YourCustomer@YourBusiness.com

Providing Internet service to your customers may sound like technology, but it's all about marketing.

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Inc.ubator

Randy Petersen is a man who knows his core competency. The company he founded in 1986 is now a 34-employee business built around the improbable subject of frequent-flier programs. Believe it or not, Frequent Flyer Services, in Colorado Springs, Colo., makes $10 million a year publishing frequent-flier newsletters, magazines, and books; hosting a FlyerTalk bulletin board that has 600,000 users; and selling T-shirts, mugs, and insurance.

Petersen recently departed from his aviation agenda, however, when he began offering free Internet access and free WebFlyer.com E-mail addresses through his Web site. A jet-setter himself -- he's a member of Hilton Hotel Corp.'s Frequent Traveler Hall of Fame -- Petersen had been throwing more and more cash at his local Internet service provider for long-distance access on the road. He reasoned that a nationwide network with local dial-up service in every city could really take off with his road-warrior customers. And he hoped that putting his company logo in front of his customers whenever they were staring at their computer would help him promote his other products. "We look at this as a brand extension," he says.

Analysts agree: branded Internet access can be an effective marketing tool, even if a company's core business has nothing to do with technology. Consider it digital direct mail. Companies and affinity groups from Ace Hardware (at OurHouse.com) to the Democratic National Committee to the Baltimore Ravens football team to The Simpsons TV show are providing Internet access to customers and fans, with such enticements as celebrity chats and vanity E-mail addresses.

Now for the fine print: small companies probably won't see a tangible return on their investment in branded access, at least not right away. The major benefit seems to be giving customers a warm and fuzzy feeling for a company. That translates into brand loyalty, which can help a business in the long run. Other upsides are more surf traffic to the company's Web site and more foot traffic to its offline location, where people can pick up the free disks to launch the service.

Warm and fuzzy sounds good to you? Consider the following three options for becoming a "private-label Internet service provider." Using one of the start-ups that specialize in such things, you can set up a free service for your customers as Randy Petersen did, or you can offer a paid-subscription service as the New York Yankees do. (See "For the Fans," below.) Behind curtain number three: the large Internet backbone providers, which are rolling out their own private-label services.

Free for All
Petersen chose a "virtual ISP" company called Brand3 to build his freebie. But first, to define terms: a virtual ISP isn't an ISP at all. Rather, it leases network lines, contracts with a customer-service company to handle phone calls from end users, sells ad space, and repackages it all with your brand. Brand3, founded in San Francisco and Los Angeles in June 1999, aims to compete with two other "virtuals": Spinway, in Palo Alto, and 1stUp.com, in San Francisco, both founded in October 1998.

Branded Web access can be a great marketing tool. Everyone's doing it, from Ace Hardware and the Democratic National Committee to the Baltimore Ravens and The Simpsons.

Spinway and 1stUp.com sell full-motion ads that "air" during the 30-second dial-up. You could buy those ads yourself; for example, customers of Kmart's Bluelight.com service, which is powered by Spinway, are subjected to a Kmart television ad starring the Judds.

In addition, Brand3, 1stUp.com, and Spinway place a small bar on your customer's screen; it's always there, but the customer can move it around. The bar usually contains ads that are targeted to customers based on the information they supply. If customers click on the bar, special content from your company pops up: daily deals, news, whatever you choose. And even when customers are offline, your logo and special content sit on their screens. That's because Brand3, Spinway, and 1stUp.com have developed a technology that downloads content right to the user's desktop, where it sits "like an egg waiting to hatch," says Brand3 CEO Peter Mansfield.

WebFlyer.com customers see a sleek blue menu with a picture of a stylized wave; if they click on it, they can read about frequent-flier deals or dial up all over again. Randy Petersen is particularly pleased with that feature, which Brand3 calls GluOn. "We don't just own the browser; we own the desktop," he says. "That's kind of sexy to us."

Some providers of free private-label Internet service are real ISPs -- that is, they are already in the business of providing Internet access. LibertyBay.com, in Tacoma, Wash., is one such company; its service does not include the ever-present bar, but it requires users to sit through a 30-second ad every 20 minutes, as if they were watching television.

With either kind of ISP, you'll pay for the CDs that customers use to log on. You'll also have to market the service to your customers. Your final cost: around $14 per customer per month. The cost to the customers: zero.

Pay and Play
Free private-label service may tempt you because customers love free stuff. Millions of people are already using a free Internet service of some kind. But the free model is a bit risky for companies both large and small. That's because there's no immediate revenue stream to defray the costs. So some providers -- like UltraStar in New York City, NaviPath in Andover, Mass., and Genuity, headquartered in Burlington, Mass. -- offer a paid-subscription ISP model. Your customers won't have to put up with ads, but they will have to shell out a few bucks to connect.

Your final cost: $8 to $12 per customer per month. Cost to customers: as much as you like -- typically $13 to $22 a month.

Adios, Middleman
Finally, Internet backbone providers like Cable & Wireless and PSINet are offering their own versions of private-label Internet service. These companies will work with businesses of all sizes, but they give volume discounts to those that can provide many subscribers. They're less focused on value-added services than the virtual and small ISPs are. On the plus side, however, they offer solid nationwide networks, which they control themselves. (NaviPath, mentioned previously, also has its own network.)

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