The Daily Record -- Tuesday March 9, 2004
Business Section
Interactive Media Associates stayed afloat by maintaining eclectic mix of customers
By Tim O'Reiley, Daily Record
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Bob Karp / Daily Record
Len Muscarella, left, president of Interactive Media Associates, works with senior developer Jason Smith and designer Aleesha Punturieri. |
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| Len Muscarella started the company nearly two decades ago during the first experiments with transmitting data from computer to computer for consumer use. |
Interactive Media Associates- What company does: Designs and maintains Web sites, mainly for mid-sized companies and nonprofit groups. Also sets up electronic marketing campaigns, such as e-mail newsletters, and has a computer room that stores site information along with software that can be used as templates for sites not completely custom-built.
- Bottom line: Privately owned, with revenues of less than $1 million. Down about 50 percent from the peak in 2000. Net income not disclosed.
- Location: Parsippany.
- Staff: Nine people, plus a couple of regular freelancers.
- History: Started by Len Muscarella in Chatham home in 1985 after he participated in an experiment of sending information over phone lines. First major client was Citibank, trying out banking through computers in the early days of the PC. Helped design an online version of Newsday in 1992-94. Set up data storage division in 1996. Business started to plummet in 2001.
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PARSIPPANY - About half of the cubicles, including the receptionist's desk, at Interactive Media Associates are empty.
Like many other Web site designers, Interactive was ravaged when the Internet bubble burst.
But at least president Len Muscarella's phone has started ringing again.
"There was a period where that didn't happen a lot," he said.
Companies and groups that previously didn't have time to meet or even return his phone calls have started showing interest in launching a Web site or revamping one.
If the trend holds, Muscarella estimates that his revenues will increase about 20 percent this year, well below the 2000 peak but the first uptick since then.
William Rice, president of the Web Marketing Association in West Simsbury, Conn., said statistics on the industry are hard to come by. "The anecdotal evidence is that as the economy picks up, so does corporate demand," he said. "In the last six months, it has really been noticeable," even if not all the renewed interest has translated into firm orders.
In one sense, the path to recovery is clear-cut. "Many people built sites in '98 or '99 and have not done anything since then," Muscarella said.
"A lot has changed since then, but if it's that old, it's too expensive to update" because so much of the software and programming techniques have changed.
Muscarella also has encountered the skepticism of companies that ran with the stampede to establish Web sites a few years ago, only to find out that the results weren't worth it.
As the economy gathers momentum, Muscarella must try to overcome the perception that marketing budgets directed to traditional print, over-the-air and outdoor media bring better returns.
One client, whom he declined to identify, called recently to complain that the Web site that Interactive designs and maintains for the client had not updated for two years the statistics detailing how many people logged on to the site, which pages they turned to and where they came from.
Puzzled, Muscarella found that all the reports were current but were placed in a different electronic file than previously for technical reasons.
The Web site meant so little to the client that nobody had bothered to check the results before.
"That client would probably be the first to say the site isn't working," he said.
E-mail campaigns have been plagued by declining response rates and hampered further by the increase in spam and shortcomings in design, said James Nail, a senior analyst at the research company Forrester in Boston.
Muscarella continues to maintain that Web marketing delivers more customer interest per dollar than other avenues if companies use it correctly.
Encouraging to Interactive was its experience with the Morris Center YMCA in the Cedar Knolls section of Hanover.
The Y launched its Web site about two years ago, when a major donation allowed it to upgrade and expand its facilities.
After that, it rarely touched the site, marketing director Michelle Breslin said.
The programming language needed to refresh the site was foreign to the staff and the Y did not have the budget to regularly call in consultants.
Even though the Y does not sell memberships or generate any other revenue through the site, "people got used to seeing it and asked for a year and a half, 'When are you going to update it?'" Breslin said.
When the Y finally went ahead with a redesign in December, it came with a plain English program for updating it.
Such programs will change the complexion of Interactive as demand revives, Muscarella said.
He foresees little or no growth from site maintenance as companies increasingly perform the work inhouse.
Likewise, Interactive's Reliaserve division, a room full of computers that hold the data for some client Web sites and templates for people who don't want to pay for Web sites built from scratch, has stagnated.
Increasingly, companies have turned to large-scale hosting centers that are cheaper than boutique operations, such as Interactive's.
Instead, Muscarella will pin his hope for the company's rebound on design work and market consulting, such as mass e-mail newsletters or advertisements known as blasts.
The Paper Mill Playhouse in Millburn, another Interactive client, has built a list of 12,000 names for e-mailing notices about upcoming shows or discounted performances during slow times, public relations manager Charlie Seidenburg said.
Paper Mill sells a growing share of its seats through the Web site and will begin selling season tickets on it later this year.
Another Interactive client, Edison-based Polywood, wants to buff its image through a redesign that Interactive is drafting.
Using technology developed at Rutgers University, Polywood recasts scrap plastic into a lumber-like material for uses ranging from picnic tables to railroad ties, a field that has drawn several other entrants.
"The old Web site has done nicely, but I don't think it has given the differentiation we are looking for," Polywood president Marc Green said. "We are looking for more features and high tech (in the relaunched site) as a way to emphasize out technology."
Some of the flashier Web design styles of the past are starting to disappear.
The elaborate moving graphic shows that some Web sites use as a prelude are being incorporated into the home page, Interactive senior designer Jason Smith said.
Page viewers increasingly have clicked off opening pages or permanently disabled them as the novelty wore off, so any change in the message got lost, he said.
In addition, Interactive will face stronger competition from major public relations and marketing shops that have assembled or acquired Web design departments.
Muscarella said, "We do bump up against that, and it can be difficult because it is a relationship business," in which a client might direct all its work to one firm instead of spreading it around.
Muscarella, who started the company nearly two decades ago during the first experiments with transmitting data from computer to computer for consumer use, initially thought that he had outsmarted the dot-com crash.
The company continued strong in 2000 even as the body count among Web site design firms mounted, thanks in part to its client mix.
He had largely dealt with established companies - Interactive's first major job was designing a crude home banking system in 1985 for Citibank - and had largely shied away from the startups that held venture capitalists and Wall Street in thrall during the mid- to late-1990s.
Interactive did take on some clients that have disappeared, such as the home medical information site mediconsult.com, but it largely stuck with an eclectic mix of nonprofit groups and mid-sized companies.
In a magazine column four years ago, Muscarella correctly foresaw the failure of Priceline's short-lived venture into discounted groceries.
But as the economy began to falter in early 2001, clients began to rein in their Web budgets after spending huge amounts on technology and not seeing nearly the returns that Internet promoters touted.
The Sept. 11, 2001, terrorist attacks indirectly delivered a punishing blow, particularly with clients based in New York.
"I can't tell you how many people just stopped doing what they were doing for several months," Muscarella said. "Psychologically, it was a huge blow."
Revenues plunged about 50 percent, from what Muscarella would only describe as more than $1 million to less than $1 million.
He personally handed out severance checks to several employees, bringing the number from about 15 to nine.
While he never thought that Interactive would capsize, he feared that it might wind up being only a shadow of his dream.
But as the market has started to rebound, that worry has subsided.
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