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Published in U.S. 1 Newspaper on June 21, 2000. All rights
Internet Marketing: Affinity Works
Getting your goods in front of online consumers is
business says Chris Swenson, CEO of Iselin-based Batnet1, because
the consumer is controlling the mouse. Not only are advertising
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
because all the folks from one industry are in one place."
The son of a stockbroker, Swenson grew up in Dallas, went to the
School, graduated from Yale in 1975, and earned a masters from the
Yale School of Management. He was the chief personal aide (read:
for Bill Bradley in his first campaign for Senate and won awards for
uncovering election fraud as a weekly newspaper reporter in Ocean
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
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
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
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
and reach targeted segments of the population that may not otherwise
find that retail site. It’s a win-win situation, says Swenson.
the retailer, the quality of the site’s audience is as important as
But rather than sitting back and waiting for surfers to come to your
site, Swenson recommends push technology. His first tip: Get E-mail
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
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
— acquiring lists from listkeepers like www.postmasterdirect.com
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,
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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