BIG-TIME KID STUFF

Blame it on B’omarr Monk.

The spidery-looking droid from “Star Wars”-who only appears in “Return of the Jedi” for a few seconds-inadvertently led toy titan Hasbro Inc. to the power of the force: direct marketing.

Hasbro had created an action figure of B’omarr, but retailers weren’t interested because its shape and size made it difficult to stock. Rather than just shelve the item, the company decided to offer it as an Internet-only exclusive to collectors on its “Star Wars” Web site.

“We sold 120,000 units in six months, which we were not looking to sell,” marvels Wendy Riches, Hasbro’s president of global direct and e-commerce.

Riches left her high-profile post as chairman and CEO of OgilvyOne North America last summer to join the Pawtucket, RI-based maker of such playthings as Monopoly, G.I. Joe and Lite-Brite. For London native Riches, the move wasn’t just a bid to escape the New York rat race. It was the chance to help a major manufacturer explore virgin territory: the potential of DM as a relationship and brand building tool.

“Bear in mind, Hasbro’s total sales this year will be in the region of $4 billion, 99% of which is at traditional bricks and mortar retail,” she notes. “We do do some direct marketing, but at the moment there’s frankly nothing major. That’s grand, because there’s tremendous opportunities.”

But this doesn’t mean Riches is setting up a separate DM division for Hasbro, which has grown from a little company in Rhode Island to an international corporation primarily through the acquisition of brands like Kenner and Milton Bradley

Rather, Riches’ DM plans will feed into what the other divisions are already doing.

“To begin with, a lot of the ways we’ll use DM is to drive sales at retail. It makes sense to be doing that with what the rest of the brand teams are doing,” she says. “Behind our great brands is a group of very passionate consumers and we’re recognizing those consumers as individuals, as people who need to be talked to on a much tighter basis than mass market television is ever going to drive.”

One of the first steps in that direction-and an obvious outgrowth of the B’omarr Monk experiment-debuted in November: HasbroCollectors.com, a Web site devoted to the company’s toy lines most prized by collectors, including Star Wars, GI Joe, Batman, Starting Lineup, Beast Wars Transformers and Action Man, the European equivalent of G.I. Joe.

Hasbro-through its Beverly, MA-based interactive division-has been online since XXXX, with a corporate site (www.hasbro.com) and close to 30 brand building sites devoted to various products, such as Mr. Potato Head, Easy Bake ovens and the game Frogger. HasbroInteractive.com has been live since Dec. 1997, selling the company’s full line of digital games.

Less than 1% of Hasbro Interactive’s digital games-many based on classic board games like Monopoly, Scrabble, Risk and Clue-are sold online, says Whitney Grimm, director of internet marketing for the division. While many of the sites visitors do fall into the 18-34 male age range, the over one million visits per month range from children to grandparents, he notes.

In addition to buying games online, users can also play online, finding partners at sites like mplayer.com and msngamezone.com. Grimm estimates that there are about 50,000 active Scrabble players online in the U.S.

Unlike HasbroCollectors, which only offers a select amount of product, the game site offers all of Hasbro Interactive’s wares.

“We don’t compete directly with the online retailers in terms of price or promotions, no specials,” notes Grimm. “We might have a promotion at one point or another but certainly no more than what our retailers have an opportunity to get.”

Hasbro’s main competition overall is El Segundo, CA-based Mattel, which moved into the interactive game category in December with its purchase of the Learning Company for $3.8 billion. A survey by The NPD Group of the top 20 toy manufacturers by dollar share in 1997 ranked Mattel first with 19%, followed by Hasbro with 12.2%. Last year, Hasbro purchased two of the other top 10, Galoob and Tiger (maker of this year’s hot toy Furby).

While some exclusive product is being offered on HasbroCollectors-such as a “Clayface” Batman figure, a G.I. Joe Shuttle Pilot and a Muhmammad Ali figure-the commerce side of the site is quite small, notes Riches.

“It is primarily an information driven site,” she says. The site includes links to Hasbro pages about its collectible toy lines, as well as updates about sales at retailers and general background about toy collecting.

Riches-whose own personal Hasbro favorites are Monopoly, Scrabble and Mr. Potato Head-says the company hopes the site will give it a stronger identity with collectors.

“When you acquire companies with a wonderful tradition, like Milton Bradley or Parker Brothers or Kenner, there are customers of those companies who wonder how it is going to change,” she says. “They see Hasbro as a bit unaccessible and bureaucratic. And something like a Web site is a wonderful way to say, ‘No, we’re not. We’re people, we want to supply you with the right things’.”

Even prior to the launch of the collectors site, Hasbro was encouraging interaction online with consumers through things like a G.I. Joe diorama contest (1,000 entries were received) and a survey to choose a new Monopoly pieces (1.2 million voters named their favorites of the three choices-a biplane, a XXXX and a XXXX-the winner will be announced this month at the industry conference Toy Fair in New York).

So far, the plan appears to be working. There were approximately 100,000 visits to the site in its first week, and the average visitor looked at about 15 pages. In its first few weeks of operation, the site generated XXXX e-mails from collectors, ranging from praise about the site to suggestion for future exclusive offerings, as well as XXXX registrations. For registering, collectors will receive a quarterly e-mail newsletter, “The Hasbro Insider.”

“We wanted to see who would be the really hard core customers, who are the people who will be worth our while,” says Riches. “The person we didn’t want to sign up was the casual gift giver who was just buying for someone else and would be irritated by hearing from us.”

The registrations will help feed the dormant 1.2 million name database Riches found waiting for her when she joined the company, which had been collecting data through retail promotions and contests for years, but never mined it for marketing initiatives. To step that up, Hasbro will work with Rob Jackson of Dialogos to segment the file and learn more about its consumers. They’ll start with the U.S. names, as 60% of the company’s business is domestic.

“Because Hasbro hasn’t made this a priority, we’ve got a wonderful unique opportunity unlike, say, American Express or some of the other DM companies who have been in the business and built databases separately around the world,” she says. “We have the opportunity to start off with a real pan-Hasbro database, so we have a database that will straddle all of our companies internationally.”

Globally and domestically, action figures are big business, according to a survey Hasbro conducted with Unity Marketing prior to launching the collectors site. U.S. action figure sales reached more than $2.1 billion in 1997, with 40% of that attributable to collectibles. The typical collector, according to Action Figure News & Toy Review, is a male, age 18-40, who has been in the hobby for over 10 years. Most spend between $1,000 and $2,000 annually and are often driven by the “trill of the hunt” for new figures.

But even though the hunters are online, she doesn’t foresee Hasbro starting an e-commerce site to rival the likes of eToys. The company sees channel conflict as a serious issue, and has no intention of stepping on retailers toes. Riches says Hasbro presented the collectors site concept to retailers before it went live, and discussed what merchandise would be sold online.

“Even if you take a very optimistic view of online trade in toys and games, even with the best estimate in three or four years time, its still a small fraction of the trade done at retail,” she says. “Why would a manufacturer like Hasbro get into competition with its retailers? It just doesn’t make business sense.”

To promote the launch of the site, Hasbro conducted a charity auction on eBay.com, raising over $13,000 for Hasbro Children’s Hospital (top bids included $2,951 for a G.I. Joe created in the winner’s likeness. The company purchased some banner advertising and print ads in toy collectors publications, but choose to spend three times as much on public relations as advertising.

“The Internet is about word of mouth,” says Riches, who estimates that out of Hasbro’s over $500 million advertising budget worldwide, Internet spending is maybe around only 2%. “I think we’re beginning to see you can accomplish more with your PR dollars than your advertising dollars, particularly if you’re talking about very well established brands.”

For Riches, it wasn’t total culture shock moving from an agency to the client side, because she had been there before. Prior to joining OgilvyOne, U.K. native Riches worked for Save the Children in London for 10 years as director of marketing and fundraising. And before that, she was on the editorial side of the magazine business, working on four women’s titles for IPC International Publishing Corp. In the U.K.

Riches notes that initially, OgilvyOne had positioned its interactive division as outside the rest of the business. “Almost setting itself up to be a separate agency, saying everything was different when you go on the Internet. And my feeling was , no it isn’t, although there are some key differences. The only drawback is that I can see is that DM has always been a wonderful covert route. It takes people a whole long time to find out what you’re doing. Of course on the Internet, everybody does know immediately.”

That sense of openness does lead to another thing Riches thinks the Internet is about: partnerships. One such venture is with Hambleys, London’s equivalent of FAO Schwartz. Hasbro created Funstore (www.funstore.co.uk) for the retailer, which offers Hasbro and Hambleys product. Riches doesn’t see a similar deal in the offing with a U.S. retailer, simply because Web marketing is further along in the U.S.

Back in the states, whether Hasbro eventually tries traditional direct mail remains to be seen. “We’re going through a development phase on the internet which is so fast and already nearly over,” says Riches. “What we’ve got to think about is where is today’s three-year-old headed? Will they want to continue doing things through the mail? I think less and less. They’ve grown up with e-mail. If you’d grown up with e-mail, would you ever have written a letter?

“But,” she notes, “when someone has handwritten me a letter, I think this is really special. Maybe this is the answer to all our problems about junk mail. Mail won’t be seen as junk, it will be seen as something special.”

Marketers need to remember that, just as television didn’t completely replace print, the Internet won’t eradicate direct mail.

” I don’t think the Internet will replace things, I think it will displace things. We need to be thinking all the time about where the next displacement will be on the Internet and be a jump ahead of the consumer.”