eBay to acquire FairMarket for $4.5 million in cash
EBay has agreed to acquire substantially all of the technology and business assets of online auction and promotions platform provider FairMarket Inc. for $4.5 million in cash in a deal expected to close in the third quarter. FairMarket says eBay expects to hire a number of FairMarket staff.
Several companies such as Burger King Corp. already have used FairMarket’s platform to launch online promotions and auction-style loyalty programs on eBay. Recently, FairMarket launched another auction-style loyalty program for Dr. Pepper/7-Up that demonstrates how it combines auctions and promotions on eBay. In the program, currently up on eBay, consumers can bid at special auctions sponsored by the soft drink maker. But instead of cash, they use points they amass by collecting codes from specially marked product packages and then registering online to redeem the codes as currency for the special auctions.
FairMarket’s technology is behind those auctions on eBay, and FairMarket CEO Nanda Krish says the acquisition broadens the promotional options eBay can offer to its strategic partners. “The nucleus of this agreement is that eBay is buying into a marketing platform,” Krish says. “With its customer base and marketing prowess, now it will be able to leverage the platform to offer more solutions to its customer base, such as loyalty programs, sweepstakes, any kind of promotional activity you can think of.” Krish adds that FairMarket`s engine will move into the strategic partnerships organization of eBay.
FairMarket’s business model and strategic direction have evolved from its early businesses as a platform that hosted auctions for clients and helped them launched those auctions on eBay. That expansion from the straightforward auction hosting business to a model that combined auctions and promotions began early in 2002, says Krish.
Experiences such as an early online Superbowl program for Miller Brewing Co. gave the company experience in leveraging auctions in a promotions environment prompting its move in that direction, Krish adds. “What is unique about auctions in a promotional environment is the number of times you touch a customer, and how that can motivate customers to participate. And costs are much less than a traditional rewards program. We saw a lot of traction from those characteristics.”
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