Airlines have offered frequent-flier programs for years, and now an online marketer is bringing the same loyalty-inducing tactic to the Web. Netcentives on Monday announced alliances with American Airlines, British Airways and Marriott Hotels, and others to give "click points" to consumers who make purchases through a new Web promotions network.
Press-release ebullience aside, analysts and long-time marketing observers wonder whether the concept and other online incentive programs are a sound marketing tactic - and whether they can actually bring new people to the Web.
"What promotions do is drive traffic and increase ad banner click-through rates," said Susan Pechman, general manager at Cone Interactive, a New York-based ad agency. "I don't think it will bring cyber-virgins to the Web unless it is communicated in an off-line medium."
Netcentives and other incentives brokers like Cybergold disagree with that assessment.
"There is a myriad of ways that marketers can use this program to help reward consumer behavior," West Shell III, CEO of Netcentives.
The Netcentives program, launching in November, will award points for free travel and other goods to members who buy items from participating retailers like Macy's, the Internet Shopping Network, or Golf Web. In contrast, CyberGold pays people to look at ads.
"Another difference is that we offer cash, in exchange for points," said Collette Sandstedt, a CyberGold spokeswoman. "You can't buy a cup of coffee with frequent-flier miles, but with our service, you get 50 cents to view an ad and you can keep the cash."
The question, though, is if such incentives are needed to drive Web commerce. Shell, a promotions veteran from Atari and Procter & Gamble, argued that such campaigns have always driven retailing and noted that US$128 billion was spent on promotional marketing last year compared to $100 billion in traditional advertising.
"Commerce off the Web has been driven by promotional marketing for a long time," said Shell. "It is largely because consumers not only demand great products, they demand better value for their relationship and their investments in time and money." And the same logic applies to the Web, he said.
Netcentives, along those lines, has signed exclusive agreements with six airlines that represent 80 percent of the frequent-flier miles handed out every year: American, Delta, Northwest, Continental, USAir, and British Airways. Hoteliers Westin and Marriott are participating in the program as well, as are Yahoo, Wells Fargo Bank, Brøderbund Software, and other retailers.
Bruce Chemel, president of Advantage Marketing Programs, the frequent-flier unit of American Airlines, said that the partnership with Netcentives gives customers one more way to accumulate miles.
"We know that literally millions of Advantage users surf the Net, so the demographics are a good fit," he said.
But will any of this drive new people to the Web, or is it another hare-brained Web marketing scheme?
"I think it is hilarious," said John Hearn, research analyst at Gartner Group. "These companies are essentially trying to create a new form of currency: digital points. Look at the troubles the European Union has had with doing the same thing. They haven't made much progress at all."
Pechman of Cone Interactive said that it is still too early in the Web marketing game to offer customers incentives to come online. Marketers should focus on building their brands and expanding the pool of online consumers, not giving discounts to the crowd that is already there.
"It seems like all of these Web ventures market to other people who are already on the Web and sell them products that are Web-related," Hearn said. "The thing we really need to do is increase the number of people on the Web. We need to find more nerds." br>
