Internet sweepstakes and promotions Web site Jackpot.com's succession of $1 million give aways has helped to build its membership base to 3 million in nine months while its shift to a cost-per-acquisition model has increased ad revenue.
The company late last month announced the seven winners of its $1.3 million SuperSpin sweepstakes. It sent actor and comedian Bob Saget, a crew and the finalists to compete for the grand prize at a California theme park. The company then reported that December was its first cash-flow positive month since launching in April.
Jackpot.com, Pasadena, CA, attracts consumers to its site by offering free games and prizes and earns its keep by delivering consumers to clients on a cost-per-acquisition basis.
President/CEO Keith Cohn said Jackpot devotes equal efforts to acquiring and retaining its membership base, manages an average customer acquisition cost of $1.15 and sees “a return on acquisition costs within three months of acquiring new customers.” Cohn cited Jackpot's infancy as the reason for not having lifetime value estimates.
The sluggish online ad market has cut into revenue from dot-com advertisers, non-performance-based promotions and sweepstakes sponsorships, and banner ad campaigns.
But growth in its pay-for-performance market from traditional advertisers such as American Express, MasterCard, Nabisco, AT&T and Sprint alleviates some of the pain.
Jackpot's non-performance-based ad business has consistently slipped from between 60 percent and 70 percent when it launched to about 30 percent now.
“There's no guarantee with the CPM model,” Cohn said.
But the company claims to have found traditional companies that continue advertising on the Web. Direct marketers have continued tapping Jackpot.com for leads because “they know what the lifetime value of these customers [is] and they know what they can afford to pay us and still get a return on their investment,” Cohn said.
Jackpot attempts to keep its membership base active by constant communication through daily e-mails to announce new promotions and games. About 2.5 million members participated in the SuperSpin promotion, Cohn said.
