The Internet has done a lot to change both Americans’ buying habits and the way we relate to each other: e-mail rather than letters or phone calls, sending gifts online rather than using the mails, and so on. American Greetings Interactive, the online subsidiary of Cleveland-based card maker American Greetings, has built its business on the prospect that those two trends will intersect. The company counts on the fact that the right mix of personalized message and Flash animation will get us to use our desktop PCs to send our heartfelt sentiments out into cyberspace.

AG Interactive, which claims to be both the top online greeting card site on the Web and its largest consumer subscription site, is actually comprised of three Web sites: AmericanGreetings.com, BlueMountain.com and Egreetings.com. Taken together, they offer 20,000 greetings and other “social expressions” to more than two million registered users.

But that’s just the tip of AG Interactive’s customer base. The sites experience millions of unique visitors per month, and many of these are first-time visitors, browsing the digital aisles the way people do in brick-and-mortar card stores, idly opening cards in search of a heart tug or a hoot. Some may have been drawn by paid-placement ads they saw while searching for Easter baskets or gifts; some might have received an e-card themselves and been reminded of an upcoming birthday or anniversary. And then there are the inevitable “just-browsers”– that contingent of the population who just like looking at greeting cards.

In any case, AG Interactive wants to attract those first-time visitors and give them as many reasons as they need to come back when they’re in a card-sending mood. To draw those customers, the company relies on a number of lead-generating tactics, including search engine marketing and site optimization. (It also has distribution deals for some of its products with ISPs and portals, including America Online and Yahoo.) Once those potential consumers are on-site, AG Interactive applies Web analytics to make sure that they land on the page that’s most interesting to them, look deeply enough into the site to find other products that might also have appeal, and make it safely through the sales funnel.

One thing AG Interactive does to draw those customers is search engine marketing (SEM). The company has been involved with paid placement on search results for about two years now, primarily using Google and Yahoo. In the beginning, they bid on several hundred keywords and measured the results back to get the cost per acquisition for each term. The company has now expanded that effort, and SEM is a permanent tool in its marketing kit bag.

“We’ll continue to test and determine the value of different keywords,” says Jane Carpenter, vice president of product marketing. “Certainly every time we add a new product line, we’ll do testing to find out what words work well for it.”

Of course, it’s a search engine marketer’s nightmare to be forced to bid on such popular generic terms as “Christmas” or “Mother’s Day”: So AG Interactive doesn’t do that. Instead, the company opts for more targeted terms that will draw qualified visitors while keeping return on investment (ROI) in bounds. “We try to get more specific so we’re not bidding in a cloud of different product lines,” Carpenter says. While the keyword often reference specific holidays, they also include categories such as the terms “e-cards” or “e-greetings” to keep bids low.

One SEM effort that has produced particularly good results has been keyword marketing around the company’s “Create and Print” greetings, which allow users to download a card and print it out on their home printer, often adding a digital photo in the process. Carpenter says the company has done will in search marketing to terms like “Create and print greetings at home.”

In regard to the sites themselves, AG Interactive is continually optimizing to gain organic visibility with search engine indexers, says vice president of digital marketing Tara Lavelle. But the main thrust of the online effort has been to apply Web analytics to the sites to track customers’ paths through the company’s offerings. The company recently opted for Omniture’s SiteCatalyst platform to accomplish this, and the results have proved that decision out.

“You don’t really know what you don’t know until you get into it,” Lavelle says. “We didn’t really know a lot about Web analytics and what we would use it for. But after getting a year under our belt, we have found it useful in many ways.” For one thing, the e-card business is unique in that so much of its activity is related to non-transactional “customer events” that a straight e-commerce site wouldn’t have to deal with: primarily, tracking that card recipients are notified of their greeting and then manage to get to the company’s Web sites to pick them up successfully. Web analytics allows AG Interactive t track that pickup and monitor that recipient segment, to see what they’re interested in on the Web site, and what they might be induced to come back for.

Like other Web sites, AG Interactive applies analytics to examine and optimize customer movement through its pages. “We’re looking at pinch points and key points of abandonment, as well as click-tracking to find out what exactly customers are clicking on on the page,” Carpenter says. “We do a lot of A/B testing on the Web site, and we’ll continue to use the tool to make sure that we’re getting people through the product funnel effectively.”

Those quantitative measures are often teamed with qualitative ones such as focus groups and on-site user surveys. “Because we have such a large member base, we’re very interested in how they feel about every change that we make on the site,” Carpenter says.

Segmenting the customer base and making sure that its Web sites work smoothly are especially important for AG Interactive because the company’s business model depends so heavily on selling product extensions, ancillary services and repeat business. It needs people to come to the site, “handle” all the cards, send one or two for free (after registration) and then sign up for a year’s subscription for $13.95. For that reason, AG Interactive lets visitors see all the cards and makes sure that each category contains a few free samples.

That hands-on requirement is also one reason AG Interactive has gotten only indifferent results from occasional efforts to market to lists other than its house list. “We really want people to try before they buy, so it’s tough to go out and rent a list, because it won’t pay for itself until the second run-through,” says Lavelle. AG Interactive offers a free trial month of e-cards for prospective subscribers. Customers who sign up for the Create & Print download service also get a sample month to decide whether they’ll pay $19.95 per year for the privilege; and users who enroll for both get a bundled price of $29.95 for a year of service.

This product-extension philosophy is working for AG Interactive, both with its online offerings—in additional to e-cards and the Create & Print line, the site offer a free event invitation service, printable scrap booking products and PC screensavers—and with the crossover to the paper cards retailed by its parent company. In fact, says Carpenter, it’s surprising how many people send both a paper card and an e-card. “They might send a paper card in the mail and then send an e-card to say the first card is coming late, or to make sure something arrives on the actual day,” she says.

“People who are greeting card junkies want to communicate in a number of different ways,” agrees Lavelle. “Sometimes they’ll purchase a card at the store, sometimes they’ll print one at home and mail it; and sometimes they’ll send an e-card—all for the same occasion.”

The Internet has done a lot to change both Americans