Just over a week ago, Utility.com landed $30 million (US$) in venture capital from Trident Capital and Idealab!.
The cash must have been burning a hole in Utility.com’s pocket, because a few days later, the Albany, California-based company unloaded a chunk of it by paying the highway tolls for thousands of Boston-area drivers in the midst of a busy Friday afternoon commute.
The publicity stunt, which gained minor local press coverage, cost the company $30,000, according to officials at the Massachusetts Turnpike. But that does not include the 200-plus advertising spots on local radio stations that touted the toll-free day for a week in advance.
Of course, Utility.com created plenty of goodwill among drivers heading home on a Friday evening. And maybe some logged on when they got home and checked out what the firm has to offer. The problem lies in what they found, or should I say, what they did not find: Utility.com is up and running, but many of the company’s product offerings are “coming soon.”
Unfinished Mouse Trap
This incident begs the question of how wise some of the marketing and publicity efforts of dot-com companies have been, especially since e-commerce has supposedly entered a new era. In the new e-commerce marketplace, actual monetary profits are going to be much more important than market share or statistics such as unique visitors and Web pages viewed per month.
To boil it down to a cliche: If you build a better mousetrap, buyers will beat a path to your door. Theoretically, at least, it should not matter if that door is made of bricks and mortar or exists only on a server locked up tight in a dark building somewhere.
But the Internet is a hyper-competitive environment and everyone knows the value of being the first name consumers think of when they consider making a purchase. In other words, every company wants to be the Amazon.com of its segment.
However, if memory serves, Amazon started out as the world’s largest bookstore. Maybe I lead a sheltered life, but I first heard of Amazon by word of mouth and was able to place an order the first time I visited. In other words, Amazon had all — or at least most — of the pieces of its mousetrap in place before the company threw open its doors and began shouting “Come and get it!” to the world.
Remember Cozone.com? If you do, it is probably because parent company CompUSA spent $17 million on advertising during the last three months of 1999 alone. One of the ads, featuring Donald Trump attempting to make a pottery bowl, won a major advertising award. It is now the second quarter of 2000. Do you know where Cozone is?
Pretty much gone, is the answer. CompUSA announced in mid-March it would back away from its e-commerce effort and review how it could better merge bricks and clicks. If experts are to be believed, the e-commerce graveyard will be full of plenty of Cozones by the end of 2001 as cash — be it venture capital or money raised through IPOs — continues to burn at an alarming rate.
So what is the alternative? It is now too late in the game to simply build a great site, sit back and hope that word spreads. Too many brands are trying to muscle each other out of the same space.
Some credit must be given to Utility.com for not resorting — at least not yet — to the tactics of one competitor, Essential.com, which direct-mailed fake checks to potential customers last year.
Utility.com says it is working hard to forge partnerships and win regulatory approval so it can sell all of its products in all markets. But timing is still everything. For every visit to its unfinished site, there may be a pair of eyes that will never see the finished product.
Buzz Springs Eternal?
The company is clearly hoping the boost from its stunt will last for a while. “This is the kind of event people will talk about for an extended period of time,” Robyn Forman, the firm’s director of marketing said on Friday.
She may be right. But consider the guy who arrived home Friday evening, loosened his tie and logged on to Utility.com. He may have been ready to thank the company for his free ride — was possibly even prepared to save himself some money on natural gas or long distance or DSL service.
Instead of buying something, all he could do was leave his e-mail address for Utility.com to notify him when things are running at full speed — or he could make a mental note to check back later.
Given the instant gratification consumers have come to expect from the Internet, it is hard to imagine him doing either.