Changing strategy: Venturing offline

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Online direct-marketing company CoolSavings makes its first foray into the offline arena with this week's launch of a CoolSavings-branded cooperative direct-mail piece.

Just eight months after its stock was delisted from Nasdaq for failing to meet minimum asset and price requirements, CoolSavings' offline extension is an attempt to establish a cross-media platform for marketers and help bolster its own balance sheet, still suffering from the dot-com fallout. (See Profit & Loss, this page.)

"We see [the direct-mail piece] as having very significant potential as a money maker," said Matt Moog, president-CEO of CoolSavings. The company is looking to its past-it launched in 1997 to help package-goods marketers and traditional retailers drive traffic to stores via online marketing and incentive programs-to help it survive a future void of the online retailers on whose backs it rose, and fell, in the late `90s.

complete solution

"We need to provide a complete solution to our advertisers to reach the consumer," Mr. Moog said. "We're looking at how consumers respond to different offers and different channels, and how CoolSavings can leverage its beginnings as a dot-com-only service to really become a much more comprehensive solution." He said the direct-mail piece is a "natural extension" that enables marketers to leverage CoolSavings' database of registered users; 12 million of its 20 million members have opted in to receive offers by mail.

CoolSavings first capitalized on that list of postal addresses earlier this year by renting it to marketers for their targeted direct-mail efforts. The success of that list led to the launch of the cooperative mailer, branded with the signature sunglasses-wearing CoolSavings piggy bank, which contains offers from 14 marketers including children's book company Grolier, photographer Olan Mills and cosmetics company Yves Rocher. The envelope will land this week in the mailboxes of 100,000 households with young families, followed by another mailer next month to 100,000 affluent women.

"This is a big payoff for the CoolSavings' database," said Wally Marx Jr., director of operations for Marx, a CMR/TNS company that audits freestanding inserts and provides coupon information. "Having collected this information for so long, and being able to use it in a targeted manner either online or offline is going to benefit the advertiser."

Yves Rocher, which has used CoolSavings' online marketing programs for two years, is advertising in the cooperative mailer because CoolSavings has delivered the best customers at the lowest cost, said Stephan Dechaux, e-commerce manager at the cosmetics company. "The customers we recruit through [CoolSavings online] tend to generate the most repeat business," he said. "Their targeting capabilities are pretty extensive."

Targeting to a receptive audience is what differentiates the CoolSavings' mailer from mass-oriented coupon-delivery mechanisms like FSIs, said Charles Brown, VP-marketing for coupon-processor NCH Marketing Services. "When the consumer is engaged in the request, those types of coupons redeem much higher," Mr. Brown said. "Direct-marketing and other forms of targeting are more effective from a redemption point of view because you're reaching more people who are likely to buy."