E-Channel: Cobranding Expands Scope of Business, Reaches Consumers

Posted: 12/2000

Cobranding Expands Scope of Business,
Reaches Consumers
By Josh Long

Their website may feature the look and feel of your own, and more
importantly, a staple of new consumers you might not otherwise reach.

Today, more telecom companies are launching cobranding initiatives on the web
as a means to garner new business. These marketing initiatives permit a business
to brand or closely associate its name with a product or service another
provider offers.

Often, the consumer offers enticing bargains to get new customers through the
door. The real sales pitch, and subsequent financial rewards, come later.

AT&T WorldNet Service (www.att.net) is a
case in point.

This summer, the ISP launched a cobranded program that allows businesses to
offer customers WorldNet Service i495 Internet access directly to consumers
under their own brand. The service is cheap, and AT&T WorldNet probably
isn’t making a fortune on the offer, but that’s not the point, says Rob
Lancaster, an analyst at Boston-based consulting firm the Yankee Group (www.yankeegroup.com).

"It is all about getting the customer in the door and selling
value-added service when they are ready for it," says Lancaster, who notes
that companies like AT&T WorldNet can market additional services to their
new customer base such as DSL and cable. "Just by striking deals with
recognized brands, AT&T is exposing itself to large numbers of potential
customers."

Furthermore, the agreements are saving companies like AT&T WorldNet a
bundle of money on marketing expenses.

"They have been spending too much on marketing, and customer acquisition
costs have been soaring," Lancaster notes. "So, by having a partner
company do the marketing for you, you are all but eliminating your marketing
cost. And all of a sudden the ISP service becomes much more effective."

Meanwhile, such partnerships enable companies outside of the telecom industry
to seemingly play a different role as a telecom provider.

AT&T WorldNet spokeswoman Janet Wyles says the program is " a good
opportunity for businesses to offer their customers Internet access but don’t
want the hassle of becoming ISPs themselves."

She adds, "They don’t want to deal with back-office stuff that is
necessary if you are going to provide Internet access to your customer
base."

Other telecom companies are forging alliances within the industry. For
instance, Florida-based BuyTelco Inc. (www.buytelco.com),
a vendor-neutral web-based telecom back office that provides research tools and
distributes telecom services to small and medium-sized businesses, has enabled
its partners–some of whom are value-added resellers (VARs)–to host an online
telecom services store.

BuyTelco integrates its telecom pricing and ordering engine into partners’
websites through links to its services. In October, Broadband Store enabled its
partners to sell DSL online. Other services, such as VoDSL, T1 and Internet
access, are expected to be available through the affiliated stores.

BuyTelco’s business model is success based and requires no investment. The
company splits a percentage of the commission with its partners based on new
sales generated through the affiliated websites.

The cobranding venture enables partners to extend their capabilities without
stretching their own resources, says COO Kurt Scott. The partners have a new
"capability and service, and they have not added a single person to their
office," Scott explains.

Oregon-based Etrieve Inc. (www.etrieve.com),
a wireless mobile-office solution provider, represents another company that has
recently launched an affiliate marketing program. Through the marketing program,
partners can offer Etrieve’s mobile phone e-mail solution.

Etrieve pays partners if consumers sign up for its free trial program, and
delivers a bonus if trial members convert into paying subscribers.

Sarah Van Dyck, vice president of Etrieve’s marketing, says traffic has
quadrupled on their site since the program began in the fall. However, it is
more crucial to forge partnerships with businesses that are going to draw
"quality traffic"–folks likely to join the service–rather than haul
in an endless parade of wandering cyberjunkies, she adds.

A planned partnership with Cellmania.com Inc. (www.cellmania.com)–a
wireless service provider–seems like the type of venture that will draw the
visitors Van Dyck is looking for.