Free email provider Juno Online offered up its 4.5 million subscribers as a test lab and potential revenue generator for LCI International in a multi-million dollar five-year deal, the two companies announced Wednesday.
The arrangement will give LCI exclusive long-distance marketing rights on Juno’s proprietary network. Juno will get a cut of the revenues from new customers it sends LCI's way.
But the appealing thing about the Juno network, from LCI's perspective, is that it is the ideal environment for test marketing programs. When Juno customers sign up for a free email account, they must first fill out an elaborate questionnaire detailing everything from their age, sex, occupation and income, to their eating and reading habits. That information can be sliced and diced any old way an advertiser wants.
"It gives us a laboratory to test different types of marketing strategies with a group of people that we know - by definition - are telecommunications literate," said John Taylor, LCI's senior vice president for consumer markets. LCI has agreed to be acquired by fiber network builder Qwest Communications for US$4.4 billion.
Like Hotmail, Juno is a free email service supported by advertising. When customers check their accounts, they are presented with ads, many of which are tailored to their specific interests. Unlike Hotmail, which was bought by Microsoft late last year, Juno is not a Web-based network. Email is sent directly to and from Juno's 500 points of presence in the United States, without Internet protocols. Users get email and nothing else.
Juno and LCI both said the partnership amounted to a "multi-million dollar" deal, but neither would offer a specific figure.
The unveiling of this deal comes a day after Tel-Save Holdings, which last year made a similar bargain with America Online - but for a larger number of millions of dollars, said it is expecting to add 400,000 to 600,000 new long-distance customers to its rolls in the first quarter of 1998 as a result of their partnership.
Tel-Save paid AOL a $100 million fee up front, and continues to split the profits from new AOL long distance accounts - which offer AOL customers a special long-distance rate - generated through the arrangement.
LCI will be offering Juno customers special long-distance rates, home 800 numbers, and pre-paid calling cards, and it will pay Juno an undisclosed percentage for the new business.
The deal is a feather in the cap of Juno, which already counts American Express, Cadillac, Fidelity, Intel, Mercedes, and The Wall Street Journal among its 100-some advertisers.
"And the advertisers are only one measure of our success," said Juno executive vice president Bob Cherins. Juno is a private company that does not disclose its revenues. But Cherins pointed to growth in Juno's customer base of between 10,000 and 12,000 new accounts per day. Advertisers, who buy banners for between $25 and $75 CPM for special targeting, spend anywhere from $10,000 to several hundred thousand dollars per ad buy, Cherins said.
More than 50 percent of the advertisers return for more when they've bought once according to Cherins. Some buy two or three times per year. Even so, the LCI deal is big. "They will be marketing very heavily to Juno's customer base," Cherins said.
