Community Web site CollegeClub.com will give away $150 million worth of advertising space and on-campus promotions over the next two years in an effort to boost the number of cyber-retailers selling goods through its site, the company said.
Trying to transform itself into more of an e-commerce player, CollegeClub plans to debut a discount shopping area at www.collegeclub.com next month. The company makes money by selling access to its coveted student audience through site sponsorships and banner ads, and now the company will give those resources away in the hopes of signing more merchants.
“We may be taking potentially a hit on the advertising side, but it's … to stimulate what we think is the more significant revenue stream, which is being generated from our commerce area,” said CollegeClub president Jim DeBello. He would not say what portion of the company's revenue currently comes from the commission it gets from sales made through its site.
The motivation behind CollegeClub's push to beef up its e-commerce end? It wants part of the booming spending by college students through the Internet. Traditionally considered a difficult audience to reach, the Net is making inroads to the valuable group of young buyers.
“Jupiter [Communications] said students are spending about a hundred billion bucks a year. That's a lot of money,” DeBello said. The figure refers to both online and offline spending.
But more than just that, consumers of college age are just reaching the point where they become loyal to some products, from brands of cigarettes to products prominently sold on the Net such as personal computers and software. The group also is more familiar with the Web than most and shows greater inclination to buy things online.
It's a demographic group retailers want badly. CollegeClub is able to negotiate with merchants to offer students exclusive product discounts of between 5 percent and 25 percent that DeBello said are greater than those available elsewhere. CollegeClub takes a cut of each sale. DeBello was tight-lipped about the company's commissions, declining to give even a range where they fall from product to product.
DeBello also did not elaborate on whether the Net-wide decline in banner ad click-through rates has motivated the company to move away from an advertising-driven model. He said banners on the CollegeClub site get click-through rates on par with the rates seen at portal sites – typically around 1 percent.
CollegeClub spent the last three months persuading merchants to join the discount shopping area of its site, to be called the Student Savings Center. The company already has signed contracts with 150 merchants, including Officemax, Drug Emporium, Just For Feet, NetGrocer.com, pager manufacturer Skytel, textbooks.com and others.
CollegeClub is in the process of seeking partnerships with database firms so it can match up outside data with the basic information it has gathered on its 620,000 student members. The company gathers basic data such as students' names, schools they attend, their e-mail and address information. Last week, the firm redesigned the Web page where visiting students register to become members.
CollegeClub also accumulates information on students' hobbies, interests and academic concerns so it can, for example, deliver a skiing equipment maker's banner ad to students in the Rocky Mountain area who have an interest in winter sports.
The Web community began building its membership base in 1996, offering free voicemail and e-mail accounts, which it provides through a partnership with MCI WorldCom Inc. Club members can use a toll-free number to check voicemails and e-mails, which the company converts to a computerized voice.
The firm is on track to have more than 1 million members by October, a forecast DeBello credits to CollegeClub's free services. He contrasted the company to firms that make students “pay for the privilege of shopping,” a reference to the promotions offered by credit card companies and other concerns that give discounts only to students who sign up for a service.
Part of the $150 million worth of promotional work CollegeClub is offering e-tailers includes offline promotions, especially touting products on campus. The company employs about 1,000 on-campus workers who promote both merchant clients' products and CollegeClub. In the past, the company has demonstrated PCs and digital cameras at campus booths and then given students the chance to buy the products online.
In June, CollegeClub received a $15 million capital infusion from a group led by Convergence Partners, Menlo Park, CA. The firm has made past investments in other community sites.
