*AmericanGreetings.com Yanks Affiliate Program

Less than a year after it switched from a subscription-based model to largely offering free cards online, AmericanGreetings.com Inc. has bid goodbye to its affiliate marketing program.

The Cleveland company, a subsidiary of American Greetings Corp., said Oct. 31 that it would no longer pay for traffic from other sites through links to its own, putting an end to a pay-per-click model brokered by affiliate marketer Be Free Inc.

“We looked at the affiliate program and determined that it was not as successful as we'd hoped, and that it did not warrant the costs associated with it,” said Nancy Davis, spokeswoman for AmericanGreetings.com.

In an e-mail circulated to affiliate partners, the greeting card and content company said banner creative and links would still be available on the Be Free site at www.befree.com until Dec. 11, after which they will appear on www.americangreetings.com.

The e-mail, sent Oct. 31, also explained AmericanGreetings.com's dilemma.

“Profit pressures necessitate that we eliminate our current per-click payment of $0.05 effective Oct. 31, 2000,” the e-mail said. “Like you, we are being forced to reduce spending in key areas to reach profitability. All commissions will be calculated through the effective date and remitted by Nov. 5.”

At press time, there was apparently some confusion between AmericanGreetings.com and Be Free.

“The e-mail that was sent out … is not consistent with the conversation we had with American Greetings,” said Gordon Hofstein, chairman/CEO of Be Free, Marlborough, MA. “If they're saying the e-mail was final, then it's different than the conversation I've had.”

For now, the inability of affiliate partnerships to adequately convert traffic into paying customers has left AmericanGreetings.com exploring other options with Be Free.

The company garners revenue from on-site advertising, private label deals with other companies and direct marketing using its database of Internet card senders and recipients. It also relies on traffic to co-branded sites on Yahoo, AOL and Lycos, sharing ad and transaction revenues with these portals.

Portal deals supported by content-driven promotions and a decision in February to shed its subscription-based model in favor of free online cards helped catapult AmericanGreetings.com to the second-largest and fastest-growing greeting card site on the Internet.

According to Nielsen//NetRatings, the site attracted 7.5 million unique visitors in September, usually a low-traffic month across the board. More conservatively, Media Metrix estimated September traffic for AmericanGreetings.com at 7.3 million. PC Data Online reported 12.6 million unique visitors in September.

The pullback from affiliate marketing is in line with American Greetings Corp.'s announcement in September that it is revamping its online arm's business model.

With this new model in place, AmericanGreetings.com expects to be profitable in the fourth quarter of 2001.

“We're formulating what we want to do for the future,” Davis said. “We value any affiliation with us, but with the pay-per-click model, there's not many sites to benchmark that are giving away their content for free and then paying people to come to that site.”

Be Free's Hofstein sees it differently. Cost-per-click has proved successful in delivering impressions and click throughs, he said.

In a recent earnings call, Be Free said cost-per-click and cost-per-lead customers made up 29 percent of its customer base as of the third quarter this year.

“It depends on what you're trying to do,” Hofstein said. “If you want traffic, if that's your goal — to drive traffic to a certain place — a pay-for-click model can be very good. If you're using pay-for-click to sell something, that probably isn't economical; you should have a pay-for-sale [model].

“If you're trying to get a lead,” he added, “you should try to get a pay-for-lead program, not pay-for-click. So, pay-for-click isn't for everybody.”

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