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| A Winning Formula |
| Millions in prizes and smart content integration strategies have helped iWon become one of the Internet’s rising stars
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| By David F. Carr
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| February 01, 2001
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How do you go from nowhere to one of the Web’s top destinations? Offering users about $27 million a year in sweepstake prizes certainly helped iWon.com. But the young portal’s success is also a story of savvy outsourcing and sophisticated integration.
Launched in October 1999, iWon.com has rocketed to stardom. According to Nielsen//Net Ratings, iWon’s October page views placed it fifth among the top 50 sites, behind Yahoo, eBay, MSN, and AOL.com.
iWon’s success as a search engine is remarkable, given that the site is primarily a front end to other search services, starting with Inktomi’s. Every time you enter a search on the iWon site, its Web servers issue a back-end request to several external services, but it delivers the results fast enough that users don’t see the gears turning.
“The company as a whole focuses on being a marketing company first and a technology company second,” says George Nimeh, vice president of search and special projects. “One of the challenges that poses is that we weren’t a search engine. We weren’t indexing the Internet, and we weren’t employing a fleet of editors to catalog sites. Nor, at the time we first started, did we have a technology team to get this working.”
Nimeh was the first employee hired by iWon founders Bill Daugherty and Jonas Steinman. Previously, he had been involved with Web projects for companies like Chase Manhattan Bank and Pepsi while working for Organic Inc., an Internet consultancy. “But I had never seen anything like this,” he says. “It really had to be done perfectly, as well as in incredible haste.”
Daugherty and Steinman, who met at the Harvard Business School, hatched the iWon idea over lunch in January 1999. They figured they could build a massive Internet property rapidly by showering sweepstake winnings on users, believing they would spend less money on user acquisition than competitors employing other marketing techniques. [For more on the business model, see “Millionaire Fever,” June 15, 2000.] They decided it was such a good idea that they would have to move fast, and in total secrecy, in order to spring their plan on the world before someone else duplicated it. By April, they had secured CBS’s investment of $100 million ($30 million in cash and $70 million in advertising time). They laid most of the groundwork over the next few months with a team of just five employees, plus a small army of consultants from Sapient, and packed the actual design, development, and testing of the site into about four and a half months.
The secrecy requirement meant that even key partners like Inktomi weren’t told the site’s name, URL, or concept. That’s what makes iWon such a poster child for outsourcing, says Kevin Brown, general manager of Inktomi’s commerce division. “We just gave them the APIs [application program interfaces] to come into the system. They developed the front end, with the prize points system and their look and feel, and they had to be able to do all that without showing it to us. At the end of the project, Paul Gauthier, one of our co-founders, and I flew out to their launch party and still had no idea what to expect. Then they unveiled $1 million in cash sitting in the middle of the room, and we understood the reason for all the secrecy.”
Money Talks
iWon gives away one $10,000 prize a day, thirty $1,000 prizes a week, a $1 million prize each month, and $10 million on tax day. The big payouts are spread over 25 years, minimizing the immediate cash drain from the system. But although the money is obviously a big lure, a survey of 27,000 Internet portal users by the NPD Group found that iWon ranked either first or second in 20 of 21 attributes used to determine user satisfaction.
“The first incarnation was pretty plain,” Nimeh recalls. But soon iWon wanted to work with Inktomi to define and deliver enhanced services. For example, news feeds from Moreover.com now come to iWon as part of Inktomi’s search results, Looksmart listings are funneled through the Inktomi Directory Engine, and Inktomi’s Commerce Network serves as a gateway to shopping tools from partners like Active Research and Epinions.
The site uses Java Server Page (JSP) templates to integrate content from external sources, such as Fact City and Ask Jeeves. If any one service fails to provide a response within a second, the JSPs drop that component and return the remaining results.
In most cases, iWon tries to integrate with external services in a standards-based way, Nimeh says. “We look at things like can we take in XML data feeds, and are these things that can be easily parsed. We have so many partners that we can’t do one-offs for each of them.”
Inktomi, whose services are based on a proprietary protocol, is an exception, but software architect Eric Osterweil says the extra effort is worthwhile. “It’s a little more awkward than XML, but definitely a better choice.”
The JSP programming model’s other big job is to make sure that every click on the site is recorded in the sweepstakes points system. Internal developers also worked to improve data caching and network connection with a rewrite of the Web site’s software in early 2000.
Outsourcing everything allowed iWon to get up and running fast, but chief technology officer John Kleine says he is constantly reevaluating these relationships. For example, iWon now handles its own ad serving instead of using DoubleClick, and has created its own portfolio tracker, making its personal finance channel less dependent on CBS MarketWatch.
Inktomi appears to be in a fairly secure position, however, given that its role in the iWon architecture keeps expanding. “In every case, they’ve stepped up to the plate and been willing to work with us in a flexible way,” Nimeh says.
iWon Highlights
Launch: October 5, 1999
Content: Search powered by Inktomi, plus a number of other index, directory, and commerce catalog partnerships. Content channels include Money, Food and Drink, Travel, Celebrity Gossip, and Games.
Prizes: Users earn entries into the $10,000 daily prize, 30 $1,000 weekly prizes, a $1 million monthly prize, and the $10 million tax day prize for practically everything they do on the site iWon has applied for a patent on the technology that allows it to track and award points for every search, click, and page view.
Funding: Started with more than $100 million in initial capital, including an investment by Viacom, the parent company of CBS. In February 2000, iWon announced a second $100 million of private equity financing.
Bragging Rights: At only 10 months old, iWon was recognized as the leader in user site and feature satisfaction among the 14 top portals and search engines, according to a study by the NPD Group. In September, it was rated by Media Metrix as having the most loyal user base on the Web, as measured by repeat visitors.
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