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Hand-sanitizing startup challenges hospitals’ ban on ads

Reg Littlefield’s company, Germgo Media Group, installs hand-sanitizing stations in Ontario hospitals, then shares the ad revenue with them. But health officials worry the incorporation of advertising into the kiosks sets a troublesome precendent. Mr. Littlefield is pictured here at Markham Stouffville Hospital in Markham, Ont.

Kevin Van Paassen/The Globe and Mail

Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.

When Reg Littlefield first displayed his Germgo hand-sanitizer stations at a Toronto hospital trade show in 2010, he got a cool reception.

"Everybody liked them, but they didn't have the money [to buy]," says the founder and president of Germgo Media Group. "It looked like it was going to be a long time before I got a sale."

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On the last day of the show, Mr. Littlefield had a revelation.

"I put a sign out saying 'how about this for free?" he recalls. The move piqued interest in the stands, which have a small shelf for storing keys or a purse, a hook for brochures and a panel for poster ads that measures 55 by 71 centimetres.

"The first real bite I got was Joseph Brant Hospital in Burlington," Mr. Littlefield says. "I told them I'd put the stands in the hospital for free," with advertising paying the way.

Mr. Littlefield had turned a last-ditch, Hail Mary pass into a business model.

That first year, Germgo earned $100,000 in ad sales. Since then, the Mississauga-based company has grown to 10 employees, sold more than $450,000 in ads and placed stands in 40 hospitals across Ontario, from Niagara to Orillia.

Germgo allows its clients to reject ads they don't feel comfortable with. "Some of them give us restrictions, like we can't advertise personal injury lawyers or industries they don't feel would be appropriate in the hospital, like funeral homes," Mr. Littlefield explains.

Once the boundaries are set, Germgo targets advertisers near the hospital, such as retirement communities, orthotics providers or senior services.

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The hospital then negotiates a revenue sharing deal with Germgo that puts some ad dollars back into their health-care programs. "We're offering hospitals a way to make money and promote a campaign in the interests of public health."

Not all hospitals see it Mr. Littlefield's way, however, and are "kind of afraid of it," he says. "Advertising is brand new in the hospital sector and they feel it's intrusive." Some are afraid a Pandora's box will be opened, and soon slick-haired salesmen will come hawking floor graphics and window banners.

Reg Littlefield and one of his hand sanitizing stations, in Markham Stouffville Hospital in Markham, Ont. (Kevin Van Paassen for The Globe and Mail) for The Globe and Mail Kevin Van Paassen for The Globe and Mail

Reg Littlefield and one of his hand sanitizing stations, in Markham Stouffville Hospital in Markham, Ont. (Kevin Van Paassen for The Globe and Mail)

To create goodwill, Germgo launched public-education campaigns, including the Clean Hands Challenge, which promoted hygiene awareness. He managed to woo a few of the hospitals that don't have Germgo stands to host the campaign. But the love affair was short-lived – they "don't want to open up to advertising," he says.

Germgo has a growing list of advertisers at the ready, but the rejections are making it difficult to expand.

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"We're operational, we're well poised for sales and we've got a great product," he says. "The hurdle is getting past that pushback from the hospitals."

The Challenge: How can Germgo persuade hospitals to sign on?

THE EXPERTS WEIGH IN

Brynn Winegard, marketing expert and principal at business consultancy Winegard & Co. LLC, Toronto

Why is he so married to hospitals? Why not public spaces of all kinds? What about daycares and hostels and places where they don't have taxpayer dollars to pay for hand sanitizer? Hospitals are a very saturated distribution channel. On the one hand, working with them legitimizes the credibility of the product, but on the other hand, they have taxpayer dollars on hand.

He should focus on organizations that desperately need germ and virus control but don't have access readily to sinks. Shopping malls and subways are a perfect example. They'll be more than happy to put up with advertising.

Dominic Lim, assistant professor, and Donald G. and Elizabeth R. Ness Faculty Fellow in Entrepreneurship, Ivey School of Business, University of Western Ontario, London, Ont.

Consider changing the components of your business model – hospitals, hand sanitizer, advertising and revenue sharing model – to better align with the values of the different parties involved. That is how entrepreneurs should pivot.

What if you lease your stations to the hospital foundations (instead of the hospitals themselves) and let them use the stations to raise funds? What if you partner with a charity and use your platform to raise awareness on issues that are agreeable for hospitals (including, but not limited to, public health issues)? Or if you actually have the potential advertisers lined up, does it have to be just the hand sanitizer?

Paul Kalra, founder of Hospital Connection, which provides free baby-product kits for hospitals to distribute to patients or use for fundraising, Toronto

Germgo's website asks its visitors to choose which route they want to take – advertiser or hospital. It automatically takes you in two different directions. Germgo position themselves as the middleman. What I'd encourage them to think about is: What is their unifying cause?

On the one hand, they do the Clean Hands Challenge, which is about making Canadians healthier by preventing them from getting sick. From a hospital perspective, they support that. And from an advertiser's perspective, they can rally behind that.

A unifying cause could be saying to both hospitals and advertisers, "Hey, we're coming together to make cleaner hands to prevent Canadians from getting sick, how do we do it with you?" That one idea, the core vision that's clear no matter who you are, is the piece that is missing.

The moment that's set up, every other piece falls into place – who the clients are, where these stands go. If there's continually trouble with expanding and there's hesitation, it's because that connection with your vision is not there with the people you're talking to.

THREE THINGS THE COMPANY COULD DO NOW

Expand beyond hospitals

Look to organizations that don't have access to hand washing stations and are not averse to advertising.

Pivot the model

Lease the Germgo stands to interested parties and let them run their own campaigns using the advertising space.

Combine your communication

Have both hospital and advertiser traffic connect through one portal on the website outlining an overarching cause they can both get behind.

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Interviews have been edited and condensed.

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