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
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
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.