RealTime IT News

AllAdvantage: Money for (Almost) Nothing

AllAdvantage.com wants you to get your money for nothing and your clicks for free. Their targeted, specific consumer advertising system means that the more their members surf, the more money they make.

"Members are paid to allow us to watch their e-commerce transactions and are paid for this benefit by our advertisers, said Rich LeFlurgy of AllAdvantage investor Walden Media & Information Technology Fund. "Consumers are being recognized for their economic value to advertisers. Advertisers have the benefit of targeting messages to our members and the ability to follow the transactions."

The year-end statistics are showing that more people purchased items on the Web in 1999 than predicted. However, statistics are also indicating that advertising on the Web is having less and less impact on consumers. AllAdvantage is the matchmaker between active surfers and the advertisers who need to reach them.

AllAdvantage works as the intermediary between the advertiser and their members. Basically, AllAdvantage pays its members to surf the Web and utilizes their personal data to bring targeted advertising to their screens through a one inch Viewbar message window which sits at the bottom of the screen while they are surfing the Web. Advertisers get their messages through to consumers who have registered to get these commercials via the Viewbar. This means that the consumer getting the advertisement has actively requested the advertising and is more open to the possibility of purchasing based on the advertising.

Membership is free and all personal data obtained by the company is kept private. There is even a referral program where members are paid for referred new members. The site, which went live in July 1999, boasts four million members to date with more than 1 million active Viewbars (Viewbars are currently available only in US, Canada and UK). Income is provided by advertising clients such as The Wall Street Journal and MSNBC. Advertisers can target consumers in a myriad of ways including by keyword, ISP/OSP, related site, behavioral, demographic, geographic and time of day targeting.

This site doesn't appeal to the traditional value consumer but to more affluent consumers who get paid for allowing advertisers to reach them. "Our largest membership is found at the Beverly Hills, Calif., zip code 90210," indicated LeFlurgy. Other zips in the top 10 include Silicon Valley's Sunnyvale, Calif., Ithaca, N.Y. (home of Cornell University), Miami, Fla. and the Upper East Side of Manhattan. Members are paid 50 cents an hour for up to 25 hours of Web surfing per month. Additional payments are made for direct referrals who surf.

Founded in March 1999, the company has grown from the four founders to more than 280 employees in nine offices in the United States and one in the United Kingdom. The founders include Jim Jorgensen, founder of Discovery Zone, Challenger Sports Foundation, Western Equity and King Enterprise; Oliver Brock, who developed robot techniques at Nomadic Technologies Inc. and founded Germany's first snowboard factory; Johannes Pohle, former deputy director of Grupo Frio (Mexico City) and developed strategy and operations for engineering companies while working for Booz, Allen & Hamilton; and Carl Anderson, who was responsible for online strategy for 4charity.com and worked in investment, mergers and acquisitions with Gleacher & Co. All are alumni of Stanford University.

The company has obtained $32.8 million in two rounds of venture funding. The first round of $1.8 million was funded in May 1999 by Alloy Ventures. The second round of $31 million was funded in September 1999 by Walden Media & Information Technology Fund, Times Mirror TMCT Ventures, Partech International, J&W Seligman's New Technologies Funds and Communications and Information Fund, Technology Partners and Alloy Ventures.

"The challenge for this company," LeFlurgy said, "is to manage the growth. This company has come out of nowhere without the hype or visibility of most new internet companies. However, it has proven successful. Checks are sent out monthly to members. Advertisers are surprised and pleased with the numbers they have been receiving."

The trick will be to stay in the forefront. Copy cats are starting to work their way onto the Web and companies such as Alta Vista, Netzero (NZRO) and Excite, which have higher visibility but more restricted direct advertising, will be coming up from behind.

IN A NUTSHELL

Company Name: AllAdvantage.com
Address: 2594 Eden Landing Road, Hayward, Calif., 94545
Phone: (510)576-6000
Fax: (510) 293-6001
Contact e-mail address: alex.gourevitch@corp.alladvantage.com
Web address: http://www.alladvantage.com
Employees: 280 in nine offices in U.S. and 1 in U.K.
Total Funding: $33 million
Investors: Alloy Ventures, Walden Media and Technology Fund, Times Mirror TMCT Ventures, Partech International, J&W Seligman's New Technologies Funds and Communications and Information Fund as well as their off-shore counterparts, Technology Partners

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