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Netcentives in Japanese Joint Venture

Online loyalty marketer Netcentives will be expanding abroad through a joint venture with five Japanese conglomerates, the companies announced Monday.

The joint venture, to be dubbed Customer Loyalty Network K.K., will operate as Netcentives Japan, and will be an exclusive licensee of Netcentives' online reward platform RewardBroker.

According to the companies, the Japanese venture will use Netcentives' technology and its experience in the industry to provide an online consumer loyalty offering, not available today in Japan.

"Other companies have attempted to set up loyalty programs in Japan. However, few have succeeded largely because the programs have been viewed simply as discount programs or have only focused on advertising or customer acquisition," said Customer Loyalty Network president Noriyuki Ichihashi.

"Netcentives ... will enable Japanese companies to focus on retention and one-to-one personalized marketing to build lasting relationships."

In addition to licensing the technology, Netcentives will control a 6.8 percent stake in the venture, and will control one seat on the board of directors. Netcentives' partners in the deal include trading, finance and industrial behemoth Itochu, which will hold a 47.5 percent ownership. Other major investors include Japanese ad giant Dentsu and credit card firm JCB, each holding 15 percent.

In spring, the joint venture plans to begin rollout of a on- and offline rewards product, similar to Netcentives' existing ClickRewards program.

Netcentives chairman and chief executive West Shell III also said the venture likely will offer additional products licensed from Netcentives, including corporate incentive programs and e-mail products, as well as large-scale, branded loyalty networks in Japan.

The venture is expected to see about $50 million in revenue by 2003, according to the companies. In addition to the licensing fees, Netcentives will charge the company consulting fees.

"This joint venture exemplifies Netcentives' international strategy, which is to develop a global footprint by partnering with regional leaders such as Itochu and leveraging our business model with minimal capital expenditures," said Netcentives chairman and chief executive West Shell III.