(FORTUNE Magazine) – Dustin Grosse is sitting on the edge of his seat in a conference room at the ad agency Young & Rubicam in San Francisco. Grosse is the brand manager for Covad, a Silicon Valley company that sells high-speed access to the Internet, and he is about to review Y&R's final cuts of two television commercials. They will be the centerpiece of a $40 million, yearlong, coast-to-coast marketing campaign designed to trumpet little-known Covad as a broadband leader. A lot is at stake, especially when you consider that Covad's sales for the past 12 months totaled just over $20 million, or half its marketing budget. But what really has Grosse anxious right now is one of the spots. At last viewing, the supposedly humorous piece had fallen flat. And there are just two weeks left until the campaign launch.

The lights dim, and the commercials' director cues the first spot. The scene: a yoga studio bathed in warm, late-afternoon sun. An instructor oozing New Age smarminess gently tells his students to "assume the jasmine-blossom position, and I'll print the moon charts." But there's a problem: Dialing up the Internet on his standard-issue 56K modem to download the moon charts, the yoga man can't connect. Stung with the same frustration that has bedeviled virtually every Net surfer at some point, he loses his Zenlike cool, screams, and smacks his PC. Title cards pop up that read, in succession, FASTER ACCESS and ALWAYS ON, ending with the just revamped Covad logo. Grosse's tension evaporates. "Wow, I'm really impressed," he says with a laugh. Unlike the earlier version, the spot is funny and the message clear. The Y&R creative team smiles with satisfaction.

All across the Net landscape, contenders like Covad are spending huge sums on advertising to ascend to the heights of Yahoo, Amazon.com, and other divine online brands. According to Competitive Media Reporting, a New York City advertising research firm, Net companies spent more than $750 million on advertising in television, radio, print, and direct mail in the first half of this year, three times the amount they spent in the same period in 1998. HotJobs.com, for example, is spending up to $12 million over 18 months on advertising, even though it has only $8.8 million in annual revenue. And online technology-information provider CNET, which recorded $45.6 million in sales in the first half of this year, launched a $100 million marketing push this summer. "Everyone believes time is running out to establish leadership positions on the Internet," says John Yost, a founder of Black Rocket, the San Francisco ad agency that produced hit spots for Yahoo and Discover Brokerage. Indeed, a campaign as sweeping as Covad's usually needs 14 months; Covad is rolling it out in 90 days.

Money and speed, however, don't guarantee a bold, fresh strategy. Conscious of that, Covad CEO Robert Knowling insists, "We are not going to spend $40 million experimenting." To learn how Covad plotted its approach, FORTUNE recently trailed the company's marketing team as it prepared to launch its campaign--which will hit eight cities, including New York, San Francisco, and Seattle--on Oct. 10.

When Grosse and his team began plotting the campaign three months ago, they had to start from scratch. Covad has been in business since 1996, but other than avid Net surfers and investors who caught its January IPO, few consumers know about the company. In fact, not only do Grosse and his team have to create a brand, but they also have to introduce and explain the very nature of Covad's business. That's not an easy task. Covad sells high-speed, or broadband, access to the Net through digital subscriber line (DSL) technology. DSL uses existing copper telephone wires to deliver "always on" access to the Net, meaning users don't have to dial up a connection with that familiar modem squeal; DSL is faster and costs about $300 to install and $49 a month in service. There are lots of different versions of the technology and plenty of competitors: North Point, Rhythms NetConnections, and Baby Bells like SBC and Bell Atlantic. Covad needs a sharply defined brand to separate it from that pack.

You won't hear the acronym DSL--or any tech jargon at all--in Covad's TV, radio, or print ads. Grosse and Covad's product marketing chief, Richard Wong, bet that Net users were fed up with techno-garble advertising. "We have to make the advertising as mind-numbingly simple as possible--otherwise, grandma in Cincinnati won't buy our service," says Wong.

Wong and Grosse pitched to grandma when they worked together at Procter & Gamble, hawking Puffs and Charmin. Believe it or not, selling broadband is a lot like selling toilet paper: The marketing challenge is to strike the right tone and instill a unique "personality" in a product that's pretty much the same no matter who offers it.

Most Net firms have wielded wacky, even dark humor to set themselves apart. Outpost.com showed gerbils shooting out from a cannon, while one Beyond.com ad features a buck-naked man working at home via the Net. Covad flirted with off-the-wall stuff, like a comic TV spot featuring an amorous couple frustrated when they can't log on to an S&M Website, and a print ad that displayed just one line of text: "Remember back in high school when fast and easy was considered an insult?" But Bob Roblin, Covad's executive vice president for marketing and sales, killed both ideas. "I think women are starting to overtake men on the Net as the primary purchaser of services, and sexual innuendo is creating a backlash," he says. Roblin thinks milder comedy will appeal more to a mainstream audience.

If Roblin is right, the upside for Covad could be enormous. Beyond reaching consumers and businesses, Covad's campaign must make a big splash with Internet service providers. Covad is a wholesaler, with no direct retail relationship with its customers. Covad's ISP partners, like Mindspring and Concentric, actually sell the service, pitching it to their subscribers. If the campaign stimulates a groundswell of demand for Covad DSL, more ISPs will be driven to seek a partnership with the access provider--which will boost the top line, thus achieving the ultimate, measurable goal of all the advertising. "My orgasmic dream is partnering with AOL," effuses Dan Estabrook, Covad's consumer marketing chief. (AOL now has partnerships with several Baby Bells.)

Back in the TV meeting at Y&R, Grosse and Roblin watch the second spot. They like it as much as Yoga, though Roblin suggests one important change for both: He wants to insert a tag line at the end that says, "The Internet as it should be." In a nutshell, that's the proposition Covad is selling to the marketplace. If it takes, the $40 million will have been worth it.

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