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Published in U.S. 1 Newspaper on June 21, 2000. All rights

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Internet Marketing: Affinity Works

E-mail: BarbaraFox@princetoninfo.com

Getting your goods in front of online consumers is

tricky

business says Chris Swenson, CEO of Iselin-based Batnet1, because

the consumer is controlling the mouse. Not only are advertising

banners

and portal deals expensive, but their cost-effectiveness has come

into question. E-mail marketing, one of the latest options, is already

getting cluttered with unsolicited offers and promotions.

Swenson wants to cut a wide swathe through the marketing jungle with

affinity marketing. You have seen this work for credit cards. "It

is a tried and true method that has worked for years off-line and

has now caught the eye of online marketers," he says. It is easier

to catch the attention of Web surfers when the message is sent by

an organization with whom the customer is affiliated.

Swenson is on the panel "Using Technology to Stay Ahead of the

Competition," moderated by Maxine Ballen of the New Jersey

Technology Council. It is part of the capital conference sponsored

by the New Jersey Economic Development Authority on Friday, June 23,

at 8:30 a.m. at the Princeton Hyatt. Other panels include "Capital

Opportunities 2000," moderated by Mitchell Held, co-chief

economist for Salomon Smith Barney, and "Economic Outlook for

the Nation" by Joseph Seneca of Rutgers. The keynote luncheon

speaker is Neil Budde, vice president, editor, and publisher

of WSJ.com, the Wall Street Journal Online (see story above). Cost:

$35. Call Kathleen Gaines at 609-341-2065.

Swenson will discuss the effect of technology on marketing and say

that affinity marketing helps deliver targeted messages and promotion

without trampling on privacy concerns. "It is the ultimate in

permission marketing," says Swenson. "People have preselected

themselves and identified their interests by belonging to a particular

group. If that is the group you are interested in, you can get to

them. On the B to B side, the niche exchanges becomes affinity

marketing

because all the folks from one industry are in one place."

The son of a stockbroker, Swenson grew up in Dallas, went to the

Lawrenceville

School, graduated from Yale in 1975, and earned a masters from the

Yale School of Management. He was the chief personal aide (read:

driver)

for Bill Bradley in his first campaign for Senate and won awards for

uncovering election fraud as a weekly newspaper reporter in Ocean

County.

Founded in 1995 and privately held, Batnet1 (it stands for Business

and Trade Network) provides marketplaces to groups serving more than

110 million online members (www.batnet1.com). More than 150 Internet

merchants participate in the company’s core service, the private-label

Affinity Marketplace program, and it also offers private label ISP

service, affinity E-mail marketing, and the about-to-be-launched

Affinity

Ad Network. Last year the 75-person firm won the "early stage

company of the year" award from the New Jersey Technology Council.

Swenson says his firm is the only company to focus completely on

adapting

affinity marketing to the Internet. He estimates that more than $12

billion in merchandise and services are being sold annually through

his three largest membership groups — AAA, AARP, and the American

Medical Association. He has just raised $12 million in second-round

financing from a group that includes Apex Investment Partners, ABS

Capital Partners, Keystone Venture Capital, BFD Capital, and Dime

Capital Partners.

According to the American Society of Association Executives, nine

out of ten adult Americans belong to at least one association, and

one of four adults belong to four or more associations. Such targeted

groups are a marketer’s dream, says Swenson.

In the off-line world affinity marketing is a $400 billion business,

says Swenson. "It is about leveraging the trust relationship a

consumer has with an organization to market relevant products and

services to him or her. In the off-line world, an offer that comes

from AAA, for example, to one of its members is much more likely to

be opened than a random offer from an unsolicited source."

"Off-line groups have all kinds of demographic information built

over a period of years. That information is much more solid than any

information yet gathered on the web, and affinity marketing enables

you to target this off-web information," says Swenson.

Credit cards lead the list of affinity marketing services. Just 23

percent of credit cards are co-branded, but they generate 43 percent

of charge volume. In other areas, Sears leverages customer trust to

help sell home improvement services, and sports teams build on team

pride to sell logoed products.

It works like this: An affinity group puts a hot link on its site

— perhaps a merchant’s logo. When someone clicks from the group’s

site to buy a product or service, the group gets a percentage of the

sale. Group members get discounted services, the group earns money

for its treasury, and online retailers cut the cost to acquire

customers

and reach targeted segments of the population that may not otherwise

find that retail site. It’s a win-win situation, says Swenson.

"For

the retailer, the quality of the site’s audience is as important as

traffic volume."

But rather than sitting back and waiting for surfers to come to your

site, Swenson recommends push technology. His first tip: Get E-mail

addresses.

His second tip: Get E-mail addresses. "You can market with your

website, but you are getting much higher conversion rates by E-mail

than by direct mail," he says. "We are seeing conversion rates

of over 15 percent, and costs are typically less than for direct

mail."

Contrary to what you would think, E-mail marketing is not free. If

you have to pay for your E-mail addresses, they will cost about $200

per thousand (CPM) for consumer targets, more for business to business

addresses. "We recommend you don’t steal addresses off chatboards,

that is known as spamming. If someone is putting their E-mail up on

a chatboard, you don’t have permission to use it."

"If you are getting an E-mail server up and running yourself,

that is maybe $5 grand," says Swenson. Outside providers usually

charge monthly minimums. Though he won’t be saying much about his

own company at the conference, Batnet1 can provide most of these

services

— acquiring lists from listkeepers like www.postmasterdirect.com

and

sending the E-mails.

Just sending E-mail to "info at" any website is not advisable

— unless, as is the case at U.S. 1 Newspaper,

"info@princetoninfo.com"

is the approved general mailbox. "Our experience has been that

you need to have the right person’s name, and that `info at’ typically

gets thrown away," says Swenson.

"Our success rate has driven marketers to take a closer look at

affinity marketing as a way of generating new revenue streams and

building stronger relationships between groups and their members,"

says Swenson. "The key to any marketer’s success is being first

to market with an innovative and necessary solution."

— Barbara Fox


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