NeoPets, Inc. is an internet start-up that had struck gold in a time when many of its sister companies were feeling the pain of a market correction from asset hyper-inflation and subsequently shutting their doors. They clearly have the competitive advantage by being first to market with “immersive advertising”. Immersive Advertising is a key factor that has helped lead to their success over other online advertising firms that just used traditional banner and pop-up advertisements. Their website is #1 for “stickiness”. The data from Nielsen/Net Ratings showed the amount of time users spent on the site was over 7 hrs. So now, not only have they developed a new proprietary advertising model, but they had also developed an online environment that captured a non-typical massively multiplayer online game, or MMOG that created a loyal online social community. Finally, the nature of NeoPets audience was very unique. NeoPets audience consisted of predominantly older youth and younger teens that had to be knowledgeable or computer savvy to some degree in order to be able to interact on NeoPets website. NeoPets also was unique in the fact that the majority of their user base was female, which was unusual for many online gaming communities. The combination of their audience and advertising model made NeoPets a very attractive service for firms looking to market their products online using an industry that had pretty much collapsed from within.

Also a very important issue to NeoPets, for a number of reasons, was globalization. First off, they have created a niche marketing strategy in an IT based industry and developed a very large and loyal user audience which they’ve managed to keep to themselves, so far. One of the threats posed by globalization is that there are already other media companies that have similar product offerings already out in the offline market in other countries that haven’t developed their product into an interactive online media such as NeoPets. Similar kinds of games and/or cartoons in the offline markets already exist that, in essence share several similarities to NeoPets in terms of storylines, characters, and play style. These included Tomagotchi or Giga pets, both a hand-held game with similar a similar play style to that of NeoPets in that the player had to take care of a virtual pet. Also, Dragon Ball Z which was an anime cartoon that consisted of collecting pets with special powers and has a large fan base following, the cartoon has spawned the creation of a plushies, a card game, and movies; much like NeoPets’ Doug Dohring hoped to do with the NeoPets. Albeit these few examples do not use an as enriched or as dynamic gaming/advertising medium as NeoPets does online, but they could pose a threat if they moved over to the internet arena because of their already existing popularity offline, they would be in a position to compete directly with NeoPets for internet users.

Mr. Dohring wants to control the growth of the company and the image of NeoPets. One of the biggest opportunities for NeoPets is that the company is still young and in a rapid growth stage. NeoPets is still reinvesting its profit back into the company to fund growth and is very agile, and even though it is self funded at this point, due to the competitive nature of the internet industry and rapid rate of technological change, they could easily be in international. Furthermore, a joint venture might not be what is best for long-term growth, remember Dohring also sees potential by expanding globally into markets where his current multinational corporate customers are already doing business and has a strong desire to turn NeoPets into a franchise and in that aspect to bring Green Dot on as a minority equity holder would also allow NeoPets to continue to control its own growth and intellectual properties as it sees fit. Globalization, does offer another option there is an opportunity for merchandising and/or co-branding further, to take the Kraft Mac’n’Cheese print ad even further, to continue to expand “virally” through companies that they already work with. The company, again, is very young and spread mostly through the internet by word of mouth but has already achieved so much popularity. Apply the same viral principal to NeoPets international growth strategy, greater advertising revenue could be generated through co-branded merchandise launch with a multinational firm that 1 is already a client, and 2 also operates in the same geographic markets that NeoPets wishes to enter into as well.