YOYODYNE

We brought promotional thinking to online commerce,” Seth Godin says matter-of-factly. It’s a big claim, but it’s true.

Premium offers, trial generators, product sampling, continuity programs – the whole offer-response-reward sequence – was common enough to offline business, but it had remained pretty much a stranger to the new world of the Web. With the Net still in its infancy, many consumers weren’t sure of its security, and many retailers found the technology forbidding.

To Godin, president and ceo of Yoyodyne Entertainment, Irvington, NY, it seemed a great chance to have fun.

A recent winner of a 1998 Momentum Award for outstanding Internet industry accomplishment, Godin, 38, is seen by many in the industry as a true visionary – one of the first to deliver on the one-to-one marketing promise the Internet has offered.

A Stanford business school graduate who once did online promos for Prodigy Computers before founding Yoyodyne, an interactive marketing agency, in 1995, Godin says he believes the key to Web promotion is customer interest. To Godin, interest is whatever brings the power of attention to life in the mind. It must be “voluntary, built around permission,” he says. If a promoter is successful in getting consumers to agree to learn more about a company and its product, then consumer interest will further action, moving the customer closer to the point of making a purchase. “Interest is the core of what we do,” says Godin.

Dialog is another crucial element, Godin says. By establishing dialog between buyer and seller, a promo works to create relationships with customers over a period of time -establishing not just who they are, but what they want, and always being careful to treat different customers differently.

This certainly was the case with San Francisco-based Transamerica Corp. Seeking to build traffic for its Web site, electronic media manager David Stone turned to Yoyodyne. “We are conservative and had concerns,” Stone says. But Godin’s group came up with a six-week sweepstakes that offered a free trip to San Francisco and a private tour of the Transamerica penthouse. “It was a very innovative and strategically targeted idea,” Stone says, adding “Of all the companies on the Web, I think Yoyodyne made its reputation on its creativity. We saw it with our program.”

Godin is especially pleased with his 1998 EZSpree promo (www.ezspree.com), a mammoth online program that gives shoppers a chance to save on products and services from more than 350 specially selected retailers, plus the chance to win a $100,000 online shopping spree, instant prizes, and free gifts.

“It’s a fun and secure way to shop, but we’ve also demonstrated that we could get a huge response from customers,” Godin says of the effort.

The MasterCard-sponsored promo, launched last year, is by far the most complicated Yoyodyne has ever done, requiring some 1/2ve months of work to get ready.

Godin says that all of Yoyodyne’s promos are designed in-house by small teams of five to 10 people. In the case of EZSpree, Yoyodyne worked closely with MasterCard. There were no formal planning meetings for execution, Godin says. Instead, it “was all done by e-mail and phone. We used MasterCard’s resources and our resources.”

What the two companies did was build a “Merchant Factory” – a search engine with an identical online format for every participating retailer. The Factory allowed them to build their own Web store, feature their own products, plus provide links between each other’s Web sites. The time it took to put up such a Web store? “One half-hour,” Godin says.

Another advantage of the system was that it increased retailer exposure. “The average person who visits EZSpree ends by visiting eight stores, an extraordinarily high number – much higher than an offline shopper,” says Godin. All the participating retailers are top-of-the-line: FAO Schwarz, Eddie Bauer, A&E TV, Bonsai Boy, Fragrance Net, CD World, Omaha Steaks, Wal-Mart, and Virtual Vineyards, among others.

To help support the promotion, MasterCard sent out a statement stuffer to 15 million people in October. Apparently it worked: not long after, “three of the 10 most-served online ad banners in the world” were for EZSpree, Godin says.

The promo is also strategically timed: National Online Shopping Week begins the day after Thanksgiving, which is the worst week in stores, and Godin thought that a good alternative would be “a nice online promo.”

Godin says he is impressed by the huge computer power of the promotion, but also by its security and privacy. “I don’t think consumers are concerned about security as much as they’re concerned about privacy,” he says. “There is an enormous disconnect between what marketers think is okay and what consumers do.” As a result, Yoyodyne never sells its list to anyone, he says.

Describing the latest version of EZSpree as “vastly overhauled,” Godin explains: “We got much smarter about how we channeled visitors through the promo. We made it easier to get from store to store, and we dramatically increased the number of merchants participating.”

Yoyodyne also made it easier for merchants to offer special deals and discounts: “If you come with the right credit card, you can really make out,” Godin says. “There are no fake deals – everything is a legitimate bargain.”

At the other end of the spectrum from these big multi-sponsor programs are sponsor-specific promos created for single clients using various direct marketing techniques to fulfill their goals.

Value America, Charlottesville, VA, a huge online commerce player, is one of these, Godin says. “We are helping them enter the world of yield management online by creating a unique offer. We say to consumers you can get a $20 gift certificate by opting inon this promo.” It worked: “We signed up 12,000 shoppers in one day, and of them, three-fourths signed up for a savings certificate for a future purchase.”

Another advantage: “The value to the consumer is so obvious – it takes just one click to make your buy.”

As for Yoyodyne’s recent sale to Yahoo, Santa Clara, CA, Godin says, “We set out to 1/2nd a partner who could give us what we needed most – a worldwide recognized brand, and a huge amount of raw traf1/2c. We want to take those and use them to best effect next year. We will do the biggest and best programs in the world in a frequent and focused way.”