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Annual Report 2006
Get More Out Of Life
Every Day.
For the past 17 years, our members have been
Our members and customers have access to
essential to their everyday needs. Vertrue has
in five categories: discounts, healthcare, personal
saving money on consumer goods and services
grown dramatically over the years, changing with
the times to become a leading Internet marketing
services company.
We continue to offer consumers more ways to save
money on everyday purchases such as clothing,
school supplies, gasoline, prescription drugs, and
direct-to-consumer savings on hundreds of benefits
property, security and insurance, and personals.
Through members-only web sites, toll-free telephone
access, mobile phone text messaging, and Voice Over
Internet Protocol, Vertrue members have special
access to exclusive offers with brand-name retailers
and services.
groceries, but changes in recent years have also
Whether they’re seeking a relationship, buying
to our customers including discounts on insurance,
checkups, putting braces on their children, outfitting
opened a whole host of new savings opportunities
cosmetic surgery, automobiles, and real estate.
The Internet marketing industry itself has grown
dramatically – from $12.5 billion in 2005 to an
estimated $18 billion in 2006 – and Vertrue has
grown with it. We have built strong relationships
with important online partners such as America
Online, Yahoo, and MSN that allow us to provide
even more direct-to-consumer savings on the things
that are most important to today’s consumers. And
or decorating their first home, getting pre-natal
a dormitory room, or traveling in their retirement,
our members and customers of every age are saving
money on their important purchases, improving
their credit scores, protecting their identities, and
protecting their financial well-being with additional
insurance coverage. From direct-to-consumer
savings on shopping to financing cosmetic surgery,
Vertrue is there to help make sure its members and
customers always “get more out of life every day.”
Vertrue’s growing expertise in online marketing and
lead generation indicates a future bright with new
opportunities for our clients and members through
innovative loyalty, subscription or transaction-based
programs and services.
(Photo, Opposite Page) Vertrue Incorporated moved into a new,
high-tech open office environment in the Merritt on the River
complex in Norwalk, Connecticut, in March of 2006.
2006 annual report
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To Our Shareholders:
I always say that change is good. It takes time. But it can bring a new world of opportunities.
For several years, Vertrue has been in the midst of change as we build the leading Internet marketing
services company. We have taken our proven business model online, integrated new businesses, and
mastered new skills on our way to becoming a dominant player on the Internet. After another year of
hard work, I am proud to say that all of our change has created an exciting platform for long-term growth.
Today, Vertrue is the premier Internet direct marketing firm serving millions of consumers through our
valued programs and services. We market our products, fulfill orders, and provide service over the Internet.
At year-end, almost half of our revenue was generated from Internet-based marketing activities.
Vertrue represents a diverse group of innovative marketing businesses that share a single mission:
to provide every consumer with access to savings and services that improve their daily lives. Whether
interested in healthcare, personal property, security/insurance, discounts, or personals, consumers come to
Vertrue for the unique value we offer. They stay with us because our savings and services make a difference.
Our track record of financial performance has made the investment in change worthwhile. As we mark our
tenth anniversary as a public company, we reported a 10-fold increase in revenue and consistent growth
in profitability since our initial public offering. This year we set a new company record for revenue and
earnings per share. These strong results underscore the success of our strategy and reinforce our belief that
change is good.
So, how has Vertrue been changing?
Internet…Now More than Ever
The Internet is a true enabler of our business. We have made significant investments over the last several
years to leverage the Internet’s reach with consumers and cost effectiveness. We are now reaping the
benefits of those investments. For example, online revenue as a percent of total revenue before deferral
increased from 29% last year to 38% this year.
Our Internet marketing strategy is diverse and includes a variety of different channels to target consumers.
We utilize banner ads, search advertising, and integrated content with all of the major leading portals. In
addition, we work with leading e-commerce sites and online affiliate networks to promote our services.
More recently, we have been growing our own proprietary websites to broaden our reach with consumers.
We have invested in technology to optimize and enhance our online presence. These investments focus on
search optimization and customer service and allow us to offer a high quality, convenient online experience.
Our client partners, service providers, and customers are all benefiting from these investments.
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2006 annual report
Going Direct…Reaching a Broader Consumer Market
Vertrue was founded on our strong relationships with client partners. We continue to believe that their success
is our success, as we help them strengthen customer affinity and generate additional revenue. We also believe
that the unique value we offer can benefit even more consumers than those we reach via our client partners.
That is why we are going directly to the consumer. It is a strategy that complements our client partner strategy,
leverages our marketing expertise, and builds an ever-better product portfolio and operations infrastructure.
This year virtually all of our marketing businesses have made significant progress in marketing direct to the
consumer. Much of our growth in revenue generated from the Internet is a result of direct-to-consumer online
advertising through portals and affiliate networks. In addition, our Lavalife personals business experienced
solid growth with its mobile phone initiatives. And last but not least, Bargain Network and MyChoiceMedical,
which are pure direct-to-consumer marketing businesses, both posted strong year over year growth.
As part of our efforts to go directly to the consumer, we are expanding our proprietary website portals to offer
expanded access to our savings and services. This year we launched PrivacyMatters.com and are preparing to
roll out other enhanced portals in the coming year. We believe that monetizing the traffic to these web sites
is an area of growth potential and we are actively pursuing this area.
Amidst Change…Our Value Remains the Same
Despite all of our change, the core programs and value we provide remain as compelling as ever. Across
our five vertical markets of healthcare, personal property, security/insurance, discounts, and personals,
we continue to enhance the value we offer to our members. We believe that the collection of savings and
services we provide is value consumers cannot find anywhere else.
Closer to home at Vertrue, we moved into a new office space which is fostering new levels of teamwork
and productivity. We also strengthened our management team with the addition of Monica Albano, our new
Senior Vice President of Human Resources.
In closing, 2006 was a year of exciting change at Vertrue. Our Internet expansion is creating new opportunities
for long-term growth. Our financial performance, with strong revenue and earnings growth, illustrates
the power this change can have. The commitment of our employees, service providers, client partners, and
shareholders makes this all possible. I thank you for your support and look forward to our ongoing partnership
in the years ahead.
Gary Johnson, President and CEO
Discountsshopping
• travel
• dining • entertainment • home • small business
Our membership savings programs are designed to
Vertrue is committed to helping its members
annualized program enrollment fee to the member
to helping them get more out of every dollar they
deliver value equal to several times the amount of the
with savings at major brand-name retailers where
members already shop. That means our members
are saving money on products and services they
already use everyday, whether they’re shopping,
traveling, dining, entertaining, or outfitting their
home or small business.
For example, by pre-purchasing discount gift cards
for many of their favorite retailers, members can
shop sales and take advantage of in-store discounts
so that they more than double their savings overall.
And members who prefer to shop on the Internet
can also take advantage of numerous online savings
opportunities.
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“get more out of life,” but we’re also committed
spend. Whether they’re saving to buy their first
home, put their children through college, or live
their retirement in the same lifestyle to which
they’ve become accustomed, Vertrue strives to
deliver big savings and deep discounts to help
our members satisfy their diverse lifestyle needs.
I buy the Shell gas cards every month. With gas prices being so high,
every savings counts these days. Thanks TODAY’S ESCAPES for being
there for me on everyday items.
Joanne P., San Marcos, TX
TODAY’S ESCAPES Member
Security insurance
• privacy • financial services
More than 13 identity thefts occur every minute,
Coverdell & Company, a Vertrue subsidiary, offers
Gartner. Despite your best efforts to manage the
supplemental health, accidental death, disability,
according to research by Harris Interactive and
flow of your personal information, skilled identity
thieves will use numerous methods to attempt to
gain access to your social security number, your
bank account, and your credit card information.
Our credit protection programs help to safeguard
In addition, we help members plan a secure future
for themselves with financial, tax, and retirement
planning services.
unlimited online access to their credit report and
properties in development for Vertrue, the website
report, alerts whenever potential signs of fraud are
detected, and credit recovery and restoration services.
In short, Vertrue’s members have greater confidence
that they are doing everything in their power to make
certain that their credit future is safe and secure.
We also offer a credit card registration and
replacement service for when a members’ credit
cards are lost or stolen. Offering 24-hour service,
we will cancel all their registered cards and make
arrangements for new cards to be re-issued on
their behalf.
2006 annual report
for the unexpected emergencies that happen in life.
In March 2006, we launched a new online property
score, email notification of changes to their credit
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warranty and identity theft) to help members plan
members against the threat of identity theft through
a comprehensive suite of benefits that include
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a variety of low-cost insurance products (term life,
called PrivacyMatters.com. One of many new
was designed to provide members and general
consumers with a trusted resource for relevant
privacy, protection and identity content, tools and
services. The site offers customized content and
resources from our premier partners while also
creating a new marketing channel for our own
products and services.
Privacy Matters allows me to have access to my own credit profile without any
hassles. It makes it easy to file a dispute because you can see exactly what needs
to be disputed from each bureau. I love it!
Kira W., Dallas
PRIVACY MATTERS Member
Personals dating
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• relationships • encounters
As the world of personals and online dating
An international leader in major markets around the
continues to evolve, Lavalife remains at the forefront
world, including Canada, Australia, and the United
of the industry, offering a variety of new and
States, Lavalife works to enhance single life for its
exciting ways for singles to “click.” Lavalife members
users through the latest technology and a variety
can choose to connect with other singles through
of access points that makes connecting with other
three distinct offerings – web, phone, and mobile.
singles simple to use, safe and fun – anytime,
Additionally, Lavalife continues to host an array
anywhere. With approximately 600,000 active
of events in select cities, bringing the singles
customers exchanging over 1.3 million messages
connection “offline” and offering a new environment
every day, Lavalife is one of the world’s leading
for people to meet and connect face to face.
providers of technology-based dating services.
One day you’re surfing through the net and another one of those pop-up
windows flashes on the screen. This time it’s about an online dating service that
promises to be different. Next thing you know you are digging through all your
pictures to find that perfect one to put up on your profile. And that’s how it all
started. At first I didn’t put much stock into Internet dating... then with one click
of the mouse and a “smile” sent, my life changed forever.
Joyce P., Toronto, Ontario
Lavalife Customer
Personal Property
automobile • real estate
Bargain Network, acquired by Vertrue in November
practices to enable home buyers and sellers to find,
of 2004, continues to enhance the Company’s goal of
evaluate and purchase properties at below market
providing consumers with value and convenience in
costs. Bargain Network offers more than 700,000
practically every area of their lives. Bargain Network
hard-to-find properties and updates the list daily.
provides members with best price information on
significant purchases such as homes, vehicles, and
Bargain Network’s motor database is the only
consumer products.
auto buying and listing service that does not take
compensation from partners or dealers. Members
Home-shopping members use Bargain Network as
have access to impartial pricing information on
their online source for fast and accurate information
hundreds of thousands of car listings and thousands
on the pricing, quality, and availability of hard-to-find
of live auction events. Members have their choice of
real estate bargains. For more than 10 years, Bargain
methods to access this valuable information – online,
Network has offered information, tools, and resources
through telephone access to auto specialists, or in
to potential buyers and investors alike. Bargain
printed handbooks and listings sent via mail.
Network leverages leading-edge, proprietary search
technology with best-of-class customer management
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Thank you Bargain Network, we found a home like we were looking for. We purchased our
new home — it has 3 bedrooms, and 2 baths. The information you provided helped us to
find the right place at the right price.
James and Pamela C., Corona, CA
Bargain Network Members
Healthcare products
• services • wellness • beauty • self-improvement
Vertrue’s healthcare savings programs offer
cosmetic and reconstructive surgical procedures
members and customers discounts on a
performed in the United States continues to increase
comprehensive range of products – prescription
every year. According to the American Society of
drugs, eyeglasses, and vitamins – and services –
Plastic Surgeons, the number of breast augmenta-
medical, dental, and alternative care services.
tion surgeries alone increased by 37 percent annually
With over 500,000 participating providers, members
from 2000 to 2005.
can easily identify and access savings in their area
using the Internet or their telephone.
My Choice Medical is a practice management
company serving more than 125 board-certified
Over the last five years, our healthcare savings
surgeons throughout the United States. The
program members have filled more than 45 million
company makes high-quality, low-cost plastic
prescriptions, at a retail cost of $2.2 billion and a
surgery available to consumers who want to improve
savings of more than one half a billion dollars.
their appearance but previously thought plastic
This represents an average savings for members
surgery was prohibitively expensive.
of 23 percent on each prescription filled. In 2005
alone, Vertrue’s members together saved $110
Personal image consultants help consumers locate
million dollars.
board certified surgeons nearby who specialize
in their area of interest and follow the customer
Vertrue added My Choice Medical to its family of
through the process, including help with financing.
healthcare program providers last year in response
Since its inception, My Choice Medical has helped
to the rapidly increasing consumer demand for
more than 19,000 people look their best.
affordable cosmetic procedures. The number of
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I am 50 years old and an office manager. I interact with many different people
on a daily basis, so I always want to look my best. I called My Choice Medical and
had a consultation with a great doctor. Because your prices were so reasonable,
I was able to get not only a facelift, necklift, and eyelift, but a breast
augmentation as well! Thank You So Much!
Tommie L., Ridgecrest, CA
My Choice Medical Member
Board of Directors
Gary A. Johnson
President, Chief Executive Officer and Director
Vertrue Incorporated
Alec L. Ellison
Managing Director and President
Broadview International LLC
Joseph E. Heid
Retired Chairman, President and
Chief Executive Officer
Esprit de Corp
Robert Kamerschen
Chairman
Survey Sampling International, Inc.
Vertrue Incorporated
20 Glover Avenue
Norwalk, CT 06850
9500 West Dodge Road
Omaha, NE 68114
7010 N. 97th Circle
Omaha, NE 68122
Arena Tower
7324 Southwest Freeway
Houston, TX 77074
www.vertrue.com
Adaptive Marketing LLC
20 Glover Avenue
Norwalk, CT 06850
Michael T. McClorey
9500 West Dodge Road
Omaha, NE 68114
Edward M. Stern
President and Chief Executive Officer
Neptune Regional Transmission System, LLC
Arena Tower
7324 Southwest Freeway
Houston, TX 77074
Marc S. Tesler
Retired General Partner
Technology Crossover Ventures, LP
Coverdell & Company Inc.
www.adaptivemarketing.com
1718 Peachtree Street, N.W., Ste. 276
Atlanta, GA 30309
8420 Bryn Mawr, Ste. 700
Chicago, IL 60631
Executive Officers
Gary A. Johnson
President, Chief Executive Officer and Director
James B. Duffy
Executive Vice President, Chief Financial Officer,
and Chief Operating Officer
Vincent DiBenedetto
Executive Vice President, Health and Insurance Services
www.coverdell.com
www.bestbenefits.com
MemberWorks Canada Corporation
1801 McGill College Avenue, Ste. 800
Montreal, Quebec, Canada H3A 2N4
www.memberworkscanada.ca
Lavalife Inc.
905 King Street West, Ste. 500
Toronto, Ontario, Canada M6K 3G9
www.lavalife.com
Bargain Network, Inc.
326 Bollay Drive
Goleta, CA 03117
www.bargain.com
My Choice Medical Holdings, Inc.
1410 Spruce Street
Stroudsburg, PA 18360
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www.mychoicemedical.com
Vertrue Incorporated • 20 Glover Avenue • Norwalk, CT 06850 • www.vertrue.com