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Deal Would Create College-Marketing Powerhouse

Student Advantage, Boston, an offline and online marketer, is expected to soon acquire nearly all of the assets of CollegeClub.com, including the online company's strategic alliance with General Motors.

The move would combine a leading loyalty marketer for college students with a top site for student chat rooms and message boards, potentially resulting in an online and offline marketing powerhouse reaching thousands of college students nationwide.

CollegeClub.com, San Diego, will remain under the same name and will operate as a separate entity.

The deal is dependent on the approval of U.S. Bankruptcy Court in San Diego, where CollegeClub filed for reorganization under Chapter 11 in July.

Student Advantage put up $7 million in cash and 1.5 million shares of its common stock for the acquisition and agreed to pay CollegeClub up to $5 million if Web site revenue goals are met during 2001.

CollegeClub, which provides interactive content such as chats along with information on scholarships and loans, is the leading college-oriented Web site, according to PC Data Online.

With nearly 3 million registered online members at 3,600 college campuses, CollegeClub's customer base fits nicely with Student Advantage's commerce relationships with several university and corporate partners.

“We're seeking to do a lot of cross migration with their student members and our business partners,” said Jim Dorsey, spokesman for Student Advantage. Although cross-marketing opportunities will not be finalized until the deal is complete in late October, Dorsey expects that Student Advantage's focus on e-commerce will transfer to CollegeClub.

“By becoming part of Student Advantage, CollegeClub's student members will have access to a wider array of commerce products, while maintaining the spirit of community,” said Raymond Sozzi Jr., chairman/CEO of Student Advantage.

Student Advantage has “proprietary commerce relationships” with about 50 corporations, including AT&T and Barnes & Noble, and with 15,000 local retailers near campuses. Its Web site includes an academic research engine, a scholarships database, a news service and a college sports section.

Student Advantage's discount-card program, in conjunction with participating retailers, is the primary focus of its business. Student Advantage members receive discounts, usually 15 percent to 20 percent, from participating retailers. The discounts are available online and offline.

“Our success has been driven by our ability to meld the community and content aspects of our programs with solid revenue generation, something many traditional community-focused sites have been unable to do,” Sozzi said.

CollegeClub is a strong e-mail marketer, particularly with viral campaigns. Members obtained from the viral campaigns and by referrals from other students — which comprise more than 50 percent of new members — have been the site's most active members.

“They're a lower cost [to obtain] and the best type of customer,” said Scott Martin, vice president of marketing at CollegeClub.com.

CollegeClub's corporate partners, including General Motors and Sony, are attracted to the site's strong relationship with the hard-to-reach college audience, according to Martin.

“They are a difficult market to target to. They're on the cutting edge of trends. To build relationships with them, you have to stay fresh,” he said.

Student Advantage also purchased the assets of a CollegeClub subsidiary, eStudentloan LLC, for about $1 million in cash.

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