I first realized electronic greetings were going to be big when my nephew Joe, who was 10 at the time, asked his mom to upgrade his Web surfing privileges on America Online.
"Where do you want to go?" she asked.
"Blue Mountain, so I can e-mail a birthday card to a girl," he replied.
Even then, I didn't realize how big they would be. Nearly two years and hundreds of millions of e-cards later, ExciteAtHome closed this week on its $780 million purchase of Blue Mountain Arts, the Web's most popular digital greeting site. Also this week, the third busiest site, Egreetings Network Inc., is planning to become the first digital greeting maker to go public--offering 6 million shares at a projected price range of $8 to $10.
Bluemountain.com popularized enhanced e-mail as a new communication form in 1994 by adding animation and music to the paper greeting cards it had marketed for years. Since then, dozens of competitors have appeared, with names such as 123Greetings, Regards, Ecards and 3DGreetings. All offer e-cards for free. Sheep jumping up and down in tennis shoes ("I've been thinking of ewe!") and elephants dancing while tubas belt out "Happy birthday to you" have become one of the Internet's most popular, though least lucrative, businesses.
Most sites collect paltry revenue (Who wants ads atop their multicolored elephants?) even though they are attempting to sell gifts and do e-mail marketing customized to people's card-sending habits. After more than two years online, Egreetings reported losses of $21 million on $1.5 million in revenue in the first nine months of this year.
Which raises the question, why do greeting sites continue sprouting on the Web like dancing dandelions if they aren't generating bucks? And they do keep sprouting--just last week, VintageGreetings.com launched with thousands of old photographs transformed into virtual greetings.
The reason is they are gigantic traffic boosters. And for mega-sites such as Excite and Yahoo, higher traffic means higher advertising rates. Which is why all the top-tier Web sites added greeting services this year, bought a greeting service or partnered with one.
As holidays approach, traffic is spiking even higher at greeting sites. Blue Mountain, which sends an average of 1 million cybercards daily, estimates it will send 5 million to 10 million on Christmas Day alone. Hallmark.com said it sent six times as many e-cards last month as it did during the same month a year ago.
To compose a digital card, you select an image from thousands available at each site, add your personal note to the generic greetings available for every occasion (Did you know Dec. 15 was Underdog Day?), fill in the recipient's name and e-mail address, click "preview" to see how it looks, then "send" to e-mail a message telling your friend where to view your card online.
"This is a more casual form of communication than paper cards," said Blue Mountain co-founder Jared Schutz. "It's easy, quick and fun. It allows you to have meaningful communication with anyone anywhere in the world in a matter of seconds."
Etiquette experts frown on e-cards, calling them cold or annoyingly slow to receive. But unless they are sent out in bulk (which can be done), I do not see them as impersonal. I agree with Schutz that they are quite the opposite: "Creatively, they can express as much if not more than a paper card," he said. "The process of selecting the right greeting card to convey the communication you want is just as meaningful as browsing down an aisle in a store."
The offline paper-card kings, nervous about the long-term impact electronic freebies could have on card prices, are moving in, injecting a few twists into this Internet drama.
A few weeks ago, No. 2 cardmaker American Greetings Inc. announced it will buy No. 3 player Gibson Cards--which is a key investor and artwork supplier for Egreetings, which in turn is a big competitor of Americangreetings.com. That means Egreetings could lose much of its artistic content. It gets even worse for Egreetings. The company reported last week that 40 percent of its ad revenue has come from ExciteAtHome, and Excite canceled those ads in November after buying competitor Blue Mountain. On the bright side, Egreetings recently inked a deal to give NBC nearly 8 percent of the company in return for on-air advertising and the right to market greetings based on NBC TV shows.
Just another day in the cutthroat world of Internet business.
Offline market leader Hallmark, meanwhile, has lagged in Web traffic, even though it has been online for years. With $3.8 billion in annual sales, privately held Hallmark Cards has about half the $7.5 billion market for paper greeting cards. So far, it has put 600 e-cards online--far fewer than the 3,000 to 10,000 available at leading sites. Hallmark says consumers don't want to be overwhelmed by choice.
Instead, the company is adding other services--Web calendars, address books, e-mail reminders--to help people build and maintain personal relationships. Its Web site also lets people order boxed paper cards with customized greetings and artwork. Despite its team of 50 people working full time on its Internet initiative, Hallmark appears to be no match for start-ups when it comes to innovation.
One site drawing more traffic than Hallmark's is OhMyGoodness.com, which is run by only three people and is full of lighthearted adult humor such as "flasher" cards. Each shows Santa, the Easter Bunny or other characters opening their "coats" to show something silly. The site was created by a man and woman--one in Italy and the other in Ohio--who met in an Internet chat room three years ago and now collaborate from afar.
Toronto-based Ecards.com is pushing the genre even further with slick animations that amount to mini-movies. Its "new millennium" narrative depicts a satirical mini pro-wrestling match in which Rudolph the Reindeer pins a muscle-bound Santa, then climbs into Santa's sleigh, which is pulled by Santa on all fours.
Top sites are adding other technology tricks. Many recently added voice messaging: You can call an 800 number and attach a personal voice message to your e-card. Many also let you send delayed cards, which will help me next week when I go to my brother's in Connecticut for Christmas.
I'll be leaving my laptop at home, but I'll go online this weekend to compose a delayed card for my nephew Joe--one of Blue Mountain's interactive games in which he can help Santa play golf.
Hint: Try the tree trunk for a hole in one.