JW Direct Banks on Space-Age Modeling TechniqueThe president of JW Direct is so confident that support vector machine modeling will be successful for his customers that his company has agreed to share the financial risk with clients that test the technique.
While the technology has been used by NASA to find volcanoes on Venus and to detect sunspots, JW Direct, Culver City, CA, is betting it also can boost response for direct marketers. Its president, Joe Weissmann, has more than 30 years of database marketing experience.
In simple terms, Weissmann said the technique uses statistical theory along with intuition. He recruited chief scientist Padraic Smyth, an expert in the field, to develop the models. But Weissmann agreed that run-of-the-mill marketers aren't that technically minded; they just want to see results.
That's where JW Direct comes in with its shared-risk offer. The company will assume two-thirds of the financial risk on the $15,000 model if a client does not get good results. So, the out-of-pocket risk for the mailer totals $5,000.
Weissmann doesn't seem worried.
"At this stage of the game the company is willing to share the risk with clients that this will outperform anything else that's out there," he said. "I've got 30 years in this field, and I'm putting my reputation on the line as well as my money behind it."
Weissmann began his career at ADVO in 1969, then founded a firm called Demographic Research in 1975. He started JW Direct in 1992 and began working on direct mail applications for support vector machine modeling, or SVM, about a year ago.
When the technique takes off, Weissmann expects to discontinue the deal and raise the model's price to $25,000. If a client is pleased with the model, JW Direct also will offer installation of a customized system on the client's premises for $50,000. It will train the client's staff to use it.
Clients are just getting ready to test it. Weissmann would not name clients yet, but a condition of the shared financial risk is that the company will be able to publicize the results. For more information, Weissmann can be reached at 310/841-6500 or at JoeWeissmann@earthlink.net.