WebTV, Digital Impact to Launch E-mail Promotions

Digital Impact Inc., San Mateo, CA, and WebTV partnered last week to develop a private label program called DealMail that will ask WebTV subscribers to agree to receive promotional e-mails from the e-mail marketer’s clients.

DealMail offers WebTV’s 1-million-plus subscribers a weekly or biweekly e-mail that contains some editorial content but primarily coupons and incentives to buy products or services offered by Digital Impact’s clients. The offers are tailored to the preferences the subscribers provide during the opt-in process, then delivered to each subscriber through e-mail. DealMail supports electronically delivered messages in both television and PC viewing contexts.

Joe Poletto, WebTV’s vice president of network media, said he felt confident the e-mail marketer’s personalization techniques, combined with its opt-in procedures, would give DealMail subscribers the right set of offers at the right time. In a preview of the campaign, the companies said that 85 percent of WebTV’s DealMail recipients opened the e-mail offers. The test groups’ click-through rate came in at 22 percent. Testing encompassed all 1 million WebTV subscribers.

As part of the agreement, Digital Impact has acquired a chance to reach 2.2 million new prospects. Mountain View, CA-based WebTV is a wholly owned unit of Microsoft. It has just over 1 million subscribers, but those subscribers average 2.2 e-mail accounts per household.

E-mail marketers have begun their migration onto interactive TV as research firms forecast rapid growth for the platform. For instance, Datamonitor estimates that interactive TV will reach 67 million U.S. and European homes by 2003. In 1998, the number of homes with interactive TV hookups totaled only around 10 million. Datamonitor predicts digital TV set-top boxes, which will combine interactive services and television programming, will be the category’s growth vehicle, outnumbering set-top boxes that provide only Internet access by a 10-to-1 ratio.

While WebTV was the first provider to offer consumers Internet access through a television set-top box, it remains tied to dial-up service, an old-school technology that does not allow for the transmission of rich media and streaming content that is available via broadband. A major new competitor, America Online’s AOL TV, which plans to use broadband, is set to launch this summer. For its part, however, WebTV has added satellite television technology to its product offerings.

While the companies did not release any financial details, one of WebTV’s interests in the Digital Impact partnership is the revenue it will generate by granting the marketer access to its subscribers. This deal is WebTV’s most recent effort to create additional revenue streams and deliver more services to its clients.

Earlier this year, WebTV made a short-lived attempt at inserting ads into the e-mail messages delivered to its subscribers. While the practice is commonplace among free e-mail service providers, WebTV’s customers opposed the practice because they pay $25 per month for the service. WebTV quickly suspended the e-mail ad placements and said it would continue to test additional ways of generating revenue.

WebTV is also wrapping up a three-month promotion to boost its membership. The company offered two months of free access to customers who signed up for the service between Feb. 1 and April 30.

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