Card Personalization: The Gift that Keeps on Giving

  Millions of consumers are becoming used to uploading photos to picture-sharing Web sites. A growing number of retailers, and at least one bank, are hoping that familiarity with online photo sites will lead more customers to choose gift cards that they can personalize with a picture of daughter Katie's ballet recital or Paws the cat.
  Millions more will be offered the opportunity to put their own photos on gift cards now that Yahoo! Photos, the fourth-largest of the online photo sites according to Nielsen/Net Ratings, has agreed to promote the personalization services offered by Chicago-based Cardways.com, part of Arroweye Solutions. More than 7.2 million U.S. consumers visited Yahoo! Photos in September, Nielsen/Net Ratings says.
  Some 20 other retailers will be offering customized gift cards this holiday season through Cardways, which formerly called its Web site 4YourSoul.com.
  Anything that sells more gift cards is profitable for merchants, who make money on the goods they sell, regardless of how customers pay. While the overall profit potential of bank gift cards is less compelling, the vendors of the personalization services hope to convince more financial institutions to sign up, although it may be next Christmas season before there is any real movement.
  Among the first retailers to use the personalization service of Arroweye was Overstock.com, a Web site that sells overstocked merchandise at discount prices. The site first offered personalized cards in fall 2004, and the online retailer says it is pleased with the results.
  "It allows us to offer a unique product that a lot of our competitors don't have," says Jacob Hawkins, senior vice president of online marketing. While he would not divulge sales figures, he says that as the product has gained steam, it has been given more prominence on the Web site. And he says Overstock.com plans to make more use of personalized services this holiday season, including on electronic gift certificates.
  As people become more savvy online, they're going to want to have this option, Hawkins says. "Giving a gift card is nice, but giving a personalized card that adds more personality to the gift is far ahead of that, and more and more customers will be looking for that," he says.
  Another Internet merchant that came on board last fall is eBags, which sells luggage and handbags. "We wanted an up-to-date gift card solution that leveraged the possibilities of the Internet, versus the standard e-mail gift certificate or plastic card with no stylized greeting," says Jonathan Fox, brand director at eBags. Fox says he is pleased with the customer response and has had no significant customer-service issues. He would not reveal sales figures.
  The Cardways service started as a Web site that allowed consumers to personalize a greeting card with a digital photo, says Jeff Keller, chief customer officer at Cardways.com. He says the company started testing uploading of photos to gift cards with Overstock.com two years ago. Since then it has sold "hundreds of thousands of gift cards." Besides individual consumers, his customers include companies that add a logo or photo to gift cards they buy for clients and employees.
  Keller notes that consumers are increasingly comfortable with uploading photos, an assertion backed up by Nielsen/Net Ratings figures that show 50.5 million U.S. consumers used online photo sites in September and that visits to the top 10 sites grew 13% over September 2005.
  Keller says about 45% of customers who buy greeting cards at the Cardways site now personalize them with photos, up from around 15% when the company launched the service five years ago. He says close to 80% of customers buying gift cards from Cardways.com add photos.
  The personalization service costs $4.50 plus the value loaded onto the card. Retailers who drive business to the Cardways.com site receive 28% of the fee. Retailers pay a one-time fee of $5,000 to $10,000 to connect to the Cardways.com site, the company says.
  While Keller says his focus remains on retailers, he envisions offering the service to issuers of gift cards carrying the major payment brands, such as Visa, MasterCard, American Express and Discover.
  One card-personalization company that already focuses on banks is United Kingdom-based Serverside Group, which says it has 30 issuers signed up for its service worldwide, including seven in the United States. One of those, First National Bank of Omaha, allows bank customers to add a photo to a Visa-branded gift card, charging $5.95, which includes shipping.
  However, most of Serverside's bank clients start with credit cards, hoping that having a picture of a child or a family vacation on the card will make that piece of plastic the one the consumer pulls from her wallet, says Adam Elgar, president of Serverside.
  "With a credit card, the business case for giving the service away free is very strong because it increases balances and drives the card to the front of the wallet," Elgar says. "With debit, the business case is flatter because you don't have the balances you have with credit."
  The company's work with U.S. banks also has been slowed because many issuers offering network-branded gift cards work through such prepaid specialists as eFunds and Metavante, and Serverside is still working on sealing deals to work with those companies, Elgar says. "As soon as we get that pipe in place, it should be a great deal more straightforward for us to integrate with the card issuers," he says. EFunds and Metavante did not respond to requests for comment.
  SUPPLY CHAIN ISSUES
  However, Andy Savitt, marketing director at TSYS Prepaid Inc., another major prepaid processor, says some of the card vendors he works with have brought up the idea of offering personalization. He sees it as an appealing feature, especially to the younger consumers who have grown up with gift cards. But a lot will depend on how much it costs to integrate the service with the various providers in the supply chain, including card manufacturers, processors and fulfillment companies, Savitt says.
  "It's exciting and emerging, but you never know how the market takes to it," says Savitt. His best guess is there will be more issuers of network-branded gift cards offering personalization during the 2007 holiday season.
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