MyPoints in Joint Venture With Japan Printing Giant
DNP claims to be the world's largest printing company, with annual revenue of $10 billion and offices across Asia, Europe and especially the United States. It is the leading supplier of direct marketing services in Japan.
MyPoints operates large Internet rewards programs with an aggregate of 8.5 million U.S. members and 600 to 700 advertisers, many of them large offline companies trying to reach consumers through the Web.
"Japan is obviously the place where any Internet services company would want to be," Geoffrey Ossias, vice president of corporate relations, said. "It is the world's second largest ad market, and in terms of per capita ad expenditures, it is No. 1.
"We believe that MyPoints would be very successful in Japan on its own, but we chose to partner with DNP because we think it will give us the leg up we need to attack the market quickly," he said.
"This is a high-level partnership for us with real strategic benefits. We are the technology and marketing expertise provider, while they add marketing clout and the client base, since most of Japan's DMers use their services."
DNP is investing about $8 million in the joint venture, while MyPoints will add less than $2 million for a 19 percent share in the company, with an option to increase the stake to 50 percent "down the road," Ossias said.
"Mostly we will contribute our technology and derive revenue from licensing and development fees as well as from our trademark training and other royalties from our DM protocols and technologies," he said.
Ossias believes that MyPoints' program can easily be adjusted for the Japanese market. "What we do," he said, "is aggregate an audience of consumers who have given permission to be contacted by e-mail or on the Web.
"These consumers earn points by interacting with our advertisers electronically and receive points for doing so that are good for gift certificates in travel, music or books, like Barnes & Noble," he said.
"In effect, we create an audience and Internet-based tools to reach that audience by turning loyalty programs around. They are usually seen as a customer retention tool. We use loyalty as a Trojan horse to do sophisticated DM for our advertisers."
The company has had some experience in customizing its program for a foreign market. A year ago, it outsourced the technology to Swedish Post, which created bonusmail.se.
The site solicits e-mails from potential consumers interested in receiving mail about a variety of products, from books, sports and media to health and fitness, the Internet and the economy.
Based on the Swedish experience, "we ought to have our technology in Japan localized in the third quarter and go live before the end of the year," Ossias said. Conceptually, the program will be the same as in the United States, but awards will be changed to appeal to Japanese consumers.
Creatives will be done locally, and the copy will be "dramatically different," Ossias said. The program also will make "any other cultural adjustment that is needed," he said. "We partner with companies [that] understand their market, and DNP understands the Japanese market better than anyone else."
There are other benefits. "Once we localize the technology for Japan, it will be much easier to localize it for other languages in that region," he said.
Japan is MyPoints' fourth foreign venture. It has an alliance with Experian in Europe, one with Star Media in Latin America and a pilot program in Australia.