HotSocket Charges Up Direct Marketing With SMART Promotions

Stick your tongue in a hot light socket and you’ll get a taste for the sort of charge that HotSocket wants to bring to the world of online direct marketing.

In the legacy world, direct response merchandisers typically buy space ads in magazines or use direct mail or outbound telemarketing to get product offers in front of consumers. Online, the task of converting clicks to cash has mostly been a kludge process of buying banners, leading people to a number of different Web pages that test various offers for merchandise, subscriptions and services and then spending weeks trying to make sense out of the resulting data. Whether online or in the legacy world, the process is complicated, awkward, time consuming and inefficient.

But HotSocket thinks it has developed a better way through the data fog with its SMART (Sales-driver Measurement Analyzed in Real Time) technology and turn-key execution. To get things started for a client, HotSocket designs web-based offers testing a variety of variables including prices and gift offers. Then it purchases click-throughs for its banners leading to the offer test pages. Finally, its proprietary software analyzes returns in real time in order to bring the best campaign to market as quickly as possible.

HotSocket’s new assault on the $80 billion U.S. consumer direct sales market (according to the Direct Marketing Association) garnered $3 million in first stage funding in July from Zero Stage Capital

“Click throughs pre-qualify the visitors right off the bat which makes the process less wasteful,” said HotSocket President & CEO Dev Bhatia who co-founded the company in January.

“Unlike the direct mail promotion I got from a car insurance company. I live in New York City and don’t own a car. It cost them a buck to send me that.” In addition, the Postal Service is notorious for delaying or even dumpstering direct promotion pieces when volume gets inconvenient, thus further raising the overall costs of direct mail promotions.

Bhatia was formerly brand management vice president at Yoyodyne, which was purchased by Yahoo! (YHOO) in 1998. There he ran the “Get Rich Click” consumer promotion said the HotSocket system is not only less expensive, but faster and more accurate at designing a direct offer than competing systems.

Bhatia noted that a key feature of the SMART system is its ability quickly to identify “sales drivers” — the component of a campaign that influences the sale of a product or service — which plays a key role in completing the sale. He said that sales drivers can be quickly and inexpensively identified on the Web and with a few corrections, used in print or for direct promotions.

BusinessWeek direct promotions coordinator Cathy Alonge said she is impressed with HotSocket.

“We were able to test six different prices and two gift offers in just a couple of weeks,” she said. “We quickly learned some very interesting things including the fact that price wasn’t that important to our subscribers and that the web pages with fewer graphics pulled better because they downloaded faster.”

In addition to developing the technology, HotSocket offers a turnkey operation for its customers that includes design, hosting the test offers and analyzing the results. In return, Bhatia said HotSocket charges either a percentage of each sale or a flat fee on transactions depending on the direct marketer’s needs. Other than a $5,000 set-up fee, there are no other charges for the service. Other clients include AT&T and Time Inc.

Bringing greater efficiency to the direct sales process promises not only to increase profits for marketers but to make things easier on customers as well by making fewer but more relevant and better targeted offers.

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