SugarDVD CEO Jax Smith makes a habit of observing and learning from the competition.
With a potent blend of aggressive affiliate marketing and innovative mainstream advertising and promotions, adult DVD movie rental service SugarDVD has made itself one of the top names in the space. The company stocks about 20,000 titles, adding 50-60 new movies per day. Along with recently revamping its affiliate program, DVDDollars, SugarDVD launched its most ambitious branding effort yet: a national TV ad campaign starring adult superstar Tera Patrick.
"We've well surpassed more than a million rentals in the last couple of years," Smith says.
SugarDVD's shipping centers in New York, Dallas and in the adult industry's unofficial capital, Chatsworth, Calif., allow for relatively quick turnaround, and Smith hopes to open a fourth center in Chicago within the next six months, with one in San Francisco after that.
Prior to co-founding SugarDVD, self-described "serial entrepreneur" Smith had launched two mainstream Internet firms.
"One was a complete bomb without a business plan," the Austin, Texas, native says. "I dumped in lots of cash, got distracted by a stripper for three months and was out of business. The other one did OK. I learned a lot and realized I loved being a businessman. That being said, all I have really done in the past 15 years is work. Every day."
Smith and two partners, Toad and Jesse, (he praises them as "extraordinary" programmers), founded SugarDVD in late 2001, after concluding that "the discreetness of renting adult movies by mail would be extremely appealing to all those that get sweaty and nervous going into a store." The company currently has a staff of about 30.
And the name?
"We wanted something that was sexy and alluded to the product," Smith recalls. "But also something that wasn't 'super adult' like 'Asshole DVD' or 'Suck My Cock DVD.' We wanted something we felt we could put out in a lot of places and that would be accepted."
Tera on the Tube
The Tera Patrick brand campaign began airing in March on MTV, VH1, BET, E! and Spike TV.
"We picked these channels because they cater to our audience and the message is instantaneous," Smith says, noting that Patrick delivers the message with a touch of class. "She has an elegance, beauty and charm which make her the perfect spokesperson for SugarDVD," he says.
The 30-second spots, which promote the convenience of renting adult DVDs from SugarDVD through the mail, are far from hardcore, with Patrick tastefully dressed against a backdrop of an animated SugarDVD logo. We hear her intone — in her sexiest come-hither voice — "SugarDVD allows you to discreetly rent adult movies by mail."
The ads represent another step in adult's convergence with mainstream entertainment. Smith won't specify the campaign's cost but says it was worth the high cost of production. He says that SugarDVD spent a little "north" of $1 million on all of its advertising in 2005. That figure includes costs that were budgeted for the Patrick commercial.
Smith talks about hoping to expand the partnership with Patrick, including a contest in conjunction with her website.
The Patrick ads are part of an overall marketing campaign that includes radio, the Internet and event sponsorship. A few weeks after the Patrick spots started airing, SugarDVD took its message to Sirius Satellite Radio. A focal point has been Sirius' Maxim Magazine channel, which broadcasts a mix of comedy, sports and music targeting — like the magazine itself — the under-30 male demographic. Smith calls it an "audience that appreciates beautiful women and the finest that the adult entertainment industry offers." SugarDVD plans to continue running both TV and radio ads.
Chance of a Lifetime
Another high-profile promotion has been SugarDVD's sponsorship with Playboy TV for an ongoing "Casting Call" contest to send amateur girls to Los Angeles to appear on the adult channel "Night Calls," with hosts Jesse Jane and Kirsten Price.
Asked about the initiative's origin, Smith says, "We have been doing contests to promote our brand in an exciting way," referring to past promotions that offered a chance to win dates with adult actresses Ashley Blue, Mary Carey and Tiana Lynn. (WantedList has also shown a knack for generating buzz with "win a date with a porn star" contests.)
"We felt this contest offered a big impact with its 'chance of a lifetime' opportunity to go on Playboy TV," Smith says. "We also believed that the Playboy TV audience would be interested in our rental service. It is a unique contest, not a movie giveaway or discount." Switching from straightforward businessman mode to colorful quipster, Smith adds, "And what a joy to review some of the hairy people's submissions from the Midwest!"
Meanwhile, SugarDVD hasn't been ignoring the fundamentals of adult website marketing. The company recently updated DVDDollars, which also enlists affiliates for SugarDVD's gay offshoot, BoyToyDVD.
The changes, Smith says, make it easier to use, more attractive to look at and, thanks to the newly implemented program incentives, significantly more profitable for affiliate webmasters. DVDDollars also now offers custom skins to webmasters who send 100,000 or more uniques per month.
Sweet Ride Ahead?
Smith is sold on the value of mainstream marketing and pictures a solid place for it in SugarDVD's future. "As we grow, we continue to increase our ability to do more far-reaching things," he says. "We now offer several services outside of rentals" — these include an embryonic video-on-demand section, sex toys and DVDs for sale — "and we intend on bringing them into our advertising fold. We like TV as a medium, and we like radio. Outside of these, we will be looking to sponsor special events or host them. These give us an excuse to ride around in a huge limo with our logo on the side and wave to people."
Asked if SugarDVD takes seriously the need to stay ahead of the VOD/digital delivery curve, Smith responds with a characteristic mix of seriousness and tongue-in-cheek gusto: "Hell yes! We're always looking at what is next and what could put us back on the streets eating out of restaurant dumpsters in back alleys. When you have two incredible programmers as your partners, technology comes up in every meeting."
With digital delivery of content poised to do to DVDs and other "tangible" media what meteors once did to Earth's dinosaurs, the company has registered a separate domain, SugarVOD.com. Smith wants to start building that brand in the coming months. He also plans to offer VOD in Windows Media format to move beyond the limited availability of content for DivX.
"We intend on continuing the expansion of our VOD service and exploring some new cutting edge technology brands in the near future, although I have no idea what these are going to be yet," he said.