Slashes Staff, Spins Off New Company

Responding to the slowdown in Internet advertising and marketing spending, Silicon Alley-based loyalty marketer has drastically reduced its staff and plans to spin off a second company, so the first can focus on its portal business.

Published reports have set the number of current employees — post reduction — at 30, and said the most recent layoffs cut the staff in half, but declined to confirm how many jobs were eliminated. This round of layoffs followed earlier cutbacks in October.

“No one in their wildest dreams contemplated the market the way it is right now,” said Jordan Stanley, a founder of who will be heading up the new company, Liquid Loyalty. “It seems to be an equal and opposite reaction to the witless optimism of last year.”

The new company, which will launch with 10 employees, will be structured as a consultancy and as an end-to-end loyalty marketing provider, focusing on bricks-and-mortar clients. The company will provide advice, and will also offer private label currency and other solutions aimed at driving traffic to a Web site, or to a retail outlet.

Art Winkleblack will lead the existing company,, which will continue to aggregate offers for its clients — mainly dot-com plays — on the site. Consumers who participate in the program earn points each time they perform certain actions — making purchases, registering, visiting a site, etc.

The idea behind the spinoff is that each of the firms will be better able to focus on certain types of advertisers.

“I think the wisdom of this is that two different companies can serve the diverging needs of advertisers,” said Stanley. “The new reality is that, in order to better focus on different types of advertisers, you need organizations dedicated to doing so.”

Loyalty and promotional marketing companies have all been suffering in the current market climate, in which anything having to do with Internet advertising or marketing has been punished. The biggest player in the loyalty space — — recently had its chief executive officer and founder leave the company, after the elimination of 120 jobs.

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