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digitalnation_sm.gif (867 bytes)Meeting Recap:
Network Solutions meeting,
March 18, 1999
From: Dave Olson,
Dominion Marketing Group, Inc.
(Email:
pniva@aol.com)

The Ad-Marketing Meeting Series was treated to an outstanding presentation last Thursday, 3/18/99, by Douglas Wolford, Senior Vice President, Business Development, Marketing and Sales at Network Solutions, Inc. (http://networksolutions.com), followed by a vigorous Q&A that examined the successes at NSI.

As a bit of background, Doug related the history. In 1993, NSI was awarded a contract with the Government to register all .com, .net and .org domain names, with an annual contract cap of $1 million. Within six months the browser appeared on the scene and NSI' business exploded. What started with 70K domain names is now in excess of 4 million. What started out as a $1 million annual contract now exceeds $100 million in sales.

How did NSI manage this growth? The marketing approach is what made it happen. In a presentation spiced with pithy comments, Doug laid out their success. This review is oriented around his comments and pointers to the group (the quotes are from the meeting itself). The following takeaways offer the essence of his comments and are most valuable to Ad-Marketers, especially those looking to build their firms marketing into the big leagues. What is particularly interesting is how NSI has oriented its entire program towards small business, giving them an identity on the net that they cannot achieve in any other way.

"It takes a while to get scale" -- According to Doug, NSI is the very definition of scale, and pointed to the fact that they were not profitable until they exceeded 600K registrations. Like many other net based businesses, losses at lower volume can only be turned into profits at larger volume. Scale does not guarantee profitability, but was a necessary step at NSI, and probably is at most net based companies.

"Redefine your market until you are less than 2% of market share" -- Unless you are only a small fraction of your potential market, you have no where to grow, and you will miss the broader opportunities. NSI owns 100% of the .com, .net and .org registrations. They own 75% of the registrations when other domain names are included. But they own less than 2% when all email addresses are included. At NSI, rather than focusing on the more limited market of domain registration, Doug made the marketing decision that NSI would sell "identity". This new definition of NSI drove the entire marketing program into new areas, to include new products to address the market, new channels of selling, and affiliate, alliance and partner programs to extend the reach of NSI products.

"Don't let your ego get in the way of the market's choice" -- Especially when it comes to branding. In line with the new definition, NSI created a branded image with a new phrase - 'the dot com people'. After examining NSI in light of their role selling IDENTITY, and looking at what the market saw as important, NSI created this new brand. The campaign was and continues to be oriented towards those small businesses that want and require a net presence. It creates a new identity for them. The new branding concept was followed up with a serious campaign in multiple media, designed in part to touch the customer earlier in the process, and of course, to "sell more stuff".

"If you don't go after each day like a cavalry charge ... you will lose" -- Urgency is key. Do the PERT analysis, and look for places to squeeze down the timeline. At NSI, for example, testing new products occurs 24/7. A rigorous evaluation process is employed for each new concept, but once approved, time is of the essence.

"Build value from what you do well" -- While redefining your market to make it larger, it is also necessary to "tend to your knitting". Stick to what you do well. Find partners that are equally competent in their fields and create alliances with them. NSI created their first deal with D&B. They have since created alliances with credit card issuers, data driven organizations and many others that complement and utilize the key competency of NSI.

"In the short term, sales beats marketing" -- For every early stage firm, making sales is essential, and more important than a marketing plan. In the longer term, undisciplined sales will wander and dilute the overall effort. It is at that point that a disciplined marketing plan, well conceived and implemented, becomes important to direct and control the sales effort.

"We spend 40% of our revenue on sales and general administration" -- with most of that dedicated to marketing and sales. During the Q&A that followed the presentation, Doug talked about the marketing budget in relation to the size of the firm. Many early stage firms will spend 60% to 80% of their revenue on sales.

"Find a break-out play" -- If you want to emerge a serious player in our space, find a big bet that will put your head above the rest of the market, and make it. NSI' strategic global advertising program, including alliances with Netscape and Yahoo, are the most recent "big bet' successfully made by NSI. When asked later in the Q&A what were the most significant events leading to NSI's success, Doug pointed to the break-out play that put their first deal together with D&B.

At the end of the evening, several gathered around and continued the conversation with Doug and amongst ourselves. Like kids with a nose against the candy store window, we all salivated at the way NSI has positioned itself from a federal contract to become a serious player in the market.

In summary, NSI has effectively addressed the small business user of the net. Their growth is due in part to the popularity of ".com" addresses, but the explosive growth of the company is a testament to NSI's marketing strength. Instead of resting on the laurels of a monopoly contract, NSI redefined their market and addressed real needs in the market. The dot com theme is the foundation for NSI's products & services and leverages the marketing campaign that branded Network Solutions as the small business dot com people.

Although NSI began by registering domain names, their marketing strategy now includes building and developing complementary business products and services. All products are aimed at helping their small business customer establish an identity and presence communicate with their customers and set up shop on the Internet. The Company aggressively markets to build a lifetime relationship with domain name users through channel partnering relationships. These relationships include ISP's, hosting companies & other marketers. NSI has propelled itself into the mainstream consumer market and is creating a need for Internet identities. 



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