Flyer miles may create better buzz for start-up

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Giving away Palm handhelds--one of the Net set's most prized commodities--may not be the best kind of online promotion in all cases.

That's the feeling at start-up Productbuzz, a Web site for vertical trading communities that recently ceased using the popular personal digital assistants and digital cameras as awards for some registered users.

Though the Palm giveaways were successful in drawing new members, the prize wasn't perfectly suited to the independent professionals targeted by the company's pharmaceutical and home health care online exchanges.

"I wanted our potential members to get very excited," said Mallory Kates, VP-marketing at the Boulder, Colo.-based company.

Productbuzz launched in October as a unit of bCandid Corp., a provider of software for online discussion groups. In January, bCandid spun off the unit, which at that time received $7.5 million in venture funding from Sequel Venture Partners and iBelay.

In search of the perfect prize

The company started monthly Palm handheld giveaways in November. Then, in February, Kates said she decided the target audience would respond better to digital camera giveaways. That promotion ran from March through last month.

But Kates said she believes the company can get an even better response with a more sizable and personal reward.

So last month, Productbuzz switched to an online sweepstakes with a grand prize of 1 million frequent flyer miles. To enter the sweepstakes, a visitor to the Web site has to register for a free membership, refer a friend or perform a product search. Visitors are allowed up to 15 entries a day.

"I know that people will go to great lengths to get a million frequent flyer miles," Kates said.

"If you read your psychology books," she said, "they'll tell you that if you can give someone an incentive to take a new action a number of times, chances are, if it's a good and positive result, they will become habituated."

That became obvious earlier this year, when a man now known as the "pudding guy" reminded marketers of how powerful promotions can be. David Phillips, a California civil engineer, purchased more than 12,000 packages of Healthy Choice pudding so that he could accumulate more than a million frequent flyer miles.

Kates compared the giveaway of one million frequent flyer miles to a significant lottery jackpot. People above a certain demographic won't buy lottery tickets unless the jackpot is above a certain dollar amount, she said. But, when that amount is high enough, everybody plays--despite the fact their odds lower as the jackpot increases.

Direct and print, too

The company also just launched a direct-mail and print advertising campaign, created by New York-based Lieber Levett Koenig Farese Babcock, with the goal of driving visitors to the Web site.

The direct mail effort will target 113,000 people in the pharmaceutical and home-health market. An e-mail blast will ask site members to "refer a friend."

Productbuzz's current giveaway represents quite a departure from its earlier promotions, which were publicized at trade shows and by fax.

Without the funding to buy lists or an agency to create direct mail, the fledgling company drew up and faxed press releases--which don't qualify as spam---that happened to mention a giveaway.

Productbuzz purchased the airline miles from, a start-up also backed by Sequel VenturePartners, after seeing WebMiles' full-page ad in The Wall Street Journal. Sweepstakes companies were too expensive, Kates said, and going directly through the airlines also proved to be pricey and time consuming--and it would restrict the winner to that airline.

Robin Leventhal, director of marketing at Productbuzz, said that outsourcing the promotion to WebMiles has been cost-effective, though she would not disclose the promotion's budget.

"It allows you to concentrate on your business," she said. "Let the perks people handle the perks."

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