Swagbucks, a website that rewards users with virtual currency for online actions, is on track to hit $25 million in revenue this year. Its four million users garner “Swag Bucks” for playing games, watching videos, shopping online and searching the web.
They also got in on Cyber Monday with the announcement: “Black Friday may belong to the store, but Cyber Monday belongs to us. In addition to continuing to run our killer Black Friday Deals, we’ll have additional sales, something new for SBTV and, of course, we’ll be announcing the winner of $2500 in Amazon Gift Cards from our Swagbucks Pays For Your Holidays, and giving away more prizes, of course.”
Major brands including Target, Wal-Mart and Gap are paying when users click on ads or redeem coupons using the Swagbucks toolbar. Calling itself “the web’s premier digital dollar,” the online rewards destination has the distinction of being founded by a rabbi.
CEO Josef Gorowitz embraces his background in Talmudic scholarship and runs his business according to the Biblical idiom, “Treat your fellow man as you would treat yourself,” according to Bloomberg.
Gorowitz launched Swagbucks in 2008 with the intention of building search engines for selling ads on the web for NFL teams and rapper Kanye West, but aggregating discounts soon proved a smarter business.
“We had started by creating a private label, search engine for charities," says founder Scott Dudelson. "Through that, it evolved into a rewards program, and instead of charities, we started bringing it out to brands" including the Green Bay Packers and WWE.
“Those brands created reward portals around Internet search, so, for example, you might go to the New York Giants site, search through their branded portal, and you would earn points, which they could redeem for swag from the team. That mutated into us thinking why not have our own, central portal based on Swagbucks, which is where Swagbucks.com came along."
How it works: Swagbucks members earn points to get rewards like free Amazon gift cards. Amazon gift cards cost 450 Swag Bucks and it’s not uncommon that users are able to earn Amazon gift cards on their first day using the site.
It’s a highly competitive landscape and brands like Groupon (with its recent IPO of $700 million and subsequent slump), MyPoints, RetailMeNot, Savings.com and CouponCabin all feeding the ever-growing hungry beast of ‘consumer entitlement,’ as shoppers today expect rewards for spending their money.
Although a comparatively small piece of the pie, online advertising fueling the rewards ecosystem is projected at 17% of the $412 billion global ad market according to MagnaGlobal.
Swagbucks’ 2.6 million coupon-cutting moms are the frontline troops driving last year’s $12.5 million in revenue, those same moms who account for 75% of U.S. household spending according to Mediamark Research & Intelligence.
The company is working on a mobile product, as well as a move into social gaming with Facebook developers which will leverage the brand’s already 3.5 million members. Also on the drawing board, Swagbucks sites in Latin America and Europe and further personalization of consumer behavior on the site to boost rewards and revenue.
“It's all about integrity, and being trustworthy. You can't run a business without integrity. From our perspective, you can't have a consumer engage with the product every day if you're not going to deliver on the promises you say you are going to provide,” comments Dudelson.
Swagbucks has built a legitimate reputation that cuts through the scam ethos of many online rewards sites. It may be that added touch of Biblical truth does indeed raise the bar on virtual swag when assiduously applied.