Frank Catalano

Frank Catalano: No one should be surprised that Redmond-based photo sharing and greeting company Smilebox is trying something new with advertising and distribution in the --well -- real world.

Earlier this month, Smilebox announced that it would experiment with placing an ad on the lower right corner of the front cover of Scholastic Parent & Child. At the same time, it packaged its Web application into boxes to be sold in such bastions of cinder block as Target, Fry's and Office Max.

Long-time industry observers like me could almost imagine the smirks of the high priests of the Digiterati. It's as though the Web-bred-and-borne company risks failing some kind of secret Internet purity test: a business which was spawned and conducts its business online trying innovative marketing offline? Why waste the time and money with traditional marketing media and distribution channels?

That thinking is so last century. Because we are now in a post-Web world, where smart retailers draw on the best of the physical and the digital. The archaic all-or-nothing mindset belies a reality that more than 15 years of the browser cannot change: consumers continue to live in the analog world, and only visit the digital one.
 
Those who forget this are likely doomed to fail, especially in a now-challenging economy. One of the highest-profile examples of this kind of misstep was a company which was once the leader in software retailing and is now no more than a fond memory, living on as a domain name for a storefront on Amazon.com: Egghead Discount Software.
 
Egghead made a number of mistakes ensuring its future as a high-point-value trivia question, but at its peak around 1990 it had more than 200 stores in the U.S. and British Columbia and equal amounts of revenue from retail locations and corporate accounts.

It pioneered the concept of selling software below list price (really) using a knowledgeable staff, and had a loyal customer base that would come into the stores an average of three times each month, just to see what was new. I had a front row seat to the show, as I was in marketing management at Egghead for four years, ending in 1992. 
 
However, after a series of unfortunate business decisions, Egghead pioneered one step too far: it closed all of its retail stores in 1998 and went completely online, leaving a lot of empty storefronts with the company's logo. In the process, it misread a critical consumer behavior: while its customers liked computers, they didn't live inside of them.

I suggested the chain keep one store open in each market to be a "showroom" focused on what was new and cool to provide long-time customers some familiarity and physical marketing presence. And, importantly, not make it seem like an empty store meant a failed company. But that idea -- and the company's approach -- didn't go anywhere, and shortly thereafter Egghead was effectively Eggdead.
 
The practical result of a physical presence is that it can enhance consumer trust, reinforce other marketing efforts, allow for cross-promotion and -- for products that have to be shipped -- provide immediate gratification.
 
Other firms have realized their customers spend time away from computers and made appropriate choices. Portland-based women's active wear retailer Lucy (lucy.com) opened physical stores to complement its original online presence, and then -- from 2001 to 2004 -- actually shut down its e-commerce site to let its stores get traction. Now it operates both, giving customers a choice.
 
So Smilebox's decision to try something new with old pressed, dead tree media and concrete structures should be applauded. These efforts may not succeed; a lot depends on pricing, product quality, and the partners chosen.
 
But marketing and distribution ideas that marry the best of the physical and digital, and creatively take them to the next level, acknowledge a reality that companies should move smoothly between the offline and online worlds -- just like their customers do.

Frank Catalano is an author and advisor on marketing and business strategy for technology and education companies. He blogs at Intrinsic Strategy.  Opinions expressed in guest posts are those of their authors, and don't necessarily reflect the views of TechFlash or its staff.