All checked out

By Alicia Doyle

August 1, 2000 Web posted at: 1:52 PM EDT (1752 GMT)

In this story: Untapped market Breaking new ground RELATED STORIES

VENTURA, California (The Ventura County Star) -- Employees may soon see advertising banners on the backside of their paycheck stubs.

Larry Wolf and Todd White, the brains behind AdChek

AdChek Inc., an entrepreneurial start-up by Ventura residents Larry Wolf and Todd White, has established a new advertising delivery channel -- direct advertising -- on the backside of employee paychecks.

"Our slogan is 'Money for Nothing, Checks for Free,' " said Wolf, co-chief executive officer.

"It's useful to the companies that do payroll in-house and useful to outsourcing payroll companies because it eliminates a hard cost of doing business by using AdCheks. The key to good marketing is to reach consumers at the point of decision when they are ready to purchase. AdChek provides a medium to advertisers that reaches consumers who have money in hand."

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Established in June 1999, the company already has secured contracts with three major corporations that process payroll for a community of more than 1 million employees, representing more than 14 million annual checks, Wolf said.

The company is currently in discussions with Lucent Technologies, J.C. Penney, Kroger and 30 other corporations that can benefit from using the AdCheks.

The company's current marketing partners include Earthlink, AT&T Wireless, Emazing.com, Proflowers.com and others. The company also has printing agreements with many of the largest business form printers in the country who print more than 2 billion checks combined.

There are 135 million civilian workers in the United States who receive paychecks, documents show. There are 5.85 billion payroll checks processed in the United States annually.

Based on AdChek's research, 92 percent of working Americans receive paychecks or direct deposit drafts, and 84 percent of employees carefully review their paycheck stub every payday and keep them for one year.

Advertising on the backside of paycheck stubs is a novel idea, but with all the other avenues of available media out there, it would require a tremendous amount of ingenuity to put it together and make it successful, said Peter Shih, senior vice president of the American Advertising Federation.

Network television and the big screen, for instance, reach a wide audience in terms of advertising, Shih pointed out. Other issues, such as the frequency of the ads and exposure to the ads, determine how successful the advertising will be.

"The concept is reach," Shih said.

AdChek has successfully printed a beta test issue of 400,000 checks and is currently printing a second issue of 1 million checks for August, Wolf said. The company expects to roll out in October 4 million checks.

"Our goals are to provide the payrolling company with a reduction or elimination of existing costs while providing an employee benefit," Wolf said. "We also have a goal of providing our marketing partners with a very direct, unique medium to reach targeted consumers with special offers and discounts."

AdChek is the innovator of this patent-pending, alternative media and the first to market in this space, which represents an untapped aggregated direct channel of $1.2 billion in potential advertising revenues, Wolf noted.

"This has never been done before," he said. "It has tremendous appeal due to the impulse, point-of-sale and promotional characteristics."

The first phase targets the lucrative 18-to-34-year-old female demographic. Ads are distributed on the check stubs every Friday. Ads are delivered when consumers have money in hand. Plans for the future are to take the company public, most likely in about two years.

Wolf and White have raised funding through their own investments in the company and through family and friends. They are currently in discussions with a few venture firms and "angel" investors for first-round financing to expand operations.

White comes from the staffing and patrolling industry, and Wolf comes from the advertising and marketing industry. Friends for more than a decade, the two have been kicking around ideas for the past couple of years, with White looking for ways to reduce costs of doing business, and Wolf looking for new avenues for advertisers to reach consumers.

"One day at lunch, we got the idea of paying for business forms by offering advertising on the back side," Wolf said.

"At first, it seemed silly. But as we continued to develop the idea, it began to make a lot of sense."

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