Sweepstakes Web sites that lure visitors with prizes have seen a big boost in Web traffic lately, but such businesses should read the fine print closely before deciding they're already winners.
A report released Tuesday by Web traffic measurement firm Jupiter Media Metrix listed five cash-incentive and sweepstakes sites among the top 10 newcomer sites in August. Numbers from Nielsen/NetRatings paint a similar
picture: The Web metrics firm reported last week that a grab-bag of sweepstakes sites posted double- and triple-digit traffic gains in the last week of September, including the Web site for sweepstakes giant Publishers
Clearing House, which popped 230 percent on the heels of an ad promotion.
While the numbers are encouraging for these companies, analysts say sweepstakes sites must answer several crucial skill-testing questions before they can claim their prize of survival in the battered dot-com economy.
Buying traffic can be an expensive way to boost advertising in a tight market, analysts say. Paid Web surfers are not as valuable to advertisers as unpaid surfers, making it harder for incentive sites to sell consumer
data and target marketing campaigns.
"Every site that's implemented some kind of sweepstakes promotion giveaway has attracted a lot of traffic," said Sean Kaldor, vice president of e-commerce strategies for Nielsen/NetRatings. "Greed in terms of gambling
and sweepstakes...works very well online. (But) it is not easy to execute on that; not everyone does a great job."
As traffic and advertisers gravitate to a handful of top-ranked sites such as Yahoo, start-up rivals have dangled costly incentives, including cash prizes, in a bid to compete for viewers and valuable consumer data.
On the surface, the odds don't look too bad.
In June, 47 percent of U.S. Internet users said they would be willing to trade their personal data for a chance to win a prize in a sweepstakes, according to a Jupiter Research survey that polled 2,312 individuals.
Sweepstakes portal iWon.com ranks in the top 20 most-visited Web sites, according to Web metrics firm PC Data. The site awards a monthly $1 million prize as well as an annual $10 million prize. Consumers receive points as they travel throughout the site.
Newcomer Web sites have also benefited from the greed principle. Jupiter Media Metrix found that all of its top three new sites in August offered sweepstakes and other cash incentives. Excite@Home-owned Fastfreefun.com led the pack with 1.96 million unique visitors for its games-related site, followed by Uproarlotto.com and Microsoft's Win Me Sweepstakes.
Nielsen/NetRatings also reported a surge in interest in sweepstakes sites, led by Publishers Clearing House's PCH.com site, which logged 851,000 unique visitors during the last week of September, up 230 percent from 258,000 unique visitors in the previous week. Following PCH.com were sweepstakes sites Troppolotto.com with a 92 percent growth rate, Netflip.com with 87 percent, Winfreestuff.com with 86 percent, and GroupLotto.com with 63 percent.
Numbers may not lie, but translating traffic into dollars can be tricky, analysts agreed.
"The growth is happening because it is a new phenomenon," said Charlene Li, research director for media entertainment at Forrester Research. But, "I don't think growth is going to be the best measurement of whether they're going to be successful or not."
Li said a host of factors determines the prosperity of sweepstakes sites, including marketing costs, funding and investments.
The difficulties facing sweepstakes sites are already being played out among pioneers that last year rushed to test incentive business models such as pay-to-surf schemes, in which Net surfers are paid by the hour to click
on advertisements or rack up points that can be redeemed for cash and merchandise.
Some of those companies have been caught in the general dot-com downdraft, announcing layoffs, new strategies and closures.
Los Angeles-based pay-to-surf site mValue, recently redubbed SweepSurf.com,
joined the list of dot-com failures Monday. In August, the company slashed its work force by 23 people and changed its business strategy from paying members by the hour to search the Web to offering regular drawings for cash prizes.
AllAdvantage.com, which pays members to surf the Web while they view advertisements, has shed about 160 employees in an effort to trim expenses. The Hayward, Calif.-based company said it paid $32.7 million to members from December to March but
earned only $9.1 million in the same period.
AllAdvantage offers daily sweepstakes, promotions or cash to Web surfers who allow the company to collect personal data about their online shopping habits and use its Web browser. Advertisers then pay the company to reach
people interested in products they sell.
Despite its recent difficulties, AllAdvantage says its business model is sound.
"We have a thing called the advantage network where we are acting as a
Swept up Fastest-growing sweepstakes sites for the week ended Oct. 1:
Site
Unique audience, 9/24
Unique audience, 10/1
% change
PCH.com
258,000
851,000
230%
Troppolotto.com
197,000
379,000
92%
Netflip.com
294,000
549,000
87%
Winfreestuff.com
176,000
328,000
86%
GroupLotto.com
601,000
978,000
63%
Source: Nielsen/NetRatings
sales network for free (Internet service providers). That's one of the ways we create revenue," said AllAdvantage spokesman Gregg Stebben, adding that
the company also has data its members have opted to share with the company. "We never use their personal data, but we use aggregate data and that data itself is valuable."
While consumer data is often described as the Holy Grail of Net marketing, analysts said advertisers may not trust data gathered through pay-to-surf sites.
Jupiter Media Metrix's Christopher Todd said that advertisers can't trust the leads that come through sites such as AllAdvantage and iWon.
"It's like picking straws through a hat: maybe you will, but chances are you won't," Todd said. "What these (sweepstakes sites) are going to need is the user database...to make sure they're showing relevant ads to interested consumers and users, or they're going to risk dampening their business
models over the long term."
Beyond advertising, sweepstakes sites are also trying e-commerce opportunities that have been well-tested in the offline world.
Publishers Clearing House, which was founded in 1953, formed its Web site last year in an effort to expand its business to the Net, which has offered consumers sweepstakes
while pitching them with discounted magazine deals and product offers.
The company has been launching promotions such as its prize patrol blitz, which contributed to the site's recent growth. PCH.com is offering 100 $10,000 prizes to 100 winners in 100 cities throughout the United States.
"The success of (sweepstakes) Web sites indicates consumers enjoy the opportunity to enter (contests) online," said Christopher L. Irving, senior director of consumer affairs at Publishers Clearing House. "There always has to be a strong combination in getting consumers interested in your
site, but of course you have to offer something that they're interested in."
Because of their relatively well-known brands, analysts give incentive Web sites such as PCH.com and iWon better odds of success than lesser-known sites.
As for the sites themselves, some appear ready to play out their hands to the end, despite misgivings that the deck is stacked against them.
"How many Internet businesses aren't doing too well? Is it particular to sweepstakes sites, or is it a phase that the Internet is going through?" asked AllAdvantage's Stebben.
I agree, a lot of them are shady to say the least! I found that this site is very reputable for listing sweeps. They get rid of spammers and only list real prizes and sponsors of giveaways. They also let their members make comments about the giveaway so if they think its a bit shady the owner will pull it! http://forums.online-sweepstakes.com/
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