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Money can buy you lots of loving

25 March 2008

Last week in the non-archived column I pointed out that iYomu had gone very quiet over the issue of the $1 million prize it had offered as part of a promotion for the website.

Obviously the mainstream media saw that and decided to do a bit of checking up.

Claire McEntee from Stuff got ahold of iYomu and asked what the guts was.

The site's management say that they will be paying out the lucky winner but only after it has verified that the winner is "bona fide".

Well I have to admit that I'm skeptical whether Yeongch (the provisional winner) will ever see all his money.

I'm not suggesting any kind of fraud on the part of iYomu but I do wonder where the money will come from.

Right from the day they announced this venture, I had to wonder what iYomu thought they were playing at with their bold plans to play "me too" in the social networking world.

When iYomu announced their $1m competition, my level of skepticism jumped even higher.

As I said back in August of last year: "Will the winner actually get all their 12 installments? I don't know but I wouldn't bet even money on it".

I strongly suspect that iYomu is about to discover something that more experienced web-enterprise developers have known for some time. Money (and big prizes) can buy you lots of lovin but money (and big prizes) can't buy you love.

Over the years I've seen a number of enterprises fork out large amounts of their valuable capital to offer large prizes in an attempt to kick-start their sites.

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Without exception this has produced a good spike in the traffic -- but no plateau.

Once the prize has been won, the traffic trends downwards quite steeply and unless you've really been able to offer some other "killer feature", those fickle money-hunters will be off to some other site.

The fact that (according to iYomu) the competition had to be extended due to cheating by some of those who entered and that nine of the top-10 points earners were disqualified indicates that the profile of those who did sign up to iYomu is far from the ideal they were striving for.

So where is the $1m going to come from?

Apparently 16 shareholders in the company will ante-up with the $83,333 per month to be paid for the next 12 months. That's a big ask for a company that is unlikely to be providing the financial rewards the business-plan predicted.

I'm sorry but I still think they've got everything wrong with iYomu.

They didn't research their target market accurately enough (or perhaps even "at all") and made the fatal mistake of thinking that money can buy anything, including site-loyalty.

Most of those who signed up to the site so as to vote in the competition or have a chance at winning the $1m will already have found other places to hang out on the Web and I can't see iYomu's shareholders seeing a return on their investment any time soon (if ever).

Of course I could be wrong... but every day I hear folks talking about Bebo, Facebook and other social networking websites but I have yet to hear a single individual proudly proclaim their membership of iYomu.

I also note with concern that although most of their members have come from the USA, NZ rates second/third in the list. To me this suggests to me that the total sign-up is probably quite low and that the "significant number" of members the site has is only "significant" in the eyes of those with a vested interest. The Alexa figures (admittedly not that accurate) indicate that the bulk of visits to iYomu come from the home-country of the winner: Malaysia. Again, if I were the shareholders I'd be concerned -- Malaysia isn't really a country that's going to make you rich through a social networking website.

Google reports that there are a whopping 37 links to the iYomu homepage and is already showing the "money spikes" associated with the competition launch and voting leading up to February. It's now virtually flatlined.

It's not my goal to knock anyone "giving it a go" but I think it's incredibly sad to see so much money wasted in an ill-conceived marketing plan that was somewhat akin to tossing money down the toilet. There are probably dozens of much smarter Kiwi entrepreneurs with better ideas who could have done wonders with $1m in startup capital and even returned a dividend to their shareholders.

Yes, even in the 21st century, the Beatles are still right!

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