Jackpots on Net a sure thing for advertisers

Sweepstakes: Web surfers are lured to giveaway sites by the promise of riches.

November 29, 1999|By Carrie Kirby | Carrie Kirby,san francisco chronicle

Tom Church isn't among the one-third of Americans who believe that hitting a jackpot is their best chance at wealth. But when he saw a Web site giving away $10,000 a day, he thought, "It's free, so what the heck?"

He entered iWon.com's sweepstakes on a Friday last month. That Monday, the Berkeley, Calif., resident received an e-mail informing him that he was among the CBS-backed company's early $10,000 winners.

IWon.com is a Web portal with Web search, e-mail and other functions, much like Yahoo!, Lycos, AltaVista and other portals.

But unlike the others, this Web site gives away $10,000 every day, $1 million once a month, and plans to give $10 million to one winner on Tax Day, April 17, 2000.

Church entered during iWon.com's first week, when the site only got 27,000 visitors a day, so his chances of winning were better than they are today. By the second week of November, an average of 350,000 people were visiting iWon.com daily, according to Media Metrix, an Internet rating firm.

Most Internet sweepstakes offer odds that are similar or better than the odds of winning the California Lottery -- but the Web sites are all free. So what's in it for them?

For iWon, giving away bulging handfuls of cash is a tactic to win Internet users' attention. Once the firm becomes a major player, executives plan to make money just like Yahoo! does -- through advertising, sponsorship and e-commerce.

LuckySurf.com and Tree-Loot, two other online sweepstakes, concentrate on driving players to advertisers' Web sites. Launched Sept. 1, LuckySurf.com promises to give $1 million to anyone who can match seven out of seven numbers in its daily drawing. So far, the closest anyone has come is six numbers, for a $1,000 prize.

The catch: In order to validate an entry, a player must click a banner and visit an advertiser.

One online giveaway that's actually making a profit is TreeLoot, a site that rewards visitors who find money hidden in a graphic of a tree. Its banner ad shows a moving monkey and challenges viewers to "Catch the monkey and win $20." The Kansas City company's president, 19-year-old Scott Lynn, says that his site started making money three months after he founded it in May 1998.

"We expect to exceed $10 million in gross revenue next year. We have no venture capital. We don't even have a bank loan," said Lynn. His site was listed 59th in popularity among all Web sites by Nielsen/NetRatings last month.

Both LuckySurf.com and TreeLoot conduct surveys to find out more about their customers; the results are used to sell targeted advertising. TreeLoot doles out hints on prize location to players who answer detailed questions about their Internet use, buying habits and income. Visiting enough sponsors can land a player the chance to play in a bonus round.

Lynn paid the prizes, ranging from $20 to more than $1,000, out of his own pocket until the advertising revenue started rolling in. Now the site offers a $25,000 grand prize, but no one has won it yet, probably because players have to click two points, consecutively and in the right order, to get the jackpot. There are 170,000 points on the tree from which to choose.

In TreeLoot's chat room, the consensus is that the big prizes are all but impossible to get.

"I play but I don't know why," complained a player who goes by the screen name Strongbow. "They just want you to visit their sponsors and make them money."

With new sweepstakes sites appearing every week, Henry Blodget, a senior analyst at Merrill Lynch, says that the field will soon be so crowded that the prizes may have to get even bigger to garner attention.

"As long as you make more money than you give away, there's nothing wrong with this business model. But very few of them will work because there will be so much competition that they will have a hard time making enough money," he predicted.

Because they don't charge money to play, the people behind these sites believe they're operating within the law. Sweepstakes are legal in most states, as long as they don't require the player to make a purchase, pay a fee, or provide anything else of value.

Of course, the information players provide through registration forms and surveys is worth plenty to marketers. Sandra Michioku, a spokeswoman for the California attorney general, said that she did not believe these things constitute "consideration," or payment.

The most prominent Internet giveaway sites are scrupulous in following sweepstakes laws. They post the odds of winning and engage independent auditors to conduct drawings. Some allow mail-in entries as an alternative to visiting the Web site. They post winners' first names and photos. TreeLoot even shows scanned images of canceled prize checks.

Their methods of financing the giveaways vary.

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