By Leslie Walker
Washington Post Staff Writer
Thursday, January 21, 1999; Page E1
If you like frequent-flier miles, you may love one of the Web's emerging business models: frequent-clicker programs.
As Internet companies struggle to find profits to justify their sky-high stock prices, many are launching "loyalty" programs that mirror the popular award plans pioneered by the airlines. The hope is that Web surfers will be drawn again and again to the same sites – and spend more time clicking through each one – so they can wrack up huge blocks of points, becoming recognized as Web road warriors of sorts. Web site operators can point to that increased traffic to charge advertisers big bucks for a spot on their page.
CBS SportsLine kicked off its version yesterday: For each page you view at its SportsLine Web site, you get one entry in a random drawing for a $1 million prize. You also get reward points for each page viewed. Like frequent-flier miles, the points are redeemable at www.sportsline.com for merchandise and special offers. Earn enough points and you can participate in private chats with celebrities.
"The idea is to recognize you for what you've done and give you incentives to do more as you go along, " says Lawrence Kruguer, vice president of SportsLine, which hopes the points will help it catch up to Web frontrunner ESPN SportsZone. "Check scores and get rewarded. Buy products and get rewarded. Click on ads and get rewarded."
While SportsLine's points can only be earned and redeemed at its site, three start-up companies are working feverishly to corral big groupings of sites, all of which will pool their frequent-clicker programs and allow users to redeem points for goods on any participating site. In effect, the entrepreneurs are creating new electronic "money" systems that "pay" people to return to Web sites and become loyal customers.
I have to admit this is all very clever and convenient. (It sure beats carrying around a wad of club cards for your airline, grocery store and coffee bar in your wallet.) And the programs may actually help the Web find its elusive profit point. But Internet users may not embrace it as readily as some of the big guys think. The programs reinforce that uneasy feeling many of us have about being watched, that our every click, our every surfing whim, is being stored in some giant computer somewhere for marketers to plunder.
But those concerns aren't going to stop this wave. The Web's leading gateway sites – Yahoo, Lycos and Disney's new Go Network – are among those desperate to attract repeat business. All of the big portal sites are in talks with one or more of three fledgling points brokers – Netcentives Inc., Intellipost Corp. and CyberGold Inc. – to create frequent-clicking programs on their behalf.
"I fully expect to see every major portal launch its own branded points program in the first half of this year. It will happen this quickly," says Steven Markowitz, chief executive of Intellipost, whose company has signed one Web directory and will be announcing details soon.
Markowitz predicts the gateway sites will roll out frequent-clicker programs with the same speed that American Airlines and United Airlines announced the first frequent-flier programs in 1980: one week apart.
"We think there will be only a few of these big networks, because consumers won't have the time to figure out which of the offers will be the most valuable," says West Shell III, chief executive of Netcentives. "We recognize the consumer is making an investment in time, and the return needs to be in a currency they value."
Not all of the programs to reward Web surfers are based on points. CyberGold, for example, pays people in the real green stuff: cash. Users can spend CyberGold money at participating Web sites or even in the real world by transferring it onto their Visa credit card accounts, dollar for dollar, to be spent anywhere.
"We felt there was a kind of crisp honesty associated with letting the consumers know what the value of the reward really is," says Nat Goldhaber, chief executive of Cybergold.
Intellipost has nearly 2 million registered participants in its program, while Cybergold has 1.2 million and Netcentives has nearly 700,000. Collectively, the roster of Web companies that have signed up to issue or redeem credits in these three rewards networks includes hundreds of well-trafficked Web sites, such as Barnesandnoble.com and ESPN SportsZone.
America Online has had a loyalty program since 1996. AOL members who make purchases at participating merchants or who agree to fill out opinion surveys earn points that can be used to reduce their monthly subscriber fee. Recently, AOL offered "AOL Reward" points to subscribers who open online investment accounts with Ameritrade, E-Trade or Waterhouse Securities. E-Trade, for instance, is offering new customers 13,200 AOL points, redeemable for six months of AOL service.
But the other online reward programs could take this program to a much bigger scale. Also, they reward people not just for buying something, but just for looking at advertisements
But the Web programs, while clever, may also lure consumers into wasting time chasing discounts instead of quality. And they will create even more angst for people concerned about how personal identities are being surrendered into the vast impersonal computer network that is transforming society.
© Copyright 1999 The Washington Post Company