GenuineVC David Beisel's Perspective on Digital Change

February 13, 2006

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.

  • http://tachophobia.com Rick

    What was the Yahoo competitor that gave away $10k per day?

    Why am I continually reminded of 1999 lately?

  • David

    What’s old is new again. Although a slightly different concept (registration req. for example), you can see a glimpse on how this might play out from the earlier http://www.iwon.com. I had not thought about iwon in awhile until I stumbled on the Blingo site. The iwon.com site goes back to at least 2001 (?) and is still going as part of Ask Jeeves. Not sure of it’s user base or current revenue numbers?

    A good topic might be a list of the new-era Internet Start-ups that are just re-attempts of earlier or dot-com era start-ups (probably already done)? A better idea might be to search the list of earlier business ideas that may have just been ahead of their time and re-start them as new now?…Any takers?

  • http://www.u-lik.com leafar

    Completly agree !But MSn is doing the same thing :

    http://www.msnsearchandwin.com/

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  • http://nikemark.com/Gucci-Sunglasses_388.html GUCCI Sunglasses

    A better idea might be to search the list of earlier business ideas that may have just been ahead of their time and re-start them as new now?…Any takers?

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  • Lee Hower
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    @vcparty that statement is true. FRC's LP base looks pretty similar to Sequoia's though
  • Lee Hower
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    @vcparty agree. some LPs have to bend their model, though best LPs don't care much about concentration - they focus on accessing best funds
  • Lee Hower
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    @vcparty thx - would slightly disagree trad'l LPs & smaller funds are misfit… best seed funds have trad'l LP base (albeit concentrated)

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