Hits & Misses
(Business 2.0) – [HIT] You're fired. Well, on second thought ... Product placement is risky business, since there's always a chance that your brand will be associated with something unsavory. And indeed, Unilever's tie-in with NBC's The Apprentice looked disastrous after both teams of contestants, assigned to create an ad for a new cucumber-scented Dove body wash, produced laughably bad clips, including one that verged on the pornographic. No matter: After declaring both teams losers, the Donald emceed an airing of Dove's real ad, resulting in the distribution of 400,000 free samples to curious consumers.
[MISS] Look before you Leap. Toy companies love the holiday season, but there was no yuletide cheer at LeapFrog Enterprises last year. Hoping to mimic the success of its LeapPad device for kids ages 4 to 8, the company released more than 15 new products for everyone from toddlers to teens. Alas, the problems with this plan were twofold: The rapid expansion bloated costs, while distribution problems allowed Mattel's competing PowerTouch device to siphon off market share. Fourth-quarter sales fell by 23 percent from the previous year, leading to a $9 million loss. The company laid off 16 percent of its staff and announced yet another overhaul of its product line.
[HIT] Standing out. America's ardor for online dating seems to be cooling--but love is proving an easier sell for gays and lesbians. While Match.com saw revenue increase just 7 percent in 2004, PlanetOut, parent of Gay.com, reported that its subscription revenue rose 32 percent. Better yet, its churn rate fell by 23 percent, even as it raised its fees by $2 a month. PlanetOut attributes the reduced churn to its success in pushing prepaid annual subscriptions via enticements like free magazine subscriptions. New users, meanwhile, were lured by a controversial $1.7 million outdoor and print campaign, which included ads featuring two half-naked football players under the slogan "Play for Keeps."
[HIT] Less is more. Originally conceived as a way to boost online filing among poor and elderly taxpayers, the IRS's Free File Alliance has turned into a marketing free-for-all, with several services offering no-cost 1040s to all comers. Intuit, the world's largest maker of tax-prep software, joined the fray this year, lifting income caps that restricted free access to its popular TurboTax Online. Though the strategy is, um, counterintuitive, it seems to be working: Intuit reported that, in the early part of the tax season, the number of free filers it served nearly tripled from last year, yet overall TurboTax unit sales still rose 6 percent in the quarter. Free filers tend to be new to online tax preparation, the company noted, and most end up spending $10 or more for state tax filing and other services.
[MISS] Frogs, boils, plague--and a wiener shortage? After ConAgra subsidiary Hebrew National ran into production problems at its new $37 million plant, retailers nationwide reported shortages of kosher meat products. Smaller competitors seized the opportunity: Abeles & Heymann, a $3 million producer of kosher foods, said its sales have grown fivefold during the shortage, and Empire National said its Brooklyn plant nearly maxed out production. ConAgra announced that its earnings will take a $25 million hit and the shortages won't end until well after this month's Passover season, thus doing a major mitzvah for its smaller rivals.
[HIT] Smart and smarter. DaimlerChrysler wowed crowds at the Detroit Auto Show with its two-seat Smart car, which, at 8 feet in length, can park perpendicularly in a parallel spot. But when it came to selling it in the States, the company demurred, saying it would roll out a Smart mini-SUV in 2006. Sensing an opportunity as gas prices rose, Zap, a Santa Rosa, Calif., firm best known for selling electric cars, circumvented Daimler by spending $10 million to import Smart cars from European Daimler dealers. The results surprised even Zap: 10,000 buyers put their names on a waiting list, and U.S. dealers placed orders worth $55 million.