Internet Deals Signal Strong DM Push

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Two Internet developments last week indicate that Yahoo isn't the only big-name Web company with serious direct marketing intentions.


Excite (www.excite.com) reached an agreement with specialty cataloger Hanover Direct Inc., Weehawken, NJ, to offer Hanover products in a catalog department that Excite plans to add to its shopping area in the next few weeks. Also, search engine AltaVista (www.altavista.com) confirmed that it is working on an opt-in e-mail list to be developed and managed by e-mail list firm NetCreations, New York. The confirmation makes AltaVista the first major search engine to begin building an e-mail marketing list to be managed by a list firm.


The developments come on the heels of Santa Clara, CA-based Yahoo's acquisition of direct marketing firm Yoyodyne last month.


"Everybody thought the Web was about branding, and now they've woken up and realized it's about direct marketing," said Rosalind Resnick, president of NetCreations. "We're incredibly optimistic that [the e-mail list development deal with AltaVista] is going to create hundreds of thousands, if not millions, of names for our database."


Under terms of Hanover's agreement with Excite, the Redwood City, CA-based portal's catalog department initially will include merchandise from The Company Store, Silhouettes, International Male and Improvements. Eventually, Excite will offer merchandise from all of Hanover's 12 titles, which include The Safety Zone, Kitchen & Home, Tweeds, Austad's, Undergear, Gump's By Mail, Domestications and Colonial Garden Kitchens.


"The fact that we have a targeted approach with our brands fits in nicely with [Excite's] philosophy of personalization and target marketing," said Hanover CEO Rakesh Kaul.


Though each of Hanover's catalogs have Web sites that it promotes on the more than 300 million print catalogs and other pieces it mails each year, Kaul said, "we are only reaching a tiny fraction of the people who are on the Internet every day. Excite gave us unique access to [a] very large audience."


Also under the agreement, Excite will promote Hanover affiliate Keystone Fulfillment Inc. as the exclusive third-party fulfillment vendor for other catalogers on the site.


Hanover's strongest appeal to Excite was a long direct marketing history, said Andrew Halliday, vice president of commerce at Excite.


"They represent product categories that are already online, but they have in their blood the principles of direct marketing campaign management," he said.


The deal also presents opportunities for synergy.


Excite owns MatchLogic Inc., Louisville, CO, an online ad-management company that also runs e-mail marketing service DeliverE in conjunction with list firm American List Counsel, Princeton, NJ.


Though MatchLogic operates independently of Excite, it has been talking to Hanover about collaborative online direct marketing efforts, Halliday said.


"Though there's not a link directly to the deal that we've just crafted, obviously MatchLogic will be an important resource to [Hanover] going forward for their online campaigns," he said.


Neither Excite nor Hanover disclosed financial details.


AltaVista's e-mail list building initiative is part of a shopping section the firm will launch at http://shopping.altavista.com in time for this year's holiday shopping rush.


"This was created very specifically for users to receive promotions from companies that they're interested in hearing from, and for advertisers to be able to do mailings to folks who have a agreed to receive them," said Perry Allison, director of advertising and sponsorship sales at AltaVista, San Mateo, CA, a division of the Compaq Computer Corp.


AltaVista has taken steps to avoid being labeled a spammer, Allison said. "The list is double opt in. It's a test. If we get negative feedback, we'll pull the plug."


AltaVista's e-mail list has serious potential. The search engine is promoting the shopping section on its home page, which two weeks ago for the first time drew 40-million impressions in one day, and AltaVista averages 100 million home-page impressions per month, Allison said.


As for the major search engines' apparent recent embrace of direct marketing, Allison said, "the Web has always been viewed as a powerful direct marketing vehicle, but I think people are getting smarter about it."


Melissa Bane, senior analyst with research firm The Yankee Group, Boston, argues that at least Yahoo recognized the Internet's DM potential a long time ago. But the company had to wait to begin making direct marketing-oriented acquisitions until online merchants had an appetite for direct marketing services.


"These companies have to very carefully plan their acquisitions so they can stay ahead of their competitors, but so that they don't make the acquisition too early to implement the technology and make good use of it," she said.


Bane also argued that most of the portals still haven't discovered direct marketing.


"They've discovered how to get increased viewers, depth and frequency," she said. "In terms of recency, frequency and monetary value [RFM], they've got the 'R' and the 'F,' but they don't have the 'M. That's where these DM acquisitions come in."


Bane predicted the next wave of online acquisitions to include companies in categories like coupons, affiliate networks, auction technology and e-mail customer service.


"Those will be the next sexy companies on the shopping list," she said.
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