Cendant Corp., formerly CUC International, said that in a typical month, Cendant’s sites, which include apartment classifieds site Rent.Net, generate $90 million in sales from 60,000 transactions.
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 Corp., formed from the merger of CUC International and HFS, operates
more than 50 Web sites that support its existing real estate, travel and
entertainment discounts membership businesses, including the Entertainment
books and Traveler’s Advantage. Its flagship Web site, NetMarket, charges $69 per year and allows members to choose from about 1 million items at near-wholesale prices.
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.
