Cybergold Adds Merchants to Program

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Online loyalty program firm Cybergold Inc. has launched its first incentive program that serves several merchants on the same third-party site, and CEO Nat Goldhaber said the company will strike similar arrangements with other sites over the next month and a half.


"We're very much in demand. In fact, we're more in demand than we have the ability to meet at the moment," Goldhaber said.


Technology from Cybergold, Berkeley, CA, is designed to reward consumers who take specific online "actions" desired by the company's clients, usually online store operators or other e-commerce firms. Such actions include everything from making a purchase to filling out a questionnaire. For example, search engine start-up Ask Jeeves uses Cybergold technology to pay Netizens 50 cents for making their first search.


Cybergold launched a private-label loyalty program this month for client EarthLink, Pasadena, CA, an Internet service provider, that rewards cybershoppers who use their EarthLink MBNA Visa cards when browsing through the 20 stores of the company's virtual mall. Shoppers get a 2 percent rebate on any purchase they make at the EarthLink mall (http://themall.earthlink.net) or a 0.5 percent rebate whenever they use their EarthLink MBNA cards anywhere else, either online or in traditional stores. EarthLink pays Cybergold a commission on purchases.


Signing on a mall that corrals several retail names such as Godiva, Music Boulevard, Barnes & Noble, eToys and the Computer Super Store, marks an important turn for Cybergold, Goldhaber said.


"Effectively, we don't have to individually sign up each of the merchants. EarthLink has done it already," he said, adding that the company has inked similar deals it would not reveal at clients' requests. To meet growing demand, Cybergold has added to its 50-person staff.


Incentive programs appeal to online businesses because they charge only for the consumers who make purchases or follow through on other prescribed actions. In contrast, click-through advertising requires companies to pay for Net surfers in batches whether they spend any money or not. And incentive programs naturally tempt customers to return to buy again and again.


"The whole thing here is the shift from customer acquisition to customer retention," said Fiona Swerdlow, an analyst at Jupiter Communications, New York. E-commerce sites increasingly are focused on "stickiness" -- the ability of a Web destination to hold its customers' attention and get the most revenue out of them.


Consumers shopping at a Cybergold client accept an offer by clicking on a virtual coin image on the page. Unless they're already a member, they then are linked to the company's site at www.cybergold.com, where they join by entering their e-mail addresses and passwords. With 1.2 million members holding incentive accounts, Cybergold is the largest player in the online loyalty category.


Cybergold is authorized by Visa USA to transfer money directly to personal Visa accounts, something members can request at any time they wish. The company is not authorized to make transfers to other types of cards, though Goldhaber said he hopes to change that. Shoppers who join Cybergold can request that rewards be submitted directly to their bank accounts or they can donate them to one of six nonprofit organizations.


Two years old, privately held Cybergold is partly owned by Intel Corp.

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