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Christmas Gift Guide
Tech Industry

E-card fees drive traffic to free card sites

Traffic on free e-greeting card sites is up after American Greetings, which operates three of the most popular e-card sites, began charging fees earlier this month.

Traffic on free e-greeting card sites has surged since American Greetings, which operates three of the most popular e-card sites, began charging fees earlier this month.

Hallmark says traffic on its Web site, where it offers free e-cards, is double the normal level for this time of year and that the number of visitors surged the day after American Greetings began charging fees. "We saw it almost immediately," spokeswoman Kathi Mishek said.

Traffic numbers from Jupiter Media Metrix show that the number of unique visitors to AmericanGreetings.com, still the most visited e-card site on the Web, fell to 473,000 a day last week from nearly 500,000 a day the week prior. Meanwhile, Hallmark.com traffic rose to 415,000 visitors a day last week, from 243,000 the week before.

USA Greetings, another site offering free e-cards, says traffic on its site has quadrupled since American Greetings instituted fees.

"Greeting cards have been one of the most popular application on the Web, and they're popular because they're free," said Stacey Herron, an analyst at Jupiter Media Metrix. "As companies start charging for e-cards, people will look for them somewhere else and not open their wallets, especially in this economy."

American Greetings began charging fees nearly two weeks ago for e-cards from its three major sites, AmericanGreeting.com, Egreetings.com and BlueMountain.com. Consumers must now pay $11.95 a year to send cards from those sites. Included in the charge are some other perks, such as online scrap books, address books, and a coupon for three free paper cards that can be redeemed in-store.

Many independent e-card companies have suffered as ad revenues plunged this year in the wake of the dot-com meltdown. The revenue squeeze has led to a consolidation among e-card companies. American Greetings bought Egreetings.com earlier this year and then scooped up BlueMountain.com, previously owned by Excite@Home in September.

Although USA Greetings, which relies on content and private label deals with businesses for revenue, is not yet profitable, the increased in traffic may make it more popular with advertisers and help it reach profitability sooner than its recent estimate of 12 months, Chief Executive Suresh Reddy said.

For Hallmark, which earns less than 1 percent of its $4.3 billion in annual revenues from Web sales, e-cards are a useful marketing tool to attract customers to its stores and Web site, where it sells other merchandise, but they aren't considered a source of revenue themselves, Mishek said. The company intends to continue to offer e-cards for free.

Analysts say American Greetings will be an interesting experiment in online loyalty. Other sites that started charging fees after initially offering free content, such as Salon.com and Britannica.com, may provide an indication of what's to come for the American Greetings online properties, according to Betty Yeh, an analyst at Neilsen/NetRatings.

"We definitely saw traffic drop in the month right after they implemented fees," said Yeh. "But they got back some of their customer base as people got used to the idea. It really depends on how people view the value proposition."