The world is not enough

Since its launch in March, Lastminute.com’s online advertising agency LM Media has enjoyed phenomenal sales. With a unique position in the market, and an eye on the US, global success is not far off.

Matt Gower is feeling glum. His teeth hurt, he can’t eat, and worst of all, he’s got a £1,000 dental bill to look forward to.

Being down in the mouth is not something he’s used to. As managing director of Lastminute.com’s newly launched online advertising agency, LM Media, life is rosy. His title is recognition of the fact ad sales are now a major part of the retailer’s income stream. And, it formalises a job he’s done for Brent Hoberman’s Internet phenomenon since the company floated in 2000.

“We’ve been selling ads on the Lastminute site pretty much since it began,” said Gower. “But we kept getting asked by other companies to sell ads on to their sites too; that’s where the idea for LM Media came from.

“I suggested to Brent we start an advertising agency. He looked at the figures and just said ‘Let’s go for it’.”

And no wonder, given the evidence he put on the table. In 2000, Lastminute pulled in £50,000 from advertisers. At the last count, LM Media was generating £10 million. In 2004, Internet ad spend in the UK rose 76%; for Lastminute, ad revenue leapt 206%.

LM Media’s approach is split into two distinct areas. On one side, there’s the advertising it sells on Lastminute in the UK and on its sister sites across Europe. It’s the usual range – banners, skyscrapers, pop-ups and rich media, together with sponsorship and advertising on the newsletter it sends to 10 million subscribers weekly.

Then comes the new bit. Companies looking to generate extra cash can sell space on their websites, with LM Media finding the clients. In return, the agency takes a cut of the profit.

LM Media launched on March 17, a deal with Ryanair grabbing the headlines. “We’ve got eight clients now, including Ryanair and Lastminute,” said Gower. “On average, we take three calls a day from businesses wanting us to be their agency. But it’s a matter of scale, and making sure the people we work for fit in with our profile too.”

While you might think the business of selling advertising is straightforward, LM Media self-regulates with a strict set of guidelines to protect the sanctity of the Lastminute brand – and keep the marketing department happy.

For example, none of Lastminute’s competitors can advertise on its site. The same goes for inappropriate products such as porn, or ones not fitting the company’s ethos.

“It’s a balancing act,” said Lastminute marketing director Mat Hart. “The Lastminute name is our biggest asset and we don’t want to damage it.”

Hart and Gower often discuss potential advertisers or suggested campaigns. And they won’t be too precious if a company with cash to spend fits in with their demographic – the 24-hour ‘homepage takeover’, which saw the vibrant pink Lastminute look ditched for a promotion of the recent Brad Pitt/Angelina Jolie film Mr and Mrs Smith is a good example.

“That ad was overt, had streaming video and made a real impact,” said Hart. “But it was big money and really hit our market, so we were happy.”

Protecting the brand isn’t the only concern. LM Media doesn’t take ads for anything sold on the Lastminute site, be that flights, days out or candy underwear. Instead, suppliers are encouraged to spend their marketing budgets promoting the offers appearing on the Lastminute site itself. It’s a win-win for the retailer – get the supplier to pay for pushing its deal, then get commission when it sells.

“When you click their banner it takes you through to their level,” said Hart. “It’s preferential advertising, and for them offers a good return on investment.”

This close relationship has proved a real benefit when it comes to the business of selling. “We have an advantage over competitors,” enthused Gower. “We’re different in that we have a unique pool of advertisers drawn from Lastminute’s suppliers. Our pitch is that we can generate more money than anyone else, and that’s very compelling.

“Our sales team meets suppliers who want to sell their product through Lastminute the retailer. Then they are asked if they want to advertise on the whole selection of sites we work for. Whereas a sales person might have made a sale of £5,000, that can rise to £50,000 by selling across the network.

While smaller concerns might worry about the strength of Lastminute, LM Media presents new opportunities for suppliers, according to Fiona Canavan, market development manager at travel web consultancy Netizen. “Online advertising spend is a small part of most companies’ budgets, and LM Media is well positioned to benefit as this rises. Suppliers can be seen across a wide network of sites.”

Itself a master at maximising its online presence, Lastminute now boasts almost two million unique visitors each week in the UK. A team monitors the effectiveness of its paid search keywords – a medium Hart admits is becoming less effective as more travel companies wake up to the ‘Google’ effect.

“Search marketing is one element of the mix for us. The Holy Grail is natural search so we’ve put lots of effort into boosting content to make us more attractive to the search engines.

“We do advertising ourselves. We buy selected sites to push campaigns and messages, and team up with big brands for promotions. An affiliate scheme also drives traffic our way.”

Hart insists new Lastminute owner Sabre is content to let the company’s management team decide its direction. After all, the distribution giant has already announced Lastminute will be its lead brand in all European markets, ahead of Travelocity.

For Hart, the challenge is to ensure Lastminute shakes off the image it started with – a marketplace for distressed stock. “Despite all the other things going on, we are a leisure travel retailer,” he said. “We have to convince people we have a huge range.”

Gower, too, has big plans. For him, it’s taking LM Media across the pond.

“US advertisers want a presence in Europe. Getting access to the US is something we get asked about a lot, so it makes sense to expand, especially with Lastminute just launching in the US. In two years we could be global. I want to do design and be creative too; a full-service agency but online.”

And you know what? He’s smiling.