, CT. "Mailbox Values is too confining compared to where we wanted to be in the future."


ADVO distributes Netserts.com to 10 million households monthly. However, the company expects this number and frequency to increase quickly.


"I can see a time when Netserts.com could evolve to a place where we could have a dot-com section and brick-and-mortar section [equally divided in the ShopWise mailer]," said Hutter.


Nationally, 23,000 retailers advertise in the ShopWise shared mailer. However, this number has been growing as the number of Internet companies looking to draw traffic through traditional direct mail has increased rapidly in the past three to six months, according to Hutter.


"What's going on is essentially we're starting to see some nice growth in our dot-com business," he said. "A lot of that money had been spent on electronic advertising and branding. But as you know, the dot-coms of the world are increasingly being held more accountable for hit rates and a business model that's going to make some money. Print-on-paper ads have enormous effectiveness, if targeted the right way, for driving traffic to Web sites."


The subsidiary's other major role will be to create online partnerships that fit in with ADVO's core business plan. "It's safe to say that ADVO will look to strategic acquisitions that complement the business," said Don McKenzie, newly appointed president of ShopWise.com. "ADVO has shown a willingness to make strategic acquisitions and coordinate them into their core business."


Many traditional direct marketers have been slow to the Web, and ADVO is no exception. "What's going on right now with direct marketers is that there's a lot of experimentation. It's going to evolve," said Hutter.
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