Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson (Part 3)

Sramana: When fans go to the SearchWithKISS.com website, what do they get out of it?

Scott Dudelson: Every time a fan does a search on that site, he or she has an opportunity to earn points called Swagbucks. They can redeem those points for things like KISS concert tickets, memorabilia, or autographs. The money that is generated from the sponsored link clicks is shared between the label and us as the technology provider.

Sramana: What kind of money were people able to make with this solution?

Scott Dudelson: We had partners who were making upward of $10,000 a month on this. For a major band that is just an incremental element of revenue, but it does cover the cost of their entire web presence.

Sramana: What kind of traffic levels did bands need to achieve that level of revenue?

Scott Dudelson: It depended on the type of audience they had. They could get that level of revenue from 2,000 to 3,000 users a month. We monetize very high.

Sramana: What are the different buckets that brought money in?

Scott Dudelson: At that time, money was only coming in from Internet search.

Sramana: Those numbers don’t seem to add up right. How can 2,000 to 3,000 users generate $10,000 of revenue a month for the brand or band?

Scott Dudelson: A site like Google makes $20 million a day. The search market is huge. People searched for a keyword, and they would click on a link. Those links generate revenue. It was that simple in the early days.

Sramana: I know search is a great business; even so, I am surprised you can get that much money out of such few users.

Scott Dudelson: Not every 2,000 to 3,000 users will generate that. Some portals had a demographic which would search for high-value key words. It all comes down to the user base.

Sramana: How did the business evolve once you had branched out into brands and teams with the incentivized search portal concept?

Scott Dudelson: We would find that sometimes even very large brands would not make much money, yet very small brands would do well. We realized it all came down to promoting their concept. At its peak we were making around $2 million a year. We would aggregate more and more partners and brands, and we noticed that when they promoted the concept, they did very, very well. Over time, the brands would promote us less and less. The priority of those brands is not to promote search, it is to promote their brand. It became a struggle to continually get promotion from those brands.

We realized we had a good business concept, but we knew that our numbers would drop, which made us concerned about sustainability. We realized that in order to scale this business, we needed to take destiny into our own hands and create a product that did not rely on brands to promote [us]. That product was Swagbucks.com which was launched in 2008. That was the biggest pivot and change that has come about.

Sramana: What was the Swagbucks.com product?

Scott Dudelson: It started as a search-based portal where users could earn points, just like our previous products. Instead of earning points that could be redeemed for brand merchandise, users could now redeem points for gift cards from places like Amazon.com or Walmart.

This segment is part 3 in the series : Bootstrapping to $35M via Affiliate Fees: Swagbucks Co-founder Scott Dudelson
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