The advertising account for EarthLink Network Inc. is sort of like a White House intern: It seems very tempting until you actually start a relationship.
Two of L.A.'s most highly regarded ad agencies have flirted briefly with EarthLink, landed what they thought was an account with enormous potential, and then dropped the Pasadena-based Internet service provider like a hot rock. When this sort of thing happens, a company can't avoid getting a reputation around town as a "difficult" client.
"It's possible that with my analytical way of looking at things, I've given people fits and starts," admits Brinton Young, EarthLink's senior vice president of marketing. "I'm probably not the easiest client in the world to work with."
Last month, EarthLink hired Marina del Rey-based Ground Zero to handle a test project worth $2 million to $3 million. Just three weeks later, Ground Zero said thanks for the business, but no thanks.
That came after West L.A.-based Mendelsohn/Zien Advertising Inc. had dropped the same account after four months.
What gives? According to Mendelsohn/Zien Managing Partner Richard Zien, EarthLink wanted to handle the account on a freelance basis, refusing to sign a contract with the agency.
"We believe that to build a client's business, we need to assign a dedicated team that's going to work with a client for an extended period of time," Zien said. "You really can't do that without a contract."
Meanwhile, Managing Partner Jim Smith at Ground Zero says his agency knew going in that EarthLink wasn't going to sign a contract, and didn't have a problem with that. He just found the client's experimental nature hard to deal with.
"They're not terribly experienced at working with ad agencies," Smith said. "They haven't had an agency before, and it just seems like they should go about the process on their own at this point."
For a relatively new company managed largely by young executives, EarthLink is pretty conservative when it comes to spending money. Perhaps that's because it's losing so much of it the company reported a loss of nearly $60 million in 1998. But like many other Internet companies it has raised a pile of money on Wall Street, and its stock is soaring.
It also has the potential to be an extremely large account, which is why agencies like Ground Zero and Mendelsohn/Zien were attracted in the first place. Though the current job is only a test, trade publications have suggested that EarthLink's overall advertising account might grow to as high as $50 million a year within a few years and Young confirms that's not far off the mark.
"If we can find cost-effective (advertising) programs, $50 million is a small budget for what we might do," Young said.
But cost-effectiveness is the key. EarthLink is in the middle of a series of tests of marketing programs, including conventional advertising, direct mail, coupons, retail kiosks, Internet banners, promotional tie-ins with retailers, etc. Young says the company is trying to find the most efficient possible method of marketing in other words, the methods that bring in the most new subscribers for the least money.
Young says the company is very close to finding that ideal marketing program, though he declined to provide details.
Zien said there are no hard feelings. "I respect what they're doing," he said. "Maybe once they find what they're looking for, they'll be willing to lock in."
Smith agreed. "This is a very cordial split between us," he said. "I think they're tremendously nice people."
There are P.R. agencies that tie their compensation to results, and others that even guarantee media placement. But agency owner Michael Levine is breaking new ground: He's offering a money-back guarantee.
Levine, of Levine Communications Office, says he'll refund his agency's fees to any client who isn't satisfied.
Levine, the author of books on do-it-yourself marketing for small businesses and charities, said the money-back guarantee is tied to the marketing concept of risk reversal you'll attract more customers by taking on more of the risks of a business transaction.
The agency's 11 staffers weren't exactly thrilled about the idea at first; after all, they stand to lose their commissions if clients pull back their fees. But Levine, whose company has traditionally represented celebrities but is trying to attract more corporate accounts, is convinced that the idea will ultimately pay off.
"If we lose 2 percent (of revenues) a year but pick up, through the boldness of the gesture, a 20 percent increase, that's how risk reversal works," Levine said.
One of L.A.'s larger independent P.R. agencies is getting a new name, as well as a pair of new partners.
Investor relations agency Pondel Parsons & Wilkinson based in West L.A. is now known as Pondel/Wilkinson Group. The name change was some time in coming; Craig Parsons left the company in 1997 to head corporate communications at one of the agency's clients, Metro-Goldwyn-Mayer Inc., but it took until now for the remaining principals to take his name off the letterhead.
Two of the agency's top executives, Gary S. Maier and Robert M. Whetstone, have been elevated to principal, meaning they have an ownership stake.
"As the largest owner, I believe in sharing that ownership with people who deserve it as an incentive," said CEO Roger Pondel. "In our industry, as in every industry, the finding of excellent people is very, very difficult."
News Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.
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