Archive for September 2007

Affiliate marketing 101

As many of you know, I’ve become a regular reader of the Affiliate Marketing Blog. It’s got some great insights into affiliate marketing. In a recent post, Shawn Collins discusses via video how a merchant can calculate the ROI on an affiliate marketing campaign. You can check out the rest of his post here but the gist of it is quite simple. A merchant’s ROI is calculated by taking revenues generated from the program and subtracting from it these three costs: 1) Cost of personnel managing the affiliate marketing program 2) Cost of commission to the affiliate marketer (the one driving the sales to the merchants) 3) Cost of affiliate marketing network or software While it might seem straight-forward, I think it’s a great idea to provide this clarity to merchants. Affiliate marketing isn’t a widely understood discipline, especially by traditional marketers. So everything Shawn and his affiliate marketing followers can do to shed some light on this very effective marketing strategy.

Vesdia Corporation joins Performics’ VIP Club

Vesdia Corporation recently announced that DoubleClick’s Performics online affiliate network has invited Vesdia into its ranks of VIP publishers. VIP, or Very-Important-Publisher, is a positive recognition for Vesdia’s success in driving affiliate sales for Performics and its retail advertisers. Vesdia, as many of you know, recently sold its flag-ship school fundraising program, SchoolPop, to Linkshare for an undisclosed amount of money. Vesdia is moving its focus away from costly direct consumer marketing and more towards building online loyalty / rewards malls for large financial institutions (they currently run the program for Citibank) and other large affinity organizations. Their decision to be a technology provider rather than consumer marketer is smart. I think that this new strategy will pay off in spades, especially since they have been invited inside the velvet ropes of the online affiliate networks and are receiving royal treatment (i.e. higher commissions) from merchant advertisers.

Does breakage hurt or help loyalty marketers?

As many of you know, breakage is often a core part of any loyalty marketing program. People don’t all define breakage the same way, however. For purposes of this blog post (and my own personal definition), breakage refers to all the unused points, airline miles or other non-cash rewards that are left unused by consumers. Many of you probably have unused rewards points from Citibank or Chase or airline miles from American Express. Each point or mile unused translates into approximately $0.01 for the loyalty / rewards provider. As you can see, that adds up quickly. I recently came across an interesting article on breakage over at r-Dialogue that discusses some ideas for why it is actually a bad thing for businesses (banks, retailers etc.) to focus on breakage as a core money-making strategy for their loyalty programs. Check out the blog here. This is a great post and very relevant. I’m a huge fan of loyalty programs that allow members to earn cash-back only for in-store merchandise. This keeps people coming back again and again because they see value in the cold hard cash and is way better and more cost effective for the retailer (Staples is my favorite) rather than give consumers indiscriminate 20% off coupons.

Seth Sarelson quoted in Adweek

My co-founder at OnCard Marketing, Seth Sarelson, was recently quoted in an Adweek article by Joan Voight titled ‘Total Rewards’ Pays Off for Harrah’s. The article, found here, describes Harrah’s new membership rewards program with special focus on what industry experts have to say about the program. Great job Seth!

Interview on B2B Marketing Blog with Tom Pick

Yours truly, Jonathan Treiber, was recently interviewed by Tom Pick over at B2B Marketing Blog about our experience so far running OnCard Marketing, or OnCard, and I tried to match his insightful questions with my own answers and think that overall it was a very solid interview for the company. Please check it out if you’re interested on Tom’s blog by clicking here. Thanks! JT

Performics affiliate network creates VIP club

In a blog post from Shawn Collins over at Affiliate Marketing Blog, I learned that Performics, the #3 online affiliate marketing network, announced the creation of a VIP club to top publishers. You can check out his blog post here. My initial response to this news is that Performics should recognize top affiliates with special perks like personalized account managers, increased visibility/recognition, and invitations to special events. This is a good thing for top affiliates. However, based on this information, it really doesn’t sound any different than what Linkshare and Commission Junction, Performics’ two top competitors, have been doing for quite some time. I guess DoubleClick has finally realized that to compete for top affiliates, Performics needs to offer the same perks that the two other big guys (#1 & #2 in the industry) are already offering. Yes it will add additional costs to the business, but I think it will be worth it in building long-term relationships with companies (mostly large rewards programs) who will generate sales for their advertisers and the network.

LifeSpring Health gains distribution for new rewards card

LifeSpring Health recently announced a partnership with National City, a prominent commercial and retail banking and mortgage finance provider in the Midwest, to provide its LifeSpring Health rewards Visa card to National City customers. This is a great announcement for LifeSpring Health because they are starting to gain consumer distribution channels for their rewards credit card. The card, referenced in a previous post, found here, allows shoppers to earn reward points that can be used for Health Savings Accounts (HSA), insurance premiums, health services, prescriptions, elective medical procedures, gym memberships, and wellness products. LSH has a great card program, especially in today’s day and age of rising health-care costs. National City can only benefit from pushing customers to the LSH card because it costs them nothing and probably involves some type of revenue sharing based on the interchange revenue collected by LSH on each transaction. LSH wins from this deal because it seems that National City will be marketing the card to its customers at no cost to LSH. On the flip side, National City wins because its able to offer a new and innovative rewards card to its members without the associated costs of administering the rewards program themselves. I hope we’ll see LSH strike similar deals with the likes of Citibank and Chase. That will certainly catapult them into the stratosphere of top-tier co-branded rewards cards.

Rewards that pay your doctor’s bill…

In a news release by Lifespring Health, a credit card and rewards provider, they recently announced a new credit card with an interesting rewards twist. As everybody knows, the cost of health-care and fitness activities have been going up and up with no true end in sight. Lifespring Health internalized this consumer dilemma and created a rewards program to go with their new credit card that enables cardholders to apply points they accumulate with the card to health service, prescription, elective surgery, gym membership, wellness products, and contributions to Health Savings Accounts (HSA) and many other related services. The problem as I see it is that the program only works with 275 online retailers. If you look at the demographic of people who worry about healthcare costs (45+ years old) and the demographic of avid online shoppers (<45 years old), there isn’t as much overlap as one might hope. Maybe I’m misreading the press release. If not, I don’t see this program catching on very much since the target demographic for this Lifespring Health credit card simply does not shop online. For those who do, the frequency and dollar volume is probably so low that they won’t have too many points to apply toward their next prescription. Overall though, it’s a great idea and certainly addresses a consumer pain-point. With enough tweaks to their model, they could really have something here. It reminds me of other programs targeted at college savings or retirement savings by the likes of Upromise or NestEggz.

BlogTipping – When are we going to tip?

I was just contacted by a fellow marketing blogger over The Marketing Minute, Drew McLellan. He emailed me a link to a new post on the top blogs he enjoyed reading last month. I was pleasantly surprised to see that our blog was at the top of that list. You can check out the post here. Drew pointed out a few things he likes about our blog and one area for improvement. His points are well taken and I realize that I need to start linking more to other blogs that I reference in my posts. Thanks Drew for the great feedback! I’m so glad you (and many others) like what you’re reading here. Blog Soon, JT

Registered card technology hits the debit card market

Thanks Again, a provider of rewards to consumers, recently announced that they are launching a service that allows consumers to register up to 5 debit cards with their service, turning every debit card into a rewards card. Their philosophy is refreshing and simple. People don’t want new cards in their wallet. They want more rewards on the same card. This philosophy is embraced by only a few players in the market, including OnCard Marketing. Most banks and retailers alike believe that consumers are going to want a new card because it carries their brand name. This is one type of loyalty strategy but one that is not that effective (or popular) with customers. Thanks Again offers members various currencies, predominantly airline miles, but include cash-back as one option. This is a great announcement because debit cards are the red-headed stepchild of the rewards industry. Since margins / profits are so low on debit cards for banks, it is simply unprofitable for them to offer any kind of rewards on those cards. We are seeing the emergence of third-party rewards providers who are able to provide these rewards to debit card holders since the banks can’t. Consumers love rewards, especially if they can get more without doing anything different. Banks won’t complain because they want to offer debit cardholders rewards. They simply can’t afford it. At the end of the day, this is the discussion of bank-funded versus merchant-funded rewards, a very interesting topic for a future post. I am optimistic that this type of program will catch on with consumers. It will be largely dependent on the cost of the program to the consumer as well as the availability of top-brand merchants in the rewards network.