Report: Can't Buy Me Love - or Greeting Cards

Greeting card sites that do not charge a fee to send a heartfelt message will fare better than pay sites this Valentine's Day, according to a new report.

Charles Buchwalter, vice president of media research at Jupiter Media Metrix (Nasdaq: JMXI), said that like many Internet companies, some greeting card sites have turned to user fees in order to decrease their reliance on online ads.

In this case, however, the move might not be such a great idea, according to Buchwalter.

"Timing is everything, and embarking on this strategy during the holiday season and in a depressed economy could backfire, allowing free, ad-supported services to gain share," he said.

Traffic Down

According to the report, traffic to sites run by American Greetings, including Americangreetings.com, Blue Mountain and Egreetings.com, dropped from 25.5 million visitors in November to 22.9 million in December, after the company began charging customers a US$11.95 annual fee to send most cards.

Blue Mountain, the largest of the three sites, suffered the most defections, with visits down 22 percent. The other two sites saw traffic increase from November to December, the report said.

All three sites inform Valentine shoppers in a pop-up "special announcement" that they still can browse all cards and can send a small selection of "everyday" cards, although they must pay to send holiday and birthday greetings or to create custom cards.

Visitors spent less time on American Greetings sites after the company began charging, from an average of 13.1 minutes in November to 10 minutes in December -- a 24 percent decline.

Some card-seekers kept site-hopping once they found out about the fee. In November, just 16 percent of visitors went to more than one site, but 27 percent did so in December.

It Pays To Be Free

Visits to free sites Yahoo! Greetings and Hallmark.com, on the other hand, both increased over the same period.

Yahoo! Greetings traffic rose 70 percent, from 5.4 million visitors in November to 9.1 million in December. Hallmark.com saw visitor numbers increase from 4.7 million to 8.2 million in the period, a 74 percent boost.

The two free sites also saw a significant increase in the number of minutes visitors lingered after American Greetings instituted its fee, the report said. Visit time on Yahoo! Greetings was up 24 percent, from 8.5 minutes in November to 10.5 minutes in December. Time spent at Hallmark.com jumped 34 percent, from 8.1 minutes to 10.8 minutes.

Flowers, Too

Greeting card sites will not be the only ones seeing a lot of traffic on Valentine's Day. W.R. Hambrecht analyst Kristine Koerber said she expects 1-800-Flowers.com (Nasdaq: FLWS) to have a banner day, topping last year's sales of $2.5 million.

In the wake of September 11th, Koerber said, "it appears that consumers are feeling more sentimental and are taking advantage of opportunities to express their feelings of affection through gift giving."

1-800-Flowers will benefit from a strong brand reputation and expanded merchandise offerings, she noted.