By acquiring CCS Inc. Wednesday, Alloy.com, an online teen destination and offline cataloger, added an essential element: boys.
Alloy.com, which has a database of 4 million teens who receive its catalog and participate at the site, had historically skewed more heavily toward girls within its target demographic of 12- to 19-year-olds. Roughly 65 percent of its database is female.
To help balance the scales, it acquired CCS' print catalog and Web presence. CCS sells clothing, shoes and hard goods for teen-age skateboarders and snowboarders. The company's database of 1.5 million male teen-agers will now be available to Alloy.com.
The Alloy.com acquisition addresses an area in which the company was severely lacking, said Renny Gleeson, vice president of marketing at iTurf.com, New York. iTurf is part of a network of 10 Web sites and catalogs that reach 70 million teens yearly.
“What they're doing is attempting to expand their direct marketing base. They tried from the outset to be a unisex publication, but it went from 50 percent girls/50 percent boys to 75/25 to 90/10.”
Gleeson pointed to Alloy.com's most recent catalog as an example. The edition, which features characters from “Buffy the Vampire Slayer,” isn't exactly something an 18-year-old boy would pick up, he said. “If you're going to appeal to Gen Y, there's two genders, and their catalog appeals to girls for the most part.”
Integrating boys into the Alloy.com catalog mix or altering the CCS catalog could pose problems, Gleeson said. Especially considering the amount of ads Alloy.com positions in its catalog, which is a major turnoff for male teens. “If you look at the first six pages of their catalog, it's all ads,” he said. “There's a fine line you run between the value gain selling advertising and what you lose moving product out.”
Another potential land mine is that skateboarding and snowboarding “may or may not go out of style,” said Gleeson.
Alloy.com paid a premium to acquire CCS. It issued 3.3 million shares of stock, valued at more than $42 million, and repaid $10 million in assumed debt.
Matt Diamond, CEO and co-founder of Alloy.com Inc., New York, sees the acquisition as not only an advantage for the company, but also for its advertisers such as Eastman Kodak, Johnson & Johnson and Procter & Gamble.
“For the Kodaks and the McDonald'ses of the world, girls spend more than boys. Teen-age boys of course are still half the market and are often considered harder to reach. CCS was the only game in town that had a market of boys,” Diamond said. “Now we have a database that's more balanced that we can leverage for ourselves to sell products to the demographic and help consumer product companies from Procter & Gamble to Johnson & Johnson to address this demographic directly.”
An immediate benefit will also be a lower cost-per-acquisition for teen-age boys. It cost the company $25 to $35 to acquire a female customer and between $30 and $45 to acquire a male customer. Diamond expects the CPA for boys to shrink by $5 to $10.
Once the company acquires a customer they expect to gain significant reach, as the teen pass-along rate for a catalog averages three to four times. Alloy.com mails 35 million catalogs each year. CCS mails five to 10 million catalogs annually.
This goes a long way for direct marketing, said Diamond.
“We have a very unique, cost-effective business model for driving traffic to the site. Others spend millions on marketing. We can circulate catalogs for what we call 'real-world branding,'” he said.
iTurf is part of a network of Web properties and catalogs that reach individuals ages 13 to 24. It includes Delia's, Droog, gURL.com and TSI Soccer.
The iTurf network of sites has 12 million names in its database. However, it would not quantify its male to female ratio. iTurf's advertisers include Nike, Nabisco and Rolling Stone.
CCS sells brands such as DC, eS, World Industries, Independent, Shorty's and Forum.