Metareward Comments on Decision to Close Incentive Business

April 14, 2006 · 0 comments

There was an interesting article on today about Experian’s decision to shut down Metareward’s incentive business (and to lay off 50 employees). A company spokesperson said, “Over the past year, the effectiveness of incentive marketing has eroded and volumes have dropped. We decided the best move for us would be to exit the incentive marketing space.” The author of the article says that the fact that MyPoints was just sold for $56 million, when United Airlines paid $116 million for it a few years ago, “supports Experian’s contention that incentive marketing is a shrinking business.”
I don’t know if I agree with that, but I don’t have any industry figures to toss around to back me up. I’d suggest that there’s more competition — many of MyPoints’ members found better places to shop for rebates, which is why only about 1/4 of their membership was active, and why MyPoints’ income was (relatively) so low.
It makes no sense to me that while online shopping has exploded in the last 5 years, that incentive marketing is “shrinking” — UNLESS it’s not properly being marketed to consumers. Ask a consumer if he’d rather buy directly from, or if he’d like to go through a rewards program and get 8% cash back…what do you think he’s going to do? I CAN see a point in time where merchants, particularly those that are national and well-known to begin with, will start pulling out of affiliate programs because they’ll realize that people will shop with them anyway. Smaller merchants that don’t have the marketing pull or name recognition that the big guys have will always need an affiliate program, thus a rewards program, to help bolster their business.

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