Sometimes, advertisers are like ungrateful significant others. They’re aggressive and disruptive, consistently butting in and imploring you to buy something when all you want to do is zone out and watch TV.
When it comes to the advertiser-consumer relationship, Joseph Gorowitz is here to play couples counselor. He’s the co-founder and president of Swagbucks, an online rewards program that allows users to earn virtual currency and real-life rewards for everyday online activity. “We allow advertisers to buy flowers for consumers,” he says. “And that makes the consumer feel appreciated. It makes the relationship a lot better.”
Users earn Swag Bucks — which can be exchanged for gift cards from a list of partners that includes Amazon, Walmart, Nordstrom, Hotels.com, PayPal and Starbucks — for a variety of online activities, including shopping, searching, watching videos, playing games and answering survey questions.
To date, users have earned over $60 million in rewards, but Gorowitz says he’d like to see his company become “a household name.”
Today, the company announced that Swagbucks’ executive chairman, Chuck Davis (the former Fandango and Shopzilla CEO, who oversaw each company’s sale in 2007 and 2005, respectively) will become its new CEO, while Gorowitz will assume the role of president. In addition, the company said it has raised $60 million from Technology Crossover Ventures.
Founded in 2008, this is the first time Swagbucks has taken on outside investment (“we’ve been bootstrapping,” says Gorowitz). So why now?
In sum, both Davis and Gorowitz say, the infusion of cash will increase the company’s credibility while allowing it to scale at a faster rate.
Swagbucks’ association with Technology Crossover Ventures – where Davis is a partner – “gives us a better chance down the line,” says Gorowitz. “Whether we decide to go public, or sell [the company’s association with TCV] would help from a validation standpoint.”
At the moment, Swagbucks’ mobile app is pretty flimsy. Davis, who has experience with mobile from his time at the helm of both Fandango and Shopzilla, says a large percentage of the money will go into beefing up the company’s mobile features, including the use of geo-targeted notifications that alert users to promotions taking place at nearby brick-and-mortar retailers.
Swagbucks currently has 10 million unique users, and Gorowitz says the site sees around 4 million uniques a month. Last year’s revenue was $53 million, according to the company.
Shopping is by far the fastest way to earn rewards – stick solely to the company’s search feature, and it will probably take “two weeks or more” to earn a $5 gift card, according to Gorowitz. Most retailers provide somewhere between one and four Swag Bucks per dollar spent. (As a point of reference, 450 Swag Bucks will get you a $5 Amazon gift card). The company takes a percentage of the purchase amount, passing on a portion of the cut to consumers in the form of rebates.
“When an advertiser shows appreciation by giving back to the consumer through us, it inspires loyalty,” Gorowitz says. “It decreases friction between them.”