DYNAMIC: NO SALE, NO REWARD FOR CLICK

Marketer Seeks Higher Returns for its Clients
September 25, 2000
By Alby F. Gallun


Crain's Magazine

A Chicago-based Internet marketing company is tapping into the growing discontent of online merchants fed up with low returns on Internet advertising.

Dynamic Trade Inc. aims to capitalize on the trend toward performance-based advertising programs in which advertisers pay for ads on Web sites only if they generate sales. Since its founding in 1998, Dynamic Trade has set up such programs for companies like Eddie Bauer Inc., Discover Financial Services and Orvis Co.

Like a traditional media buyer, Dynamic Trade places ads for clients on Web sites frequented by customers that the clients want to reach. While most advertisers typically pay a graduated fee based on the Web site's traffic, Dynamic Trade's clients pay only if the site generates a sale.

For instance, if a visitor to BizRate.com clicks on an ad for eddiebauer.com and buys a shirt on the Web site, both BizRate.com and Dynamic Trade will get a cut of the sale.

Dynamic Trade faces a challenge convincing Web site operators accustomed to collecting a fee for every Web surfer who visits their sites that they should be paid only when the advertiser makes a sale. But CEO James Crouthamel says advertisers dissatisfied with the current system will eventually force Web sites to accept pay-for-performance programs.

"We're starting to see a huge wave of the dollars trying to go through this channel," he says.

Massachusetts-based Forrester Research Inc. predicts that performance-based advertising will account for 53% of $22 billion in projected U.S. online marketing spending by 2004, up from 15% of an estimated $2.8 billion in 1999.

Unlike a typical affiliate marketing program, which links up with a broad range of Web sites, Dynamic Trade takes a more targeted approach, which is good for advertisers worried about diluting their brands, says Jodi Watson, senior marketing manager at eddiebauer.com.

"Being on thousands of sites was not our goal," she says. "We really like to have our partners measured by the value that they're bringing."

The retailer projected that sales generated by Dynamic Trade would account for about 5% to 10% of its total sales, a projection Dynamic Trade is exceeding, Ms. Watson says.

Dynamic Trade employs about 50 people, up from 15 at the beginning of the year, Mr. Crouthamel says. He declined to disclose sales.

Earlier this month, Dynamic Trade landed $7 million in a second round of venture capital financing led by Chicago-based Tribune Ventures, Tribune Co.'s venture capital arm. The investor group also includes Northbrook-based KB Partners LLC and Northfield-based Portage Venture's Greystone Venture Fund.

© 2000 by Crain Communications Inc.