Virgin's Mega-Marketing

SAN FRANCISCO (04/11/2000) - What is the "Virgin Lifestyle"? Even Virgin isn't sure. But it probably has something to do with shopping at Virgin Megastore, flying Virgin Atlantic or simply admiring Richard Branson's roguish good looks.

Starting Monday, Virgin Entertainment Group began learning a tremendous amount about people living the Virgin Lifestyle when it started taking applications from thousands of Web surfers trying to get one of 10,000 free Virgin-branded Internet devices. Soon, the company will monitor the Virgin lifestylers as they move about the Web.

"We see this as a fantastic way of gaining a better understanding of the customer," says Dave Alder, senior VP of Virgin e-commerce. "The great advantage for Virgin is this is a very cost-effective way of developing a marketing channel."

Virgin is giving away the devices as an introductory promotion for a new service called Virginconnect. Based on the demographic information contained in the applications filled out at Virginconnectme.com, Virgin will select 10,000 people to receive a free Webplayer.

The devices are provided by Internet Appliance Network, a one-year-old, New York-based startup which just completed a $20 million second round of financing led by Flatiron Partners.

"Virgin is more than a record store," says Bonnie Schwartz, chief marketing officer of Internet Appliance Network. "It's an airline; its financial services in the U.K.; it's a brand that you relate to in different aspects of your life."

The devices include a monitor, keyboard and 56Kbps modem but no hard drive. If sold in stores, Internet Appliance Network's Webplayer would retail for between $500 and $600, Schwartz says. Virgin is giving away the first 10,000, but the long-term strategy is to offer the Webplayer along with unlimited Internet access and e-mail for $50 a year.

Once the service is set up in the homes of various Virgin lifestylers, Virgin will begin keeping track of where they go on the Web, what applications they launch and on which ads they click.

"We know where they are going on the Web," Schwartz says. "When you apply, you are telling us some demographic information that will we will marry with the behavioral data on the Web."

By connecting to the service, users automatically agree to receive marketing information from Virgin and its commerce partners including Gap, Tickets.com, TheStreet.com, Bluefly.com and Expedia.com. The Virginconnect privacy policy states that Virgin will "not share your e-mail addresses with any other party."

Virgin isn't the first to exchange low-cost or free Internet access for demographic information, but Virgin's opportunity runs deeper than marketing.

Virgin is already selling music in digital-download form at VirginJamCast.com.

Alder says future Virgin Webplayers might have storage capacity and connectivity to stereo equipment so that consumers could buy music from Virgin and play it on the same device.

"In time, that is where we would like to get to," Alder says. "We see VirginJamCast as a sister business."

Virgin is Internet Appliance Network's first major client; however, Schwartz expects the company to announce future deals in the travel, financial services and retail sectors. The service is targeted at consumers who use the Internet at work or school but might or might not have a computer at home.

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