|Meet FTD's new owner
A conversation with Mark Goldston.
by David L. Coake
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 Super Floral Retailing 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.
SFR: 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.”
SFR: 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.
SFR: 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.
SFR: 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 Super Floral Retailing. Reach him at firstname.lastname@example.org or (800) 367-4708.