Ad It Up. Part 1 has 3 million users frantically recruiting friends willing to be force-fed ads in order to make money online. Just don’t call it a pyramid scheme.

Internet entrepreneurs are forever obsessing about strategies that will keep their customers coming back., a fast-growing startup with more than 3 million members after its first eight months, has come up with a new solution: Put them all on your payroll. Last November alone, the company sent checks to its members totaling more than $8 million.

Rich LeFurgy, chairman of the Internet Advertising Bureau and a partner in a venture firm backing AllAdvantage, claims the company is starting a revolution in media-audience relations. “The television industry would happily pay audiences to watch commercials if it could monitor consumer reaction,” LeFurgy argues. The Net, on the other hand, enables advertisers and viewers to have that direct dialogue, and AllAdvantage hopes to broker the value of consumer attention. INTELLIGENCE REPORT

The People
Jim Jorgensen, co-founder and CEO; Johannes Pohle, co-founder and VP, product management; Carl Anderson, co-founder and VP, strategic development

The Vision
Users get paid to browse the Web and advertisers reach a highly targeted audience.

The Significance
Change the way Net surfers and advertisers interact. Viral marketing scheme where users are paid for their time has brought the company 3 million-plus users in just eight months of operation.

At first blush, AllAdvantage’s business model resembles that of NetZero,, ePIPO, and a growing legion of other Net companies that reward users for watching ads on the Web. To sign up for AllAdvantage, consumers fill out a short form that asks for name, postal address, email, and age. Then they download the PC-compatible software (a Mac beta version came out mid-December). Dubbed the Viewbar, the software occupies an inch-high block on the screen — users elect whether to place it above or below the browser — that streams banner-style ads whenever the PC is connected to the Net. AllAdvantage targets these ads to users based almost entirely on their surfing habits; while age and ZIP code are also key filters used for ad serving, the company does not solicit other personal data or depend on consumer surveys.

The Viewbar comes installed with a money light. Keep surfing and the green light stays on. Leave your computer idle for long and the light turns red, indicating that you’re no longer earning money. The Viewbar can be clicked into oblivion at any point; just remember, unmetered browsing means you’re leaving money on the table. Not that the cash flows interminably anyway. The company pays 50 cents for each hour a member is zipping around online, up to a maximum of 25 hours a month, or $12.50.

But it’s not technology alone that distinguishes AllAdvantage from its cash-for-eyeballs competitors. AllAdvantage has surged ahead of the pack, thanks to a viral marketing scheme that transforms its core members into rabid recruiters. (See “New Rules: Turning Customers into a Sales Force,” Nov. ’98, p102.) AllAdvantage members earn money from ads watched by everyone they refer. While members are limited on the money they earn for their own browsing time, they ring up an additional 10 cents for each hour their friends surf. And if these direct referrals go on to sign up their own friends, the original Adam or Eve earns an additional nickel for each hour these “expanded referrals” browse. Competitors
Most of the “get paid to surf the Net” companies have a pay scale similar to AllAdvantage’s, though the rates vary, and some pay by percentage of ad revenue, rather than a flat rate. One anomaly is, which pays by percentage, and the rate actually goes up for extended referrals. The example on the site is that if you are getting 40 cents per hour for your own surfing, you are also getting 10 cents per hour for direct referrals, but you get 15 cents for second-generation referrals, and 20 cents for third-generation referrals.

Scoff at nickels and dimes if you will, but the highest earning AllAdvantage member for November 1999 pulled in nearly $5,500 in one month, while another 44 members were sent checks for more than $1,000. Not bad for chump change.

Jordan Nelson, 25, is one AllAdvantage member who is building a marketing empire online. The savvy Web entrepreneur who hails from suburban Kansas City, Kan., joined AllAdvantage in March 1999. Within four months, he was earning money off the browsing time of about 12,000 expanded referrals, and by December he had more than 17,500.

Nelson is the kind of well-connected person who cleans up on the marketing ploy. Nelson was already in possession of an extraordinarily large email list that he traces back to 1995 when he was producing an online newsletter to report on new ventures popping up on the Net, from weather to sports to Web design. Upon hearing about AllAdvantage’s refer-a-friend offer, he spammed — or, as he delicately puts it, “sent out an exciting offer letter to” — his list. He also recruited seven friends with even larger email lists to do the same. The results have made Nelson a believer: “AllAdvantage always delivers on what it promises; for starters, my monthly check arrives on time.”

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