Part gift card, part DVD

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(FSB Magazine) -- Robert Likoff was looking for a way to sell more drugs. No, not that kind of drug. Likoff's Montclair, N.J., firm, Group DCA (groupdca.com), markets medications on behalf of pharmaceutical companies.

Group DCA was pretty good at persuading physicians to try new drug therapies, but the company struggled when it came to reaching patients. Rebates, a time-honored strategy, were a hassle. Free samples didn't always translate into paid prescriptions. Likoff, 53, needed a marketing tool that would slice through the clutter of an ad-mad world.

In early 2005 he heard about Serious (serious.com), a New York City startup with a patented DVD technology called Cardz. The technology is expensive and requires major creative investment, but the results compare favorably to conventional direct mail. Likoff hired Serious to design Cardz for some of his clients, including Merck (MRK, Fortune 500) and Pfizer (PFE, Fortune 500). He also paid $350,000 for the license to sell Cardz to other pharmaceutical firms.

While Cardz resemble ordinary rectangular plastic gift cards and can include a magnetic stripe to swipe at a cash register, they feature a DVD encoded on the back. Slip one into a DVD player or computer, and up pops a multimedia presentation offering video, text, photos, games and printable coupons.

Serious has made Cardz for sports teams, movie studios and beverage makers, among others. Software embedded in each card helps Serious track how many users have activated their Cardz in a computer and even how long they spent in each section of the presentation. Overall, the company says, 50 percent of Cardz sent out by direct mail have been activated.

Around 30 percent of those resulted in an online purchase. The lowest purchase rate Serious has recorded is 5 percent - still much higher than the 2 percent industry average for direct-mail campaigns. "The response rate may be extra high right now because it's a honeymoon period," says Scott Symonds of digital-marketing firm AKQA in San Francisco. "But Cardz is part of a growing trend of personalized marketing campaigns that use digital media to provide extra value to the customer and encourage one-on-one communication."

The initial investment, which covers design, production and manufacturing of 25,000 Cardz, runs upwards of $75,000. For repeat campaigns, prices range between $1.50 and $3 a card, depending on features and packaging. Likoff spent about $100,000 on his first Cardz campaign, for a popular birth control pill, and has since launched 14 more Cardz campaigns for other drugs. He calculates that Cardz adoption has driven a 30 percent increase in revenue at Group DCA in the past two years, from roughly $16 million in 2005 to $21 million in 2006.

Cardz are an expensive way to market, which helps explain why roughly 75 percent of Serious customers are large companies such as Disney (DIS, Fortune 500) and Best Buy (BB). But if the history of technology is any guide, the cost of digital campaigns such as Cardz should come down as more businesses buy in. Meanwhile, Likoff is an enthusiastic early adopter. "Cardz are a challenge for me," he says. " I have to make sure that the content is always fresh and engaging so that people will want to spend time with it." And maybe refill that medicine bottle.

Do you think Cardz could help market your product? Let us know. To give feedback, please write to fsb_mail@timeinc.com.