BonusTree to Share the IPO Wealth With MembersComparison shopping Web site BonusTree.com is offering 20 percent of its cash proceeds, after deducting underwriting expenses, if it reaches an initial public offering to those who register at the site.
The site, which offers registered users cash bonuses for making purchases and referrals, has labeled this its "20/20 Vision Sharing Program."
The site hopes this will be the ultimate traffic driver "building up a large number of members in a short time frame," said Dr. Wan Chan, CEO of BonusTree.com, Los Altos, CA.
More importantly, Chan said he hopes these members will be extremely active as the more active the consumer is at the site, the bigger chunk of the cash proceeds they will receive.
This strategy may pay off, said Adam Beckerman, vice president for Knowledge Strategies Group, an Internet strategy consulting firm based in New York.
"I think you can tell from the success of companies like iWon.com that providing benefits in the form of cash or prizes is a great way to keep people using a site," he said. "Retention is one of the most difficult tasks a Web site can have."
Since it is illegal to distribute unregistered stocks, sharing the IPO wealth was the next best thing, according to Chan. "The idea is letting members share in cash proceeds in a new way without violating SEC rulings. We appreciate the value members add to our company. It's only fair to share our financial success with them."
Because there is no guarantee the site will ever go public, the scheme isn't a surefire money-maker for registered users.
"There's definitely some risk involved from a user's standpoint because they don't know if there will be a payoff or not," said Beckerman. "Even if there is an IPO and the stock price isn't very high, it still won't amount to very much."
That may not matter, according to Beckerman. "With iWon.com you either win cash, or you don't. You're not guaranteed to win anything either. There are always dreamers out there. People who want to get something for nothing. In that regard, [the BonusTree offering] is a smart way to play on those people's hopes and dreams.
BonusTree has been a big proponent of incentives. It regularly gives away cash sweepstakes prizes as part of its referral program, in which one new member and the person who referred them receive matching cash prizes. The more people a person or organization refers to BonusTree, the better their chances of winning.