A local tech company with a lock on the online gift card market is planning to go nationwide this year in a push to reach millions of offline gift-givers.
Giftcards.com, a Green Tree manufacturer that prints and sells store brand gift cards and custom-made Visa and MasterCard gift cards, is gearing up for a major fundraising and marketing campaign that could increase its workforce and shake up competitors in drugstores and supermarkets, said founder and CEO Jason Wolfe.
With only 15 percent of gift cards sold in 2012 coming from sources that weren’t bricks-and-mortar stores, Mr. Wolfe said he’s aware the company is facing an uphill battle to reach consumers who think gift cards don’t qualify as gifts.
“Studies show people identify gift cards as a little impersonal. But once you put a picture on a gift card, it becomes more. It will stay in that person’s wallet forever, it raises the value of that gift beyond any money you put up because it becomes a memento, something you keep,” he said.
Giftcards.com was founded in 1999 as DirectCertificate.com shortly after Mr. Wolfe’s first venture, MyCoupons.com, sold to Livonia, Mich.-based Valassis.
In the years immediately after that sale, his attentions were divided between DirectCertificate.com and Direct Response Technologies, an affiliate tracking and ad serving company launched in 2002. By 2006, Mr. Wolfe had sold both of those companies for $21 million to Minnetonka, Minn.-based Digital River, an e-commerce payments and marketing service provider.
After taking a few years off, Mr. Wolfe decided he wanted back into the world of online commerce and bought DirectCertificate back from Digital River in 2007 for an undisclosed amount.
With plans to reposition DirectCertificate from a third-party distributor into a manufacturer, Mr. Wolfe said, he invested between $5 million and $7 million into purchasing the former Carpenter Sun Building in Green Tree and converting it into a high-security, on-demand payment card printing facility.
Seven years later under a new name, he said Giftcards.com has grown to 100 employees, reached $110 million in revenue and has been profitable for the last four years. What started as a source for plastic gift cards from major retailers now provides local and national brands, virtual e-gift cards, group gift cards and custom corporate cards for businesses of all sizes.
The site also has exploded to feature gift cards from thousands of companies, from major retailers such as Macy’s and Bloomingdale’s to small businesses from 140 U.S. cities, including more than 5,000 Pittsburgh businesses.
Chief marketing officer Carlos Tribino, a former vice president of marketing for New York media conglomerate Viacom who joined Giftcards.com in 2012, said one factor that has helped the company gain retail customers and take hold of 25 percent of the total online gift card market is a campaign that takes advantage of a name that shoots to the top of search engines for anyone seeking gift cards online. In a market where only 11 percent of purchases were made online using websites that sell gift cards for several stores in 2012, according to a white paper by Atlanta-based payment processing company First Data, every advantage counts.
Another is targeted marketing through pay-per-click advertising arrangements with Google AdWords, Bing and Yahoo as well as affiliate programs, email campaigns and online videos and some commercials.
The company’s next step, said Mr. Tribino and Mr. Wolfe, is to use those victories to sell investors on a two-year expansion plan.
Mr. Wolfe said he is not sure exactly how much the company needs to raise, but the goal is to gain enough funding to expand the building, to double the staff, add to a patent portfolio that already has 12 issued and 45 filed, and to go after targeted acquisitions. The cash also would help expand a video ad campaign that sells the company in movie advertisements and television commercials.
The company is seeking funding from all over the nation, but Mr. Wolfe made it clear that he’s more interested in bringing investors and talent to Pittsburgh than he is in taking Giftcards.com elsewhere. And with a team that includes a former chief technology officer of New York-based tech giant AOL and a chief operating officer from Phoenix-based Skymall, Mr. Wolfe said steering what he needs into the region might not be as much of a challenge as some anticipate.
“I feel like we have something special here,” he said.
Deborah M. Todd: firstname.lastname@example.org or 412-263-1652. Twitter: @deborahtodd.