The advertising industry is having the toughest time in a long time—perhaps ever. Yes, it’s because of the recession. But it’s also because of the change wrought by the digital restructuring of marketing com-munications. Suddenly, everything is different. Ad budgets are waiflike. Creativity is measured by ROI based on clicks. And the mood couldn’t be in starker contrast to the last time that the Internet handed us an overnight revolution.

C’mon, you remember. It was the age of e-everything, including excess: overnight stock-market millionaires, unchecked bud-gets, nonsensical brand names and creative license without limit. Back then, dot-com upstarts replaced the idea of building market share with grabbing share of mind, and ad agencies were the alchemists burnishing the IPO pot of gold that surely awaited all those entrepreneurs, many of whom were barely old enough to order a beer.

Chances are you remember how it all turned out, too. The era found a fitting mascot and metaphor in the Pets.com sock puppet—blissfully happy and ultimately hollow. Pets.com burned through $300 million of investment capital in less than two years, spending $1.8 million on marketing even as it took in an anemic $619,000 in revenue in its first eight months. Who cared? The idea alone was sufficient. A business model of shipping 60-lb. bags of discount dog food was enough to have investors sit and stay.

For a while, anyway. Pets.com raced from IPO to liquidation at greyhound speed, followed by many other business-to-consumer brands. But things were good while the money lasted—and much of the money was dropped on marketing (ironically, often via old-media vehicles like TV). We estimate that from February 1998 to October 2000, 413 dot-com marketers spent about $6.5 billion in advertising.

Those days are gone forever, of course, and we’ll probably never see the likes of them again.
 
But the vantage point of 10 years’ distance gives us a unique chance to look back at the frontier days—or, more specifically, to get those who were there to look back on it. We’ve tracked down some of the era’s best and brightest, and asked them to recollect those halcyon days. To follow is the informal oral history they gave us. —The Editors



1983 Martin Nisenholtz set up the Interactive Marketing Group for Ogilvy & Mather, N.Y., the first such development unit at a major U.S. ad agency focused on interactive communication. For clients like TWA, American Express and General Foods, Nisenholtz  worked with early platforms like interactive TV and CD-ROMs.

Martin Nisenholtz, svp, The Ogilvy Group: Jerry Levin at Time Inc. was planning a massive teletext [text-based broadcast] service and went to agencies like Ogilvy to start R&D on how advertisers could use it. These were precursors to Web pages, all proprietary closed-end systems. The largest was Quantum Computer Services, later renamed AOL; CompuServe for early versions of the PC; and Prodigy. It was very crude. No broadband, very slow dial-up access and most pages were text. There were no browsers and no easy way to access. It was the early ’80s, and it was very lonely doing this kind of research. There were no other agencies doing it—just entrepreneurs in their own companies. I remember running into an [Ogilvy] art director on the street, and he said, “If we fired you, we could hire two more art directors.”

1984 Online service provider Prodigy was created as a joint venture among CBS, IBM and Sears. By 1990, Prodigy would become the second-largest ISP, with 465,000 subscribers trailing CompuServe’s 600,000. In the 1980s, Prodigy tapped PR giant Burson Marsteller to handle its marketing. As Prodigy’s service got more visual—CompuServe was still text-based—Burson worked with WPP corporate sibling, Young & Rubicam, to create TV ads.

Frank Simonelli, director of Burson’s new media group working on Prodigy: In the late ’80s, the big question was target audience. As with most new technology, we targeted early adopters and hobbyists. Print was a good medium; we didn’t have the critical mass for TV. We did some spot TV in major markets, but they didn’t get the return they hoped and were pulled. The challenge was, is this a brand promotion or a category promotion? We didn’t want to advertise the Internet; we wanted them to use Prodigy. The other question was, do we try to get people to buy PCs or go after people who had PCs? It was a chicken-and-egg thing. Prodigy didn’t want to promote the Internet and didn’t want to spend money to promote the competition. In focus group after focus group, we’d ask if they would buy a PC to use Prodigy and most people said no. It was a novelty.

1994 The start of a $24 billion business: HotWired.com, the Web’s first commercial magazine, was the first to sell banner ads on a large scale and helped to pioneer the primary source of commercial revenue on the Web during 1994-2000. Messner Vetere Berger McNamee Schmetterer was one of the first agencies to use HotWired, creating “graphical ad units” for four of its clients: MCI, Volvo, Club Med and 1-800-Collect.

Bob Schmetterer, president of Euro RSCG’s MVBMS, New York: No one knew what a banner ad was or what it meant. There were no click-through rates. No one even knew where you would click through to, and we needed to construct Web sites for clients so there was something to click to. The hardest part for clients was that some of them were afraid of having to deal directly with consumers. With a client like Volvo, they said that’s what their dealers do. So we had to walk them through it and tell them to use it as a questionnaire and not as a direct sales tool. Volvo suddenly saw this as a way to generate sales leads and became one of the first car companies to launch a Web site. I always used to say to clients and staff, the Internet will be to advertising what MTV was to music.



1994-1995 The first wave of the new digital brands is created: Amazon (1994), then Yahoo, eBay and Craigslist (1995). CNN.com was also set up that year as one of the first media content sites.

Richie Glassberg, svp, general manager, Turner Interactive Sales: In January 1995, I was told we were launching the CNN site in August, and I had to figure out how to sell it. At Turner, nobody had laptops. No one had e-mail. I went to the computer store at the bottom of our building and bought Accessing the Internet. The company bought me a laptop that weighed a ton. We did not believe in pricing on the click. We didn’t think it was smart, so we priced on the CPM and shifted responsibility to the media company. Just because it’s measured doesn’t mean that should be the metric. By 1997 CNN.com was profitable. GM was a huge early advertiser. Everyone was just buying banners. They said, “We have a partnership [with a third party] where we can put a pixel on the ad and track the ad data on the user.” We talked to people in the industry, and everyone said not to do it, but we did it anyway.

1995 On Aug. 9, Netscape went public. Shares originally priced at $14 a share were upped to $28—then hit $75 in the first day of trading. The dot.com gold rush was on. All over the U.S., ad agencies suddenly found themselves in the middle of things.

Mark DiMassimo, CEO, CD, DiMassimo Brand Advertising, New York: We worked on dot.com accounts like Kozmo, Hotwire and eDiets. On a typical day we were seeing at least one presentation from a prospective client, and they were pitching us the same way as they were VC backers and investors. One of the issues that became an incredible distraction for an agency head was the mania for getting stock. I’d spend an hour every day beating off people at the agency or their parents or their brothers who were desperate to participate in Kozmo’s next round of funding.

1996 Yahoo became one of the first dot.com brands to launch a mass-media ad campaign from Black Rocket. That year, the search engine spent $150,000; by 1999, the budget was $26 million. Yahoo had previously relied on word of mouth from Web users and publicity and now reached out to “near surfers”—those likely to get on the net in the next few months to a year. The spots asked, “Do you Yahoo!?” and closed with the pitch,”It’s free on the Net” along with a distinctive yodel that would define the brand in its early days.

Steve Stone, co-founder, Black Rocket, San Francisco: No one really knew what Yahoo could become. It had just been used for less than a year by [Yahoo co-creator] Jerry [Yang] and his friends at Stanford. We asked him where he saw the brand in five years. He said, “I don’t even know if we’ll be here in three years.”



1997-1998 Record-setting increases in the valuations of dot-com stocks attracted venture-capital money while interest rates started to drop, increasing the pool of available start-up funds. Google was quietly created in September while a flurry of other e-brands made more noise as they burst upon the scene, backed by deep-pocketed investors: eToys, Flooz.com, Kozmo.com and Pets.com. Agencies were dealing with a grab bag of clients, the likes of which many had never seen before.

Doug Raboy, managing partner, creative, Hanft Byrne Raboy & Partners, New York: Flooz.com was online gift currency. I asked, “What the heck is that?” They explained it to me and I thought, “Okay, I kind of get it, but does it make sense?” They had $50 million in funding so maybe their investors saw something we didn’t. In August/September they got the funding, and it was a race to make a deal with [Flooz.com spokesperson] Whoopie Goldberg and be advertising for Christmas. As Flooz got rolling, we made her a business partner, gave her equity and she was out there pitching like crazy. One day, there was [Flooz founder] Robert [Levitan] and Whoopie on the cover of The New York Times’ business section. I found myself thinking, “How did all this happen?”

Jeff Goodby, co-chairman, Goodby, Silverstein & Partners, San Francisco: A kind of interesting thing—actually, it was an infuriating thing—was happening. Because there was so much money out there, there were marketing people who had retired or were forced out of their companies because they weren’t very good, and they were coming back into the business. San Francisco was ground zero for the dot-coms, and we were getting three to four calls a day. I ended up in meetings with a lot of these people who shouldn’t have been there and found myself thinking, “What am I doing with my life?”

Brent Bouchez, president, M&C Saatchi, New York: We had a client, Worldspy.com, that was an aggregator of products—everything from consumer electronics to socks. The two guys behind it had been tin miners in Russia. They had gone from stripping mountains in Northern Russia to the American dot-com gold rush.

David Page, ECD, TBWA\C\D, New York: With clients, you’d often find that the head of marketing was the sister of a friend of the founder, who went to art school. The criteria for the job were incredibly loose. It was the most amount of marketing money in the most inexperienced hands in the history of the world.

Sean Ehringer, CD, Leagas Delaney, San Francisco: My lasting memory of that time was how unethical it was. Granted, marketers may have been doing their own thing in that regard, but there was a general lack of ethics and morality in the ad business. The agency community took advantage of what was going on. The work was often irrelevant, prurient, lacked focus and, in terms of brand building, didn’t do the things advertising is supposed to do. It was a gold rush to the money, and it  didn’t matter if you produced good thinking; it was just a matter of shocking people.



1998 The creative ethos of the moment may best be summed up by Cliff Freeman & Partners’ spot for Outpost.com. Seemingly designed for no other reason than to generate angry mail—and, hence, attention—the 30-second ad featured an assistant loading live gerbils into a cannon and trying to fire them through the  second “o” in Outpost—but sending most of the creatures straight into a cement wall instead. (What exactly this had to do with a site that sold electronic equipment was anyone’s guess.)

TBWA\C\D’s Page: That Cliff Freeman spot pretty much summed up a lot of what was going on at the time. All the client wanted was name recognition—that was considered branding. You had a lot of young kids in the business, given big bags of money, who were asked to just do something cool.

1999 On Jan. 31, employment recruitment sites HotJobs.com and Monster.com advertised on Super Bowl XXXIII, with spectacular results. HotJobs—which spent $2 million, half of its total revenue for a 30-second commercial—saw traffic increase from 600,000 a month to 1.7 million. Monster.com’s traffic surged 450 percent 24 hours after its “When I Grow Up” spot aired.

Edward Boches, CCO, Mullen, Boston: I went to a hotel in the middle of nowhere, and there were Yellow Page guys in polyester suits. [Monster Worldwide owned a Yellow Page division at the time.] It was after Thanksgiving, and I made the presentation. They said, “Yes, we’ll do a Super Bowl spot.” I thought, “Dude, most companies are already done with their Super Bowl stuff.” I had a junior team that had never done television before, and I promised them the next TV project would be theirs. It turned out to be this one. That’s the way things happened. It was the Wild West.

Peter Blacklow, svp, marketing, Monster, who joined later, in Nov. 1999: Working in a new media like the Internet, we didn’t necessarily understand what metrics mattered. Friday afternoons we used to wait for Media Metrix’s release of data on unique visitors. There were a lot of things people just didn’t understand yet. We signed an Olympics sponsorship for the 2000 games in Salt Lake City. They said, if you sign up, we’ll make sure we won’t sign up another Internet company. People thought of the Internet as a category and not as media.

1999 In May, Securities and Exchange Commission chairman Arthur Levitt voiced concern about an online trading environment where “investors are susceptible to quixotic euphoria” and warned marketers not to sell the activity like laundry detergent. He specifically cited Discover Brokerage ads, with its millionaire tow-truck driver who bought an island with his trading profits. As bizarre as that scenario was, so was the marketing partnership behind it.



Black Rocket’s Stone: With the tow-truck driver ad, in a two-week period we got so many new customers, the SEC [told us to] “tone it down.” We had gone to New York to sell that campaign to Morgan Stanley chief John Mack in their fancy offices. [Black Rocket co-founder Bob] Kerstetter is in the meeting wearing sweats when a shoe-shine person comes into the presentation to shine our shoes. The campaign was pretty out there for them, but we did a lot of research that showed money can be funny. You don’t have to be serious; advice can come from a friend, not an institution.

2000 The dot-com marketing frenzy peaked on Jan. 30 with the airing of Super Bowl XXXIV. No fewer than 17 dot-com companies advertised—nearly half of all the event’s marketers—paying an average $2.2 million for a 30-second spot. Even well-established brands like EDS got into the surreal spirit of the night with a Fallon spot featuring cowboys herding cats.

Goodby: I was at a Super Bowl party with lawyers that night—no ad people at all. It was fun to watch them watching the ads. These lawyers were just scratching their heads and saying, “What the fuck?” It just captured the way people felt about advertising at the time.

2000 The dot-coms become part of popular culture. Ameritrade’s chicken-squawking office slacker “Stewart”—who teaches his clueless boss to trade online—recreates the role with Bill Clinton for a video shown at the president’s appearance at the 2000 White House Correspondents’ Dinner.

Todd Heyman, writer, OgilvyOne: When Stewart showed Clinton how to use the computer in the Oval Office, it was the culmination of my career. It was great to have a lot of the conventional boundaries relaxed, but the campaign was actually a very typical direct-response ad and very informational and benefit driven. One of the metrics back then—eyeballs—always puzzled me because they just wanted to get people’s attention. It wasn’t about getting people to buy. The model was to start a company, get people’s attention, sell it, move on. It was so obvious it was a bubble, even back then.

2000 On March 10, the tech-laden NASDAQ Composite Index peaked at 5,048.62, more than double its value a year earlier. While nobody realized as much at the time, the ceiling had been reached, possibly because the Y2K scare was over and businesses cut back on tech spending. As some began to wonder about the exaggerated value of dot-com stocks, the correction began. Within six days, the NASDAQ lost nearly 9 percent. Not long before the plunge began, Razorfish CEO Jeff Dachis appeared on 60 Minutes. Dachis boasted that Razorfish “recontextualied what it is to be a services business” for clients. What did that mean? “We radically transform businesses to invent and reinvent them,” he replied.



Robert Birge, a member of the Boston Consulting Group team that helped launch Orbitz: My major recollection of that time was a 60 Minutes interview with two guys from Razorfish. It was a very strange moment. They were the latest stars of the ’90s dot-com phase. To see those two guys on national TV not making sense made you realize it wasn’t just you who didn’t get it. You’d get halfway into conversations with some of these people and not understand what they were talking about.

David Lubars, president, Fallon Worldwide, Minneapolis: A lot of what people were thinking back then seems really naïve now, but it was 2000. The American Century had just ended, and this was the New American Century. You didn’t know what to expect. A lot of young people in the business didn’t have the benefit of seeing that these things were cyclical.

2000 As skepticism about dot-coms’ market viability continued to batter their once-stratospheric stock prices, many high-profile dot-com brands began to go out of business, with the most high profile of them, Pets.com, going belly-up on Nov. 6. The iconic sock puppet, which had been interviewed on shows like Good Morning America and Regis and Kathie Lee—and even had its own float in the Macy’s Thanksgiving Parade—was the only asset of value at the end. Rights to the 100 percent cotton mascot sold for $125,000.

Rob Smiley, CD, TBWA\C\D, San Francisco: The sock puppet was incredibly successful. Some people within Pets.com were very concerned about our sock puppet. They hoped for a very warm and cuddly spokesperson for people with an undying devotion for their pets, and they felt the character should be a very literal mirror of that. Instead we had a pesky, funny, satirical spokesperson. In focus groups, about half of the people really loved the sock puppet and half hated it. We told the people at Pets.com that we didn’t need everyone to love it; we needed evangelists. Some of these new business models seemed crazy, but no one was quite sure how creating businesses on the Web would work.

2009 A decade or so later, many see  the dot-com era as a golden, albeit singular epoch.

Steve Luker, group creative director, Publicis & Hal Riney, who worked on dot.coms like Webvan: It was an incredible time creatively; everyone was taking risks. There was no end to the money. But something like that will probably never happen again. It was a time when people were still looking to traditional media, with big TV and print ads to tell their story, and I don’t think it will happen that way again.

Bob Schmetterer about creating some of the first banner ads in 1994: We wondered how big a deal the Internet would be. How many households would use it? It was still dial-up back then, with that funny noise, and slow to load. Would this become real media? It’s been only 15 years, and yet it was 15 years ago, which feels like such a long time now. Most people weren’t talking about the Internet then. Now, it’s all they talk about.



Monkeying Around With $2 Million

Aside from that dog puppet, the dot-com era’s other icon was, fittingly enough, a chimp. For its 2000 Super Bowl spot, E*Trade cast a primate to stand in a garage and do the cucaracha. “Well, we just wasted $2 million bucks,” flashed the screen. “What are you doing with your money?”

“The monkey was really well trained and did it perfectly in one take,” recalls Gerry Graf, then of Goodby Silverstein & Partners. “We just wanted a really low-budget, silly spot versus the big-budget celebrity spots for clients like Pepsi.” And it was funny. But a year later the monkey was back—shedding a tear this time as he surveyed the ravaged dot-com landscape (he even stepped on the Pets.com sock puppet). Then came 2002. Now the chimp was in space—shot into orbit after being fired by E*Trade.

Co-creator David Gray reflects on the simian trilogy today and explains, “Gerry and I wanted to create the antithesis of the BBDO celebrity Super Bowl spot.” Indeed, they did.

But the gestalt of the process was this: The agency spoofed the very era of advertising that these spots have come to symbolize. Those huge dot-com budgets are gone. And the chimp? Probably still in orbit.