BRAND SPEND ANALYSIS: Lastminute.com will need to sustain its adspend to keep ahead of the pack

By JAMES CURTIS, campaignlive.co.uk, Tuesday, 30 May 2000 12:00AM

The collapse of Lastminute.com’s share price after the company’s flotation heralded the start of the dotbomb season, with investors now much more cautious about the prospects for internet-based businesses.

The collapse of Lastminute.com’s share price after the company’s

flotation heralded the start of the dotbomb season, with investors now

much more cautious about the prospects for internet-based

businesses.



The recent collapse of Boo.com is a good example of the dilemma facing

web ventures. On one hand, they need to spend serious amounts of cash to

promote their services and build market share; on the other, their cash

burn rate is so high they risk fizzling out because of insufficient cash

flow from sales.



Lastminute is luckier than many of its rivals in that it still has a

huge cash pile to burn and high levels of brand awareness. However, does

the level of its advertising bode well for future success?





Agencies: Lastminute uses New PHD for its media planning and buying, and

M&C Saatchi for its creative work.



Total spend and the media mix: Lastminute spent pounds 1.19 million on

advertising in the year to March 2000, significantly less than dotcoms

such as Lycos, EBookers and LetsBuyIt.com. Its level of advertising

spend has dropped in recent months, in stark contrast to the rapid

overall rise in dotcom advertising expenditure.



Unlike other big internet companies, Lastminute did not incorporate

television into its ad strategy. Spend was focused on outdoor, (44 per

cent), radio (36 per cent) and press (20 per cent). This is a very

different profile to that of the top 50 dotcom advertisers overall,

where television accounts for 37 per cent of spend and outdoor just 15

per cent.



Spend details: Adspend was concentrated in November 1999, with pounds

482,879 spent on outdoor alone in that month. This was followed by a

large radio campaign running in December and January. Outdoor

advertising stopped in January 2000 and total spend fell to less than

pounds 100,000 a month after that. Outdoor and radio advertising were

heavily biased towards the London area, with London radio stations

taking 94 per cent of radio spend while outdoor campaigns focused on

London Underground sites. A third of press advertising spend appeared in

the capital’s titles, with the remainder in quality dailies (44 per

cent), weeklies and travel titles.



Conclusions: Lastminute has its advertising work cut out in the coming

months. Dotcom advertising in general is rocketing and it will be hard

for any brand to achieve standout. Lastminute is vulnerable to

competition from US-based rivals and is also facing threats from more

traditional players such as the internet travel agency recently launched

by 11 of Europe’s largest airlines.



On a positive note, the company benefits from first-mover advantage and

its well-known brand name - so there is little danger of it turning into

Lastgasp.com. However, if it does not increase and sustain its adspend,

and widen both its distribution channels and products, Lastminute risks

being eclipsed by the competition.





Research by AC Nielsen MMS tel: 01344-627553 www.mediamonitoring.com.



This article was first published on campaignlive.co.uk

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