Cendant Claims $90 Million Per Month in Web Sales
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Scott Melland, vice president of business development for Cendant's interactive division, highlighted the company's emerging e-commerce strategy during a keynote speech delivered at Cowles/Simba Information's recent Inside the Yellow Pages conference in La Jolla, CA.
Cendant currently has 72 million members for its traditional and Internet membership programs, according to Simba Information Inc.'s Yellow Pages & Directory Report newsletter.
The Internet offers traditional marketing companies a more profitable way to reach and retain customers, Melland said.
Cendant does not receive any transaction revenues, but instead relies on increasing its membership to grow revenues, Melland said.
Melland said the Internet is a cheaper method of signing up customers compared to Cendant's traditional methods, which include use of direct mail pieces and catalogues. He also said that the cost of servicing Internet customers is about one-third of the cost of traditional customer acquisition, since customers purchase directly from the site.
Melland also said Cendant makes a profit from Internet customers during their first year of membership while it takes two years generate a profit from a traditional member.
"Online marketing works, it's just very difficult," Melland was quoted as saying. As an example, he said a "successful" banner ad seen by 100,000 people would result in about 20 to 40 buyers. For an ad that cost $20 CPM, every buyer would need to purchase $67 worth of merchandise to make up the marketing costs.
Melland said that Cendant is able to negotiate low CPM banner ad prices and pays some sites only for the number of visitors and/or purchases made from a click-through. The click-through payment "essentially offloads a lot of the risk we have," he said.
Melland said he sees a bright future for e-commerce and that from his experience, he believes the market is growing much faster than what the analysts are reporting. "When online commerce works, it's a beautiful thing," he said.