The past two decades have seen spending on incentive programs and other forms of direct marketing eclipse traditional advertising. Online, banner ads still account for most marketing dollars spent, but the balance of power is shifting. And 56 percent of online users said they'd be more likely to do business with a Web site if some type of loyalty program were offered, according to a November 1998 report from Jupiter Communications. People who join the Birthday Club's opt-in promotion receive a smorgasbord of gift certificates once a year from participating merchants in exchange for parting with demographic information. Meanwhile, Netcentives has signed 1.1 million consumers and more than 50 merchants to its ClickRewards online frequent-flier program.
Incentive programs take a variety of forms.
Klickback, a new membership-based discount network based in San Diego, plans to give members discounts when they sign up for Internet, telephone or satellite TV service through the site, and pay them bounties when they get friends and family to join. What a company is willing to give away in incentives depends on what it's willing to spend to acquire new customers. The mistake a lot of marketers make is not adequately figuring out what the permission is worth. They know they'll make more than that back by the time they're done with that person, so they're willing to spend up to that amount to get them. SegaSoft learned firsthand the value of spending on incentives.