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Mark Goldston shares his plans and goals for FTD with Florists’ Review.
by Kelsey Smith
Last April, FTD Group, Inc. entered into a merger agreement
with United Online, Inc., a consumer Internet and media services
provider that comprises NetZero, Juno, Classmates.com and
MyPoints. The acquisition, which was finalized in August and
cost United Online approximately $800 million, makes FTD an
indirect wholly owned subsidiary of the Internet conglomerate.
Mark R. Goldston, chairman, president and CEO of United
Online, sat down in September with Florists' Review to
discuss his goals and plans for FTD.
an impressive résumé
An accomplished consumer marketing veteran and inventor, the
53-year-old Mr. Goldston joined NetZero in March 1999. He took
the company public a scant six months later and engineered its
merger with Juno Online Services in 2001 to create United
Online.
Prior to joining NetZero, Mr. Goldston was chairman and CEO
of The Goldston Group (1994-1999), a Los Angeles-based strategic
advisory firm that helped reposition companies in which he would
take an equity stake. During a portion of that time, he was also
president and CEO of Einstein/Noah Bagel Corp. (1996-1997).
From 1991 to 1994, Mr. Goldston served as president and
chief operating officer of L.A. Gear, during which time he
invented L.A. Lights and Light Gear lighted sneakers, for which
he holds six patents. Before that (1989-1991), at Odyssey
Partners, LP, a leveraged buyout firm, his group spearheaded the
turnaround of six private companies.
Prior to joining Odyssey Partners, Mr. Goldston held various
executive positions including chief marketing officer of Reebok
International, Ltd., where he created the inflatable Reebok Pump
sneaker, for which he holds two patents; president of Fabergé
USA, Inc., where, in 1986, he became the youngest president of a
Fortune 500 consumer products company at age 31; and senior vice
president of worldwide marketing for Revlon during the early
1980s.
During his career, Mr. Goldston has created and introduced
more than 60 products and holds 14 U.S. patents. He is also the
author of The Turnaround Prescription (Free Press; New York,
N.Y.; 1992), which is widely regarded in graduate business
schools and by CEOs as a blueprint for repositioning companies.
the interview
FR: What attracted you to FTD?
MG: Three things. One, we love great brands, and we’re
always looking for world-class brands that we feel are under
marketed but are major factors in the industries in which they
compete. Then we can go in and use our marketing savvy and our
Internet knowledge to market and revitalize the brand.
Number two, we look for large industries that might be
fragmented so that the threat of one dominant player doesn’t
prevent you from entering it. FTD has a brand name that sounds
bigger than its overall dollar volume suggests. So I liked that
a lot.
The third thing is that we have more than 50 million members
at United Online. That’s 40 percent of adult Internet users in
the U.S. And their demographic profile is exactly the same as
FTD’s. According to Nielsen [The A.C. Nielsen Company], our
members are very active in the florist category, so we should be
able to get in front of them and ask them to buy their flowers
from FTD and give them a special incentive to do that. Our
customer acquisition cost will be zero among our 50 million—plus
members, so it’s a big idea.
FR: Given FTD’s history of ownership changes in the past
few years, what can you tell florists about your commitment to
our industry?
MG: We’re not “flippers,” and this is not a turnaround.
We have not sold one major company that we’ve bought in the last
10 years. Instead, we buy companies, we enhance them, we
increase revenues and profits, and then we stick around to enjoy
the fruits of our efforts. That’s not to suggest that at some
point in the future, just like in any public company, that
somebody won’t approach us, but our goal is to be long-term
owners of this business. We’re excited to be in the flower
business. We have made a huge investment in FTD that we didn’t
have to make. We ran a hugely successful and extremely
profitable company before we ever thought about buying FTD; we
didn’t buy FTD because we needed a shot in the arm. We’re a
great company, and FTD is a great company. And we think FTD is
going to be a critical part of our mix for a long time to come.
FR: You once said that your biggest career challenge was
getting into an industry that you knew nothing about—the
Internet industry. Now you’re in the flower business—another
industry with which you have little experience.
MG: Almost every industry I’ve gone into, except for the
sports industry, I knew nothing about. It comes down to, “Do you
understand consumers?” “Can you make a compelling product?” and
“Can you service the retailers so that they feel like they’re
part of the food chain?”
You have to understand consumers and how to bring a message to
them in a mass medium in a compelling way, how to give them
value, and how to make them want to stick around after they’ve
bought the product the first time.
FR: Why is an Internet company and a flowers-by-wire
service company a good partnership for florists?
MG: The Internet is used by 140 million American adults
every day, and we can bring a lot of our knowledge of how to use
the Internet to make it not only more productive but also a
better avenue for retail florists. Florists will see that with
the programs we’re going to put into place over time, many of
which will be designed to increase consumer awareness, increase
demand and purchase frequency and, hopefully, increase
consumers’ loyalty to purchasing their flowers over the FTD
network.
FR: How are you going to accomplish those goals?
MG: We’re going to leverage the heritage of one of the
world’s truly great brands with a heavy dose of innovation,
marketing savvy and a comprehensive business plan designed to
enhance the fortunes of the retail florist community while
presenting consumers with a compelling array of products that
will set FTD apart from the competition. If we do that,
everybody’s going to be very happy.
FR: How do you see the Internet affecting our industry in
the next few years?
MG: I believe that five years from today, the Internet is
going to account for a huge portion of the floral market. Today,
Internet sales in the floral industry are only about 12 percent;
within 5 years, I believe it has the potential to be 30 percent
to 40 percent. So we have to modify the message within the
florist community so that [florists] can take advantage of that
potential growth and not feel threatened by it, and that’s what
you’re going to see.
FR: Which of FTD’s primary business segments have the
greatest growth potential—the flowers-by-wire segment or the
direct-to-consumer segment?
MG: FTD operates a broad spectrum of services, and I’m
equally focused on all of them. I also see them as being
completely interdependent rather than the “silos” they’re
depicted as in the florist community. I’m actually shocked that
some florists view the Internet as either negative or
competitive. It is, in fact, the great enabler that allows the
order count in this industry to remain what it is. You have to
recognize technological progress and embrace it; if you fight
it, you will go out of business, no matter what industry you
operate within.
FR: Will there be a need for the traditional
flowers-by-wire service model in the future?
MG: I am very committed to the wire concept. I have a
very good understanding of why the wire service existed, why it
continues to exist and why it makes sense going forward. Sending
flowers to a person in another city, and knowing that the
florist on the other end is reputable, that the flowers will
actually get there, and that they will be good quality, is the
basis upon which this network was founded, and I don’t see any
reason why that shouldn’t survive, and potentially thrive, in
the future. What has to happen, though, is that member florists
have to get behind the notion of progress. If they’ll embrace
some of the innovation that we and others may try to bring to
the table, the wire service as you know it will continue, and it
will evolve, and it will become more relevant to the way people
are buying flowers today.
FR: What benefits do you think the Internet offers
florists?
MG: The Internet provides a great way to aggregate
traffic, for florists to display their products and to let
consumers know what they are buying. It’s also a very efficient
mechanism for making the order, processing it and getting a
confirmation that it was delivered. I think the entire florist
community will learn over time, especially with us in the
industry, that the Internet is a vehicle that will help fortify
their businesses.
FR: What is the biggest difference that FTD members will
notice under your ownership?
MG: Our focus is on enhancing the retail florists’
position in the food chain. If you think of the brand name FTD
and a 108-year heritage, it all starts and ends with the
florists. So you’ll see that a lot of the programs we have
designed, if the florists embrace them, will enhance what they
do and how they interface both with FTD and with the consumer.
But they have to embrace the programs and understand that we are
firmly committed to making each of our member florists more
successful.
FR: FTD once was a leader in national advertising to
consumers. What are your thoughts about national advertising?
MG: I definitely believe in the major consumer branding
aspect and television marketing, but the retail distribution
system has to be fortified so that it can be a beneficiary of
that effort. Other than the FTD decal in flower shop windows,
there’s very little representation of the FTD brand in the vast
majority of the flower shops in America. So if we ran a major
national advertising campaign today and did nothing to enhance
the retail brand imagery of FTD and increase its physical
presence in the retail community, it would be questionable as to
whether consumers would translate that into a drive-by and stop
and go into an FTD branded florist.
Our goal is to present a seamless, integrated marketing
message that will translate from the advertising medium to the
retail florists’ shops. There are a number of ways to do that,
and we look forward to sharing some of those concepts with the
member florists.
FR: How is the new FTD going to help florists grow their
businesses?
MG: We’re going to take the best of what exists in the
industry—an incredible base of knowledge from people who’ve been
doing this for years—and enlist their support, and say “Look,
you have huge challenges in your industry. How can we, as the
industry’s leader, serve your needs as well as our own?” At the
end of the day, we have to be completely intertwined; if we’re
not, it won’t work.
FR: But our industry comprises all kinds and sizes of
retail businesses. How can FTD serve everyone’s needs equally?
MG: I realize this is not a “one-size-fits-all” industry,
but our job is to service all our members, large shops and
small. We can’t ignore one in favor of the other. Therefore, our
business plan has to be broader and more comprehensive, and it
has to focus on specific segments of the retail florist market.
We have to be mindful of the different challenges faced by the
various types of florists when we’re creating programs.
FR: What can you tell our readers about your marketing
plans?
MG: We have a comprehensive marketing branding plan, and
consumer advertising is certainly part of that, but it’s not a
silver bullet. We have major plans for the brand as it relates
to the Internet; to FTD member florists and their stores; and to
the products we deliver, either through direct-ship or through
the retail florist.
FR: What about your plans for education and member
involvement?
MG: We’re rebuilding the local FTD member infrastructure,
much like the former “FTD Districts,” where we re-establish what
we’re doing at the local level in terms of co-op marketing,
education and branding, because different communities have
different needs. We’ll have a little different format, but the
concept will be, “Do what’s right for your area.” If florists in
one area want targeted consumer marketing by locale and by
constituency, there’s no reason why we shouldn’t do that in this
industry.
FR: Why is this important?
MG: We want to re-create these "state associations" to
get feedback from our members; we care about what they have to
say. It’s unrealistic to assume that we’re “Mission Control” in
Downers Grove and that we’re going to have all the answers for
the thousands of retail florists. They know their businesses
better than we do. So we have to find a mechanism to get them
engaged and to be able to solicit their input on a constructive
basis.
All we ask is that they give advice that’s mindful of the
fact that there is more than just their shop in the mix and that
we must have a system that works across the country. We can do
it by tier, but we can’t do it by shop.
Some of what you see will be pure innovation in terms of
ways to think about the business and to drive the business. But
the other part is going to be, “Look, tell me what your
challenges are so that we can combine our resources and thinking
to come up with creative solutions that people can understand
and embrace.”
FR: Will these “state associations” be an integral part
in providing member education?
MG: Yes. When you think of how little occurs in terms of
training, it’s often because it’s too expensive. But we can
bring it to florists locally. These are programs that got lost
over the years—training co-op advertising; and exchanging ideas
by region, by state, by local community as a way to figure out
what works and what doesn’t so everybody gets better.
FR: What is your opinion of rebates, and what are your
plans concerning them?
MG: I understand why the program is in place, and I look
forward to speaking with many different levels of the florist
community to determine their perspectives on the rebate program.
FR: Who will run FTD, and when will they assume their
duties?
MG: Robert Apatoff has been appointed president of FTD
Group, Inc., effective Nov. 3. Rob will report directly to me. I
will continue in my role as chariman of FTD, and I will be
involved on a daily basis, just like I am with all of our
operating companies. Given the magnitude of the investment
United Online has made acquiring FTD, I will be very visible to
the FTD management team and will continue to work closely with
them to drive the business.
Mike Soenen had previously announced his intention to move
on, even before the United Online transaction. We greatly value
the job that Mike has done, and he has been an invaluable
resource to me throughout this process. Mike will be an employee
with FTD through the end of 2008 and a consultant to the company
through March 2009.
David L. Coake is the editorial director for Florists' Review. Reach him at
dcoake@floristsreview.com or (800)
367-4708. |
