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| Marketers Of The Next Generation |
| By Terry Lefton
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| November 13, 2000
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Cash giveaways and marketing simplicity: a portal's won-won strategy.
Like a lot of former classmates, Bill Daugherty and Jonas Steinman used to meet for lunch occasionally and dream about ways to get rich. For the first eight years or so, the ideas didn't amount to much beyond a yen to run their own business - an idea that's probably universal among Harvard B School grads. "We'd eat, toss around some ideas and by the end of lunch realize they were all pretty stupid," laughed Steinman. That changed in January '99, when the luncheon conversations between Steinman, by now a venture capital partner at Chase, and Daugherty, a National Basketball Association exec, turned to the success of top Internet portals like Yahoo! and AOL, wondering whether there was any way to differentiate a new service. As an NBA marketer, Daugherty's antennae were attuned to successful promotions, so when Steinman asked him what the best recurring national consumer promotion was, it only took Daugherty a moment to answer that it was McDonald's annual Monopoly promo, which awards the winner $1 million.
That's when the light bulb went off. The result is iWon.com, an Internet portal launched in October '99 that gives away $10,000 every day, 30 prizes of $1,000 every week, $1 million every month and $10 million on tax day. Deals with iWon's top advertisers like Sprint allow users, who must register to win big prizes, to win even more money by clicking through a sponsor's ad or site.
Given America's fascination with get-rich-quick schemes of any kind, be they Internet start-ups or TV shows like Who Wants To Be A Millionaire, one could say they were in the right place at the right time. "I don't know if we launched at the right time or if the appeal is just universal," said Daugherty. Whether it was timing, luck or both, the site is among the 10 most-visited. iWon also ranks at or near the top when you measure frequency of use, time spent and pages viewed. "What we didn't know was that we were developing a new category, which is a loyalty-based portal," said Steinman. So while neither Daugherty nor Steinman did much Web surfing before starting iWon, now there is a sign hanging in the Irvington, N.Y., loft that houses iWon's 250-plus employees that reads, "Beat Yahoo!"
Amidst the geek crowd, iWon is often dismissed as a triumph of marketing over technology. That's the very foundation of its success. At a time when the embryonic Internet industry was focusing on capital markets, iWon fashioned a marketing proposition with considerably more staying power.
"We didn't know a lot about technology or the Internet and that was probably an advantage," said Steinman. "We were pretty sure we had a great product, but we had to find a way to tell people about it."
Towards those ends, the two B-school classmates found themselves in front of CBS boss Mel Karmazin. They got startup funding and, more important, a commitment for $70 million in media across various CBS properties, which allowed for a launch budget of some $50 million. That put iWon in rarefied air among brands - all brands, not just online brands.
While it's easy to conclude that the lure of quick riches is the reason behind iWon's success, the site is also a paradigm supporting one of the few hard and fast rules to emerge from the New Economy: the hybrid model is the only model that works.
With a pertinent and unabashed view of their customer as the mainstream 25 - to 64-year-old consumer who shops at Kmart, iWon is also a triumph or simplicity in marketing. While some of its original work was overly complex, Berlin, Cameron & Partners' "Why wouldn't you?" tagline is refreshingly straightforward. And nowhere is simplicity more requisite than when selling technology to mainstream consumers.
"We've been successful because we've been obsessed about execution on the product side," said Daugherty. "On the marketing side, designing a simple concept and getting your message out there in bulk are the same things that have worked for marketers like Coke and McDonald's over the past 30 years, and they are also what's working for brands in the new economy."
iWon has also been successful because Daugherty and Steinman are a good combination of marketing and financial talents. Plenty of failed dot-coms didn't have either. "I had just been promoted he was just made partner, but we may be uniquely qualified to do this," said Daugherty. "Still, it felt a lot like jumping into the abyss at first."
iWon has attracted a host of refugees from the world of sports marketing. Former National Football League prez Neil Austrian is the chairman; Daugherty brought in Jon Brod from the NBA. Other iWon marketers include former Venator exec Jerry Canning and ex ad sales evp for ABC/ESPN Evan Sternschein. That's probably testimony to the fact that while every marketing department touts its integrated approach, leagues and teams have been doing those kinds of deals for years.
One of the newest dot-com acronyms, sitting on the virtual shelf next to B-to-B and B-to-C is P-to-P, "pathway to profitability." Daugherty and Steinman say they are close. "We're significantly ahead of plan and we fee good about profitability within the next two years," said Steinman. "And we're evolving to a more complex model that will make that easier. The model isn't one of badges and banners anymore; they are already a commodity. We're building affinity and loyalty and there will always be a good market for anyone that can deliver and service that."
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