Daren Cotter wasn’t a typical college freshman. “When I got to Minnesota State [in 1999], I became engrossed in the Internet advertising industry,” he recalls. “I was a geek and very much liked to program things and build things. I started to participate in some advertising sites as a consumer, and soon came to the conclusion that I could build a better product, both for consumers and for advertisers.”
Cotter launched CotterWeb Enterprises in 2000 to serve both consumer “members” and a variety of advertiser “partners,” most of which are seeking input for market research or consumer visits to their Web sites. CotterWeb’s flagship product, InboxDollars, is an online rewards program that rewards members who sign up to participate in partners’ online activities.
Four years later, Cotter’s “hobby” was generating revenues of $200,000 with “fairly healthy margins.” Six months before graduation, he started reinvesting his profits—and generated more members and more interest from potential advertisers. With the work piling up, he hired some friends and even his mother to help manage the business, attract new advertisers, and find capital. In May 2006, Cotter’s team moved into a Mendota Heights office.
While companies like MyPoints also offer rewards for online activities, CotterWeb is the only company of its kind to offer cash payments to its members rather than redeemable points. These cash rewards are credited to members’ online accounts. When at least $30 has been accumulated, members can request payment by check.
CotterWeb’s 6 million–plus members participate in online activities such as:
• Responding to e-mail advertisements. When members sign up, they voluntarily provide as much information about themselves as they feel comfortable sharing. They are then sent advertisements tailored to their interests and rewarded for their response. “We can deliver potential customers to their Web site or we can deliver actual transactions,” Cotter says.
• Participating in marketing research surveys. “We enable advertisers or market researchers to reach only the customers they really want to reach, and then receive feedback about their product or service,” Cotter says. “The reward to the member might be anywhere from 50 cents to $10, depending on a variety of factors—what the advertiser or researcher is paying us, the complexity of the study, how many respondents the advertiser is looking for, et cetera.”
• Online shopping. A member accesses CotterWeb’s online shopping portal and makes a purchase from one of the hundreds of online retailers. “We generate a commission on each transaction and share a portion of it back to the customer,” Cotter says.
• Trying products and services. Similar to online shopping, except the desired transaction may not include a purchase from an online store. “The transaction might be registering for the advertiser’s product or service, or joining a mailing list,” Cotter explains.
• Playing games on line. CotterWeb’s games channel is a skill-based gaming platform where members can play games against others. The platform is powered by WorldWinner, a gaming company that CotterWeb has partnered with. “Members deposit funds in their WorldWinner account and then use those funds to engage in tournament-style games against other participants,” Cotter says. “It’s like paying a tournament entry fee.”
CotterWeb’s revenues last year were $12.4 million; the company estimates 2008 revenues at more than $16 million. “It started as a hobby and a neat little way to build a product that was better than what I was experienced with,” Cotter says. “I thought it would be great if it made some money as well, but it has certainly grown beyond my expectations.”
