MyPoints.com: Rewarding Shareholders

Simply put, MyPoints.com (MYPT)
specializes in a business that makes lots of sense on the Net.
Basically, it is a supercharged rewards program. You sign-up for the
service and answer a long questionnaire, which determines your preferences.
Mypoints.com then periodically e-mails you various offers. If you visit
the sites, you get points. You can then use the points to buy goods — such
as gift certificates for restaurants or books or videos. Simple as that.

Yes, there are a variety of competitors, such as Netcentives (NCNT)
and CyberGold (CGLD)
. However, Mypoints.com appears to be a leader in the space.
According to PC Data Online, Mypoints.com was ranked the most popular
promotional site.

So what’s the point of Mypoints? The company is collecting valuable
information on the behavior of Net users. That is, users are willing to
part with their personal information. Interestingly enough, Mypoints.com
does not sell specific information on members; rather, it processes the
information and determines patterns. And companies like this — as they can
better create new products, as well as market them. In the highly
competitive environment of the Net, having such information can be a key to
success.

So far, Mypoints.com has been generating impressive results. Sales growth
has been strong. While Wall Street estimates forecasted $2.9 million in
sales, Mypoints.com instead reported sales of $7 million. But looking
deeper, there is much more. The average revenue per member increased 61 percent
from $1.41 to $2.27 from the prior quarter. There was also a 16 percent increase
in the advertising rates — as the advertising client base grew 30 percent to 224.

I expect the growth to continue, as companies find Mypoints.com to be an
effective marketing channel. In fact, it appears that the holiday season
was particularly successful, as the company announced that it achieved five
million members, which was a 21 percent increase from the third quarter. Between
October and November, the company averaged 6.7 million transactions per
month, a 46 percent increase over the monthly average in the prior quarter (a
transaction is any point-earning action by a member).

With such numbers and leadership, the company will likely continue to ride
the momentum. Even at current valuations, the stock looks attractive.

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