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Microsoft bets on offline direct

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In a bid to extend its presence in offline direct mail, Microsoft Corp. has entered a broad-ranging small-business deal with Portland, Ore.-based Zairmail Inc. The pact underscores not only Microsoft’s expanding focus on the potentially lucrative small-business market but also both companies’ commitment to offline direct mail.

Microsoft will begin marketing Zairmail’s services—which allow marketers to create and execute offline direct mail campaigns entirely online—to users of bCentral, Microsoft’s small-business portal. BCentral’s users will be able to access a Zairmail section of the site to design and mail letters, postcards and fliers.

Zairmail paid Microsoft a one-time fee for representation on the U.S. version of bCentral, said Wilson Zehr, CEO of Zairmail. He would not disclose the rate. Meanwhile, Microsoft will get a percentage, which was not disclosed, of each deal consummated over bCentral Canada.

The deal comes less than two months after the anthrax scare, an episode that many pundits predicted, when combined with the rise of e-mail marketing, would lead to a marked slowdown in offline direct mail. But since then the U.S. Postal Service has reported only a minor decline—about 8% from a year earlier—in postal deliveries.

Immediate marketing boost

For Zairmail, the deal provides a de facto nationwide marketing presence. "It creates additional exposure," Zehr said.

Through the Zairmail section on bCentral, users can create an entire offline direct mail campaign. First, b-to-b lists, supplied by Zairmail, are chosen. Fields can be filled out using Zairmail-designed templates, text can be written and the end product forwarded online to Zairmail. The company arranges for it to be printed and sent via the USPS from one of 12 printing plants in the U.S.

Zehr said one of the main advantages of using Zairmail is speed. "You can compose a campaign, choose lists, drop it in the mail, all in .74 days," Zehr said. According to the Direct Marketing Association, the average offline direct mail campaign takes three weeks to create and execute.

A good year for Zairmail

The Microsoft deal capped off a good year for Zairmail. The company’s 2001 revenues, which Zehr did not disclose, were up between 300% and 400% over 2000. "Business through the Web continues to double on a monthly basis," Zehr said. The company’s client base is now at 20,000, up from 2,000 a year ago.

Though Zairmail has worked on smaller deals for the past year with Microsoft, the current one is its most extensive yet. "Over time, what we’ve been able to do is convince Microsoft that mail’s not going away," Zehr said. "The demographic selection capability’s much better. And it has a much different impact than an e-mail message." Eighty-five percent of Zairmail’s business comes from repeat users, Zehr said.

Microsoft bCentral, which also has vendor deals with companies including Bank One Corp., signed on with Zairmail because of client demand for Internet-based postal services, said Janelle Poole, bCentral marketing manager. "Zairmail was a logical fit for us," she said. "We are focused on small businesses and all we do is focused toward that."

The deal is a natural extension for Microsoft, which earlier in 2001 acquired Fargo, N.D.-based Great Plains Software, a vendor to small and midsize businesses, for $1.1 billion in stock.

BCentral launched to much fanfare in 1999, and since then has quietly been accumulating clients. It now has 1.6 million registered users and 4.5 million page views per month, Poole said. Clients include businesses ranging from hair salons to CPA firms to retail stores, she said.

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