What's an e-mail address worth?

What do you think is a fair price for an e-mail address? How about 5 bucks off your next purchase?

What do you think is a fair price for an e-mail address? How about 5 bucks off your next purchase? That's exactly what you'll get for it at the CogniToy Web site, where the company has combined instant discounts and viral marketing.

Consumer readily accept the concept of rebates or coupons. Just send in proof of purchase, or clip out a piece of paper, and save part of the product's price. The idea behind viral marketing is just as simple: Make each customer a source of future customers. It's a cheap marketing method that's captured the attention of Internet entrepreneurs since the term was coined three years ago by venture capitalists Steve Jurvetson and Tim Draper.

"There's an involuntary element to it," says Jurvetson, a managing director of venture capital firm Draper Fisher Jurvetson. "You have to embed within the product the involuntary spread of information."

Viral marketing
They first tried the idea with Javasoft's Hotmail service. DFJ was an investor in the company and was represented on its board. Their plan was to add a tag line at the bottom of each e-mail sent from any Hotmail account. It worked -- in its first year and a half, Javasoft signed up 12 million users for Hotmail, since purchased by Microsoft. (Microsoft is a partner in MSNBC.)

Other Internet properties have invested in a broader definition of viral marketing, where the customer is encouraged -- but not forced -- to spread the word. Enter a contest at Megadepot Canada, and you can submit your friends' e-mail addresses to let them know about the contest. With ICQ, you can send instant messages to your friends, and if they don't have the software, there's a special button you can press to send it to them.

CogniToy's marketing strategy for MindRover, a 3-D computer strategy game, takes the concept a bit further.

With a small marketing budget, the company decided to offer a discount to customers willing to help spread the word. Order MindRover from the CogniToy Web site, and you'll be asked how much you want to spend. Would you pay $45? How about $40, or $35? It all depends on how many e-mail addresses you're willing to share.

For each address you provide to CogniToy, you'll get $5 off your purchase -- up to six e-mail addresses, worth a $30 savings. You can give more than that if you wish, but the game will still cost $15. At that price, CogniToy can still cover its costs. The only catch is that the best deals will soon expire, so interested gamers with addresses to share had best act soon.

The game itself takes users to one of the moons of Jupiter. There they build robots by selecting components and deciding how it should react to different stimuli. Once the rover is built, a user can challenge the computer or friends in a variety of competitions. CogniToy CTO and game architect Kent Quirk says that one of the game's real assets is its ability to grow with the user.

"Were trying to develop an extendable product," says Quirk. We want to put our toolkits out there as a base set of building blocks."

Players could use those blocks to develop their own adventures and share them with others in the CogniToy forums.

The spam lesson
CogniToy CEO Kim Quirk says she won't sell the e-mail addresses to another company, and she's already learned her lesson about spam.

"We did use some of the names to send out regular information like, 'Now we're shipping the product.' But we got some feedback about it, so we don't do that anymore," says Quirk. Instead, a separate mailing list was set up for a monthly newsletter.

She says she's happy with the response to MindRover so far, but only a week into the plan, the stats just aren't in to prove its success. The company expects to ship 20,000-30,000 copies this year.

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