Two players in the growing online promotions space will become one, following a deal between Jackpot.com and BigPrizes.com.
Pasadena, Calif.-based Jackpot.com, which aggregates advertiser-sponsored contests on its Web site and pays a commission to referring affiliates, acquired local neighbor BigPrizes.com, another sweepstakes site that claims 1.2 million registered members.
The transaction, effective immediately, will integrate BigPrizes.com’s back-end operations and membership with Jackpot.com, which has about 4 million users.
According to the deal, BigPrizes will remain an independent site, although both it and Jackpot.com will be accessible directly from the other by clicking on links in their “Games” sections, and a revamped registration process will allow players to register for both sites at once.
Further terms of the transaction were not disclosed, although Jackpot.com — an idealab! company — said the arrangement should deliver a profitable revenue stream beginning next quarter.
Additionally, the move boosts Jackpot.com’s standing, putting it in a better position to compete with larger players like Promotions.com, just as the once-niche arena of online promotion marketing is becoming even more crowded. As banner ads continue to underperform, many other Web marketing companies are working to better their revenues — and that often means beefing up their promotional offerings.
24/7 Media and L90, for instance, both recently rolled out enhancements to their promotional products, designed to appeal to smaller businesses and startups.
“This acquisition helps us extend our leadership position in the sweepstakes category and enhance our services for both consumers and clients,” said Jackpot.com president and chief executive Keith Cohn. “By investing in closely related businesses like BigPrizes.com, we’re able to leverage our existing infrastructure to seamlessly integrate additional revenue and profit opportunities. We’re expecting to see immediate results from this move, and our partners and players will be better off for it as well.”
Advertisers will benefit by having access to increased inventory, Cohn added.
Jackpot.com also will be acquiring BigPrizes.com’s clients for its own site — which is important, since several industry watchers and large players like Yahoo! have cautioned that online and offline companies are tightening their Web marketing budgets during the current economic downturn.
However, Cohn admitted that his site is considering launching a subscription-based model, ostensibly for those same reasons. Nevertheless, he waved away suggestions that his business might be in jeopardy.
“This acquisition is happening out of a position of strength,” Cohn added. “While we are committed to maintaining the formula that successfully has brought us this far, we also are looking to diversify our revenue streams by considering a variety of subscription-based models … we’re continually seeking ways to improve and expand our consumer and client services.”