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.

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 My Choice Medical, 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

Vertrue Incorporated is headquartered in Norwalk, Conneticut. The company is a category leader in both membership and loyalty programs that bring value direct to consumers through a range of benefits in healthcare, discounts, security and personals. Corporate client partners benefit from programs that effectively enhance market presence, strengthen customer affinity and generate additional value through the broad online and offline distribution capabilities of Vertrue.


www.vertrue.com