Intellipost Corp. acquired several key Internet assets last week from worldwide data provider Experian Inc.
In exchange, Experian, Orange, CA, is taking a 19.9 percent stake in Intellipost, the San Francisco-based creator of e-mail direct marketing program BonusMail, which is a membership service that rewards consumers for reading and responding to e-mail ads. The companies did not disclose financial details.
The initiatives that are now under Intellipost's roof include MotivationNet, Schaumburg, IL, a company that a year ago launched the MyPoints rewards program in which consumers earn credits toward products and services by clicking on ads, taking surveys and making purchases at member Web sites.
At launch, MotivationNet's goal was to sign 1 million members by 1999. But in June, the program had 60,000 members. Last week, Intellipost said the MotivationNet database has increased to 450,000 through a combination of MyPoints' growth and the addition of the membership database from DirectValue.com (www.dv2u.com), a Web site formerly run by Metromail, Lombard, IL, which is now part of Experian.
Intellipost said it also has 500,000 members in private label retention programs that the firm runs on behalf of partners, one of which is Internet service provider Prodigy.
Noting that BonusMail has 750,000 members, the companies said there is little overlap between the various databases and that combining them will give Intellipost a reach of 1.7 million people.
Intellipost said its membership is audited by PriceWaterhouseCoopers. MotivationNet's MyPoints membership has not been independently audited but will be once Intellipost does a merge/purge and de-dupes the databases, said Intellipost president/ CEO Steve Markowitz, adding that he sees no conflict in opting DirectValue.com members into the MyPoints program.
“The [DirectValue.com] people have opted into a program where they've agreed to receive advertising on the Web and via e-mail without any reward,” he said. “We're simply transitioning them into a program where they continue to get advertising and they get rewarded for it.”
When asked about how active MyPoints' members are, Markowitz said, “All of them are point earners. As to what percentage have redeemed, I don't have that data handy.”
Markowitz said the MyPoints, BonusMail and Intellipost private label programs will continue running separately for now. “In the future, we will unify the programs and we will opt our members into the unified program, but we haven't announced a plan for that yet,” he said.
MotivationNet has been marketing private label rewards programs similarly to Intellipost since June. “We are very heavily emphasizing building up the private label side of our business so you should expect to see that grow significantly,” Markowitz said.
Predicting that 1999 will be “the year of loyalty on the Internet,” he said Experian has agreed to use its 600-person sales force to cross-sell Intellipost's customer retention services to its blue chip direct marketing clients.
West Shell, CEO of competing online affinity marketing firm NetCentives, San Francisco, characterized the merger of Intellipost and MotivationNet as “two struggling companies trying to put together technology and assets to try to figure out a way to make [online rewards] work.”
“Hogwash. This isn't a shotgun wedding by any stretch,” Markowitz responded in a follow-up interview, noting that both Intellipost and MotivationNet have deep-pocketed backers. Intellipost's investors include partners of New York leveraged buyout firm Kohlberg, Kravis & Roberts and Japan's Dai Nippon Printing.
Then there's the privacy issue. Experian's database contains more than 95 percent of U.S. households. The company also gained a wealth of information when Great Universal Stores PLC, Manchester, England, acquired Metromail and made it part of Experian. Metromail's assets included the BehaviorBank consumer-lifestyles database of 30 million people and a main database covering more than 140 million individuals.
But consumer privacy fears so far have made powerhouse offline data more of a liability than a selling advantage to Internet marketers.
“[The deal between Experian and Intellipost] doesn't come without risks and it doesn't come without liabilities. It'll be interesting to see how it develops over time,” said Nat Goldhaber, president of Intellipost competitor CyberGold, Berkeley, CA.
Intellipost has assessed the risk and has taken steps to avoid privacy pitfalls, said Markowitz.
“None of the data that we are collecting through BonusMail or MyPoints or any of the other programs that we operate will flow to Experian,” he said.
Bob Hoyler, former president of MotivationNet and now chief operating officer at Intellipost also noted that MyPoints makes no secret of its affiliation with Experian. “It has never been an issue,” he said. “We have never had one consumer raise it as an issue or a concern.”