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Books
It's a bubble, all right!
In "Irrational Exuberance," Robert Shiller credits investors' folly with keeping the bull market on its feet.
By Thomas Scoville
[05/02/00]

Column
Sayings of Chairman Bill
Gates' Microsoft defense is full of holes, but so is the government's breakup plan.
By Scott Rosenberg
[05/01/00]

Technology: View from the top
On the record
RIAA chief Hilary Rosen defends the music industry's recent litigation against Napster and MP3.com.
By Janelle Brown
[05/01/00]

Is it time to buy Microsoft?
Wall Street has pummeled Bill Gates' stock price -- and the reasons are more psychological than financial.
By Steve Bodow
[04/28/00]

After the fall
Executives at Women.com, VA Linux, Productopia and others forge a path into post-market correction Silicon Valley.
By Janelle Brown, Damien Cave and Andrew Leonard
[04/28/00]

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Having started with just $5.8 million in seed financing, you squandered more than half of your capital in less time than it takes to soft-boil an egg. Congratulations! That fancy caper puts your little start-up in the running for the hotly contested title of Fastest Dot-Com to Piss Away the Greatest Percentage of Its Funding. And now it's time to -- what else? -- dust off your pitch and raise more money! How excruciating it must be to meet with potential investors, when the one thing your company is known for -- if it's known for anything at all -- is having the genius (or stupidity) to spend money at the rate of just under $38,889 a second.

Or not. Computer.com, a hand-holding help site for novice computer users, did actually run through 60 percent of its funding in 90 Super Bowl seconds. But Michael J. Ford, the co-founder and president of the Maynard, Mass., company, is still sporting that smile. I quizzed him about the red-faced reactions he must surely get from investors as he seeks more funding. Doesn't cartoon steam shoot out of the ears of the blustering moneybags as they roar: "Kid, you just spent $3.5 million in less than two minutes. Why should I give you, of all people, any of my money!?"

Ford assured me that he's met with no such open indignation: "They probably wouldn't say it to my face," he says.

Besides, Computer.com is hardly alone in this. It's the morning after for the 17 dot-coms, both early stage start-ups and publicly traded companies, that shot their multimillion-dollar wads at the Super Bowl last quarter -- driving the price of a 30-second spot up to a record $2.2 million. Just three months later, with the NASDAQ seesawing wildly, the public markets' once-rabid desire for anything dot-com has chilled, and even the public dot-coms that snuck their calling cards into investors' psyches during that great haze of beer, snack food and a St. Louis Rams victory are now trading below their late January price. Few of the sites have enjoyed a demonstrable growth in traffic, or can point to any big deals that were nudged into the end zone by Super Bowl advertising.

It can't be pretty for the big spenders who've got to justify their Super Bowl blowouts to shareholders and investors. They're certainly not getting a warm reception from the likes of Donna Novitsky, a partner at Mohr, Davidow Ventures in Silicon Valley: "Advertising in the Super Bowl was kind of a ludicrous thing to begin with," she says dismissively. "It's a very untargeted way of reaching consumers." So, why did this horde of mostly fledgling and unprofitable dot-coms do it? Novitsky's theory: "I think it's an ego thing ... It was really a sign of excess."

January's Super Bowl strut left Neil Weintraut of 21st Century Internet Venture Partners similarly unimpressed. "This year, advertising on the Super Bowl amounted to keeping up with the Joneses," he says. He fantasizes about all the more "heretical" things a company could have done to squeeze more buzz out of the same budget, like give away 100 Volkswagen Bugs. "The key thing is to do something that someone hasn't done before. The key thing you want to say to consumers when you're launching a company is, 'I'm an innovator,' and you're not going to do that with the Super Bowl."

In 1999, only three dot-coms advertised nationally in the Super Bowl -- and got tons of media attention for doing so. But this year Net companies packed the game like sardines: AutoTrader.com, Britannica.com, Computer.com, Epidemic.com, E-Trade.com, Hotjobs.com, kforce.com, LastMinuteTravel.com, LifeMinders.com, Monster.com, Netpliance.com, OnMoney.com, Oxygen.com, OurBeginning.com, Pets.com, Webex.com and WebMD.com. Even ad aficionados would have trouble remembering all the companies that warred for extravagantly priced air time.

Mitch Davis, senior vice president of marketing for Britannica.com, is amazed by the "irrational marketing" expenditures exhibited by the wet-behind-the-ears dot-coms. "In two or three years, we're going to look back and wonder how the hell did a company with $6 million in capital spend half of it in less than two minutes," he says. But when he admits, "I have the luxury of saying that because we have a brand" -- implying that Britannica is justified in spending millions on ads just because it has a long history of doing so -- he sounds just as delusional as the unknown start-up founders who continue to argue that the Super Bowl was a fabulous investment.

So, what exactly did those dot-commers get for the money? It may be all Monday-morning quarterbacking, but in retrospect, the bottom line looks like a bit of gawking press coverage and a temporary uptick in site traffic, but nothing so lasting that it could be called "brand building," and nothing so irrefutably valuable -- except for maybe that priceless ego-gratification -- that it could possibly justify the huge expense for a whole batch of unprofitable companies.

"They would have been better off had they taken the money that they spent on Super Bowl advertising and gone to Vegas," says David Stewart, professor of marketing at the University of Southern California's business school. "I think the odds of a positive outcome of spending those dollars would have been higher in Vegas than in a one-time ad on the Super Bowl."

Next page | How much can buzz can you buy with $25 million and a glamorous drag queen?