It’s Not Just Fun and Games

Chris Gilmer over at the Search Engine Marketing Weblog wrote about Blingo over the weekend. The year-old search engine delivers Google results, but then also randomly picks users as winners – so every time you search you have a chance to win. Chris writes, “I’m still not convinced whether I like this or not. It’s cool that they offer prizes for searching, but is it really necessary?”

While I was at About.com, my team ran a number of promotions both for our online and e-mail newsletter properties, as well as for those within greater Primedia’s. And the basic lesson which we learned is that online contests and promotions work. Consumers will respond to online contests, if architected correctly, in a very strong and meaningful way.

However, I would make one distinction with the implementation of contests/giveaways, which is between those for attracting and those for sustaining users. My experience is that promotions of this kind are better at the former. With a perceived value in participating in contests, people are more likely to try a new service that they haven’t in the past. They provide an extra nudge to push through any friction points inhibiting users from being attracted to and taking the desired action. In fact, in the race to acquire audience and users for Web 2.0 offerings, I think that contests are an underutilized tool which would help these offerings leap from “digerati-facing” to truly “consumer-facing” services.

On the other side, using contests to sustain usage is more difficult. Over time, as users fail to win prizes, the perceived value of a promotion wanes, even though the economic expected value of the offer remains constant.

Consequently, the challenge for Blingo (as I see it) isn’t necessarily attracting users (which they’ve accomplished successfully), but rather maintaining consistent usage over the long term when their offering is commoditized. Perhaps other emerging web services which do have a differentiated offering, but are struggling for a true consumer audience, could employ some of these tactics to broaden their exposure.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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