By When CBS-funded web portal iWon announced the winner in the Internet’s first-ever $10 million giveaway this month, at least four Orange County entrepreneurs watching the televised event weren’t upset that they didn’t take home the big cash prize.
On the contrary, to the principals of Newport Beach’s BigBallot.com, the highly publicized event marked their company’s first milestone as it works to move its marketing business online and create one of Orange County’s few profitable dot-coms.
The company managed the giveaway for iWon, one of several Internet ventures that use BigBallot to handle their sweepstakes and consumer-polling efforts.
“It’s crazy idea, we know,” jokes co-founder, chairman and CEO Jeff Gehl, who created the online business earlier this year. “But being a dot-com with net income really gives us a lot of room.”
Indeed, it could be a vital distinguishing feature as investors begin scrutinizing unprofitable dot-coms more carefully.
The Internet spin-off, which branched from a 25-year-old firm called TMC that specializes in the consumer polling used to promote everything from soft drinks to computer stores, has received a vote of confidence of its own from a pair of technology investors who are pumping $4 million into the concept.
Sports Connection
Many sporting events feature corporate-sponsored “All-Star” or “name-your-favorite-player” voting, usually tied into a sweepstakes giveaway and product pitch. TMC and BigBallot.com manage the entire process, taking care of ballot printing, writing the legal documentation, posting bonds in states that require it, tabulating the votes and sending out prizes.
In addition to iWon, customers include some of the biggest names in the online sports and entertainment business, including NBA.com, NHL.com, AthletesDirect.com and Uproar. BigBallot’s clients use the polls and sweepstakes to give Internet users a reason to keep coming back to their sites, making those Internet spaces more valuable to advertisers and e-commerce partners. BigBallot.com also compiles and sells the highly sought-after demographic information from registered contestants.
The private investors, who aren’t being named, manage formal venture capital funds but are putting their own money into the operation for a 10% stake. BigBallot officials say the process took less than two weeks.
The company manages online polls and sweepstakes promotions for web sites, often combining its bricks-and-mortar and dot-com operations to offer promotions with fully integrated online and offline components.
Gehl, a lifelong sports fanatic, purchased TMC last year after using it for a marketing program he coordinated as part of a sports marketing job. The founders of TMC were an older couple that wanted to retire.
Since then, business has doubled; it spun off the dot-com side of the business earlier this year. According to Gehl, the online side of the business is on track to generate $9 million in revenue, $1 million of that in profit.
While the two businesses are similar, BigBallot.com is a technology-driven operation, with a 14-person staff that includes software and web site developers. The offline business employs about 35.
Originally, Gehl and his fellow co-founders,company president Doug Martinez, VP Brian Gehl (Jeff’s brother) and COO Brad Barlow,wanted to build their own poll-driven destination web site, hoping to attract viewers with surveys, giveaways and other contests. But as TMC customers began asking for similar features in their own sites, the group quickly realized there was a lucrative demand for custom services for other Internet outlets.
Although sports marketing continues to bring in most of the company’s business, Gehl expects entertainment media and the growing Latin American market to snowball.
Spanish-Language Market Next Target
Danny Villanueva, who helped launch Spanish-language broadcasters Telemundo and Univision, sits on BigBallot’s advisory board, and Martinez says he is actively pursuing that arena.
The company plans to double its workforce over the next few months and is looking for 10,000 square feet of office space to house them. Gehl is also in the early stages of getting a $7 million round of financing.
Despite early growth, Gehl says he isn’t sure how quickly the company will go public, if at all. He says the company’s profitability gives him more time to mull exit strategies.
“We’re focused on growing the business,” he says. “We’re absolutely in no rush.”
Gehl says he may merge the two companies to offer a more seamless service.
Several companies offer web-based services that promise to help other businesses host sweepstakes or conduct consumer polling, but Gehl dismisses them for what he calls shortcomings in their levels of service. Instead of offering one-on-one service, the sites use pre-programmed legal templates and do-it-yourself web functionality.
“With different regulations on all 50 states, this is a very risky business, so it’s not something you want to skimp on,” Gehl said. n
