Paying consumers redeemable points to review Web sites or e-mail ads isn't a new idea. But paying users a universal rewards currency, which can be used to buy merchandise in major catalogs is--and it's also the business model behind MyPoints, a service going live this fall from MotivationNet, a startup from Schaumburg, Ill.
Unlike a frequent flier program that provides limited ways to spend points, "This is a global system," said Craig Muller, president of MotivationNet, noting that the program can work with offline incentive programs.
20,000 EXPECTED AT LAUNCH
Advertisers include the Goeken Group of Cos., a Chicago holding company that markets safety products and a medical record service called Global Med-Net; and water filtration company RainSoft, which said it would likely use MyPoints to drive traffic to its site and generate leads for its sales force. Advertising costs $16,000 for every million points advertisers buy to issue to customers.
The service expects to launch with about 20,000 participants, culled from undisclosed Internet service providers, which will promote the service to its users, as well as direct-mail groups.
The key difference between MyPoints and some of the other Web incentive programs, such as NetPerks from Omnicom Group's Alcone Marketing Group or CyberGold, is how points are earned and redeemed. While most other programs are restricted to Web activities, MyPoints also awards credit for offline activities, such as completing a warranty card or participating in an employee motivation program.
The redemption programs are different, too. Normally users can redeem points for either cash or products from a lineup of goods handpicked by the service, often from a sampling of advertisers' products. Meanwhile, MotivationNet is leveraging its financial backer Direct Marketing Technology (Direct Tech), a list processing and database management company, to arrange redemption deals.
Direct Tech has a client list including major names like Eddie Bauer Inc., Lillian Vernon Corp., Crate & Barrel and Spiegel. It also was recently bought out by credit card bureau CCN/Experian, which handles up to half of all credit cards issued, as well as the back-end transactions for America Online and CompuServe.
PROMOTES LOYALTY AND VALUE
All of which, Mr. Muller said, would help the service evaluate potential consumers and target them online, without invading their privacy.
Abhishek Gami, VP-Internet technology analyst at Nesbitt Burns Securities, believes MyPoints has good survival chances given its relationship with Direct Tech.
"It promotes loyalty, and it provides value to everyone in the food chain," Mr. Gami said.
Mr. Gami foresees its biggest challenge as battling the competition. "It'll come down to how good their partnering redemption and distribution programs are, and how successful their marketing campaign is," he added.
Copyright August 1997, Crain Communications Inc.