Freemark, Juno pin their hopes on co-marketing deals with big brand backers
Free, ad-supported e-mail is getting its first test of commercial viability.
Cambridge, Mass-based Freemark will start small, offering its software only in San Francisco through a co-marketing agreement with Citibank. If the promotion is successful, Citibank will roll it out nationwide.
PIGGYBACKING ON BIG BRANDS
"We're a small company and we don't have brand-name recognition," said Doug McFarland, Freemark's exec VP-general manager. "We could hire a big agency and spend millions of dollars, but we've chosen to associate our name with a number of companies to receive value from them."
Freemark also has co-marketing agreements with Radio Shack and magazines including PC Week and NetGuide.
In the works are bundling deals with PC marketers as well as affinity marketing deals with regional Bell companies and universities.
Juno, launching today, is negotiating bundling arrangements with PC marketers and has formed a co-marketing deal with Budget Rent-A-Car, which will offer the software to its best customers via direct mail.
A $20 MIL AD BUDGET
Juno is spending $20 million on advertising to drive awareness. New ads via Jordan, McGrath, Case & Taylor, New York, break this week in Business Week, U.S. News & World Report, The New York Times and The Wall Street Journal. TV spots will start this summer.
Both companies are targeting the consumer market. An estimated 22 million U.S. households own PCs with modems, but just 9 million actually use the modems.
"No one knows who Juno or Freemark are, so forming alliances with big names is key," said Greg Wester, an analyst with Yankee Group, Boston.
ADS ARE IMPORTANT
Also crucial to each service's success is the advertising. Every message delivered by Freemark contains an ad across the bottom of the screen. Clicking on the ad leads to more information.
Freemark will launch with about 25 advertisers paying 14¢ per exposure. Advertisers include Nabisco's LifeSavers, Planter's peanuts, HotWired and CatalogLink.
Juno, meanwhile, has about 15 advertisers, including Miramax Films, Quaker Oats Co.'s Snapple and Lands' End. Ads cost 10¢ per impression.
Rather than appearing on each piece of mail, however, Juno ads run across the top of the screen at 30-second intervals.
Owned by investment company D.E. Shaw & Co., Juno believes it can grow at a rate of 250,000 users per month, equivalent to the growth of America Online.
"We have the resources to compete in a market that has an AT&T, America Online and Microsoft," said Charles Ardai, Juno's president. "A company that doesn't have those kind of resources has no business launching a product."
Copyright April 1996 Crain Communications Inc.