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April 24, 2001

By Cara Beardi

CHICAGO ( -- After doing its homework for more than a year, college-savings loyalty network Upromise -- the brainchild of former Digitas founder Michael Bronner -- is graduating today with the national launch of its service, through which leading marketers contribute a portion of consumers' spending to college-savings funds.

Brookline, Mass.-based Upromise hit the ground running today with companies representing telecommunications, retail, oil, real estate, financial services, hospitality, automotive, restaurants and e-tailing.

Tax deferred
Upromise acts as the liaison between marketers and consumers, creating a loyalty structure that rewards customers in the form of contributions to tax-deferred, college-savings funds. Every time a Upromise member makes a purchase at participating retailers or a payment to participating service providers, that company sets aside a percentage or fixed amount to an account managed by Salomon Smith Barney or Fidelity Investments.

"We made a decision, because of the bigness of what we're doing, to wait until we had a full range of consumer-purchasing opportunities, from pumping gas all the way up to buying or selling a home and everything in between," said Upromise President-Chief Operating Officer Jeff Bussgang.

Partners announced today include AOL Time Warner, AT&T Corp., Borders Group, Citigroup, Cendant Real Estate Group (parent of Century 21, Coldwell Banker and ERA), Coca-Cola Co., Countrywide Home Loans, CVS, ExxonMobil Corp., General Motors Corp., McDonald's Corp., Starwood Hotels and Resorts, Toys "R" Us, 7,000 restaurants nationwide and 70 online retailers.

The service does not require any special cards; members join for free at by registering existing credit cards and billing information so Upromise can track contributions and notify families of account progress. Families can set up networks of family members and friends whose transactions all benefit one child's account.

Marketing vehicles
Upromise says its partners will act as marketing vehicles for the loyalty network. The companies' direct mail efforts, billing inserts, in-store materials and other customer communications will act as "an unprecedented public awareness campaign," said Mr. Bronner, who is Upromise's founder, chairman and CEO. "We believe this is a more powerful way to create awareness vs. an ad campaign," although Upromise plans to launch a marketing effort of its own in June through Interpublic Group of Cos.' Hill, Holliday, Connors, Cosmopulos, Boston.

Upromise predicts that "the summation of all of the contributing companies communicating to their customers that they can save for college every week, every day, every month, every year" will lead to 9 billion impressions this year on

Upromise, backed by $90 million in funding, relies on a performance-based revenue model, through which it collects fees from participating marketers based on transaction volumes. (Funding is from General Atlantic Partners, Hellman & Friedman, Greylock, Kleiner Perkins Caufield & Byers, Charles River Ventures, General Catalyst and The Goldman Sachs Foundation.) It does not share any customer information with advertisers but provides them the backbone for a competitive marketing advantage, through which they plan to redirect advertising budgets.

"I think you will see a reallocation of advertising and marketing dollars," said Harry Pearce, vice chairman of General Motors Corp., which will donate $150 to a family's account for new vehicles purchased or leased. "We don't intend to increase prices to our customers; we want to be smarter as to how we use our marketing dollars, and we'll use all channels."

Standing apart
Some marketers see Upromise as a way to differentiate themselves in competitive categories.

"We don't look at this as a marketing expense. We view this as a marketing investment," said Coca-Cola North America Vice President Jackson Cosey. "In addition to calling attention to the movement, we really believe that this a point of difference. This is a competitive advantage. Once this movement takes off, when it comes to making choices in consumer products, we believe that this will tilt the choice to our product."

Copyright April 2001, Crain Communications Inc.

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