Digest Deals Expand Product OfferingsThe Reader's Digest Association Inc., Pleasantville, NY, announced a joint e-commerce venture this week with outsourced-services provider StarTek Inc. to launch a gift-buying Web site at www.gifts.com in time for the holiday shopping rush.
Also, in separate announcements, the publisher and direct marketer said it sealed exclusive agreements with two insurance direct marketers to offer life and health insurance to Reader's Digest customers worldwide.
The deals follow on the heels of the company's Internet and marketing alliance with WebMD Inc., Atlanta, an online health-information provider, and further supports its previous statement that it would seek to leverage its brand equity across a broader array of products and services.
In the Web venture, Reader's Digest will own an 80.1-percent stake and StarTek will own 19.9 percent.
StarTek brings to the deal fulfillment services and the gifts.com domain name, which it said it registered more than five years ago. The Denver company offers a variety of services - generally for high-tech clients, including, most notably, Microsoft - such as order processing, Internet support, logistics management and inventory control.
The Gifts.com launch will be bolstered by a $20 million consumer marketing campaign that will include print, radio, television, direct mail and Internet promotions. Young & Rubicam Inc., New York, will handle the account. Reader's Digest also will use its magazines and direct marketing to drive traffic to the site.
Initially, the site will offer about 400 products. Brands will include Escada, Laura Ashley, Burberry's, Lenox and Nautica. The site will include a gift- searching function and a personal calendar with an e-mail reminder service.
In one of the insurance-marketing deals, Globe Life and Accident Insurance Corp., Oklahoma City, a direct marketer of life and health insurance, will offer its products to the Reader's Digest customer database in the United States and Canada via direct mail and telemarketing. In addition, the companies said there would be a "significant Internet component" to their marketing efforts. Globe, a subsidiary of Torchmark Corp., Birmingham, AL, which also owns several other insurance carriers, also will continue to advertise in the pages of Reader's Digest.
The insurance products will be offered under the Globe brand name, although Reader's Digest will endorse them.
Joyce Lane, vice president of investor relations at Torchmark, said the company expected that the first Reader's Digest-endorsed mailings to go out before the end of the year.
"This is the first arrangement of this type that we've done," she said. She declined to provide information on the number of pieces that would be mailed or on the past success of direct response advertising in Reader's Digest.
Meanwhile, Digest officials sealed a separate agreement with American International Group Inc., New York, to offer insurance products to Reader's Digest customers in markets outside North America.
The financial terms of the agreements were not disclosed. In addition to supplying its customer lists, Reader's Digest also said it would lend its "direct marketing expertise" to the partnerships.