About three weeks ago, Ms. Levenson discovered Loffles, a new Web site where users choose from a selection of prizes, watch a commercial in order to be entered to win that prize, then answer two or three questions to confirm that they viewed the commercial. So far she has won Michael Kors sunglasses (valued at $317), an Oster electric wine bottle opener ($24) and a gift certificate to The Cheesecake Factory ($50).
“It’s been really cool,” said Ms. Levenson, 21, a recent University of Maryland graduate who will soon begin an accounting job in Philadelphia. “This is like the first time I won stuff online.”
Since Loffles began on June 27, more than 3,400 users have registered on the site, providing their age, sex and areas of interest, information advertisers in turn use to determine who sees their ads. Users, who may enter a contest for a prize as many times as they are willing to watch additional ads, spend an average of about 16 minutes a day perusing prizes and watching commercials on the site.
About 60 percent of users are male and 40 percent female, while the average age is 24.
Brandon Yoshimura, a co-founder of Loffles, said the impetus was the popularity of online sweepstakes, and he cites data from Jupiter Research that indicates that 80 percent of all Internet users enter at least one online contest a year.
“Everyone is doing contests online, and we’re taking advantage of that endless stream,” said Mr. Yoshimura, 22, who finished his senior year at Brown University in the spring and says he is still a few credits shy of a political science degree.
Loffles has raised about $500,000 from private equity groups and individual investors. It will earn revenue primarily from companies whose commercials appear on the site, who will be charged on a per-view basis. Advertisers are not being charged as the site ramps up, but are acting as “guinea pigs” for now, said Mr. Yoshimura.
One advertiser is Bonomo Turkish Taffy, the brand that had been dormant for about 25 years before being reintroduced by new owners in 2010.
Kenny Wiesen, chief executive of Bonomo, said that though the brand, whose sales peaked in the 1960s, might strike a nostalgic chord with those over 40, it is largely unknown to younger consumers.
“We felt this would be an effective route to connect with younger people,” Mr. Wiesen said. “We thought the Loffles platform was fascinating.”
Along with running commercials for the product on the site, Bonomo also is providing prizes, like a box of 24 taffy bars valued at $30. In addition to asking questions to confirm that users were watching the spots rather than checking e-mail, the brand also is asking one or two questions for research purposes, such as what new flavor respondents would most like to see.
Besides the taffy brand, Skyauction.com, a travel site, and Adventure Aquarium, in Camden, N.J., are the only profit-making advertisers on the site currently.
For now, a vast majority of commercials are by nonprofit groups, including Big Brothers Big Sisters, Boy Scouts of America, Girl Scouts of the U.S.A., and the American Red Cross.
At least one of those ads hit the mark with Joshua Hoffman, a Loffles user from Orlando. After seeing an ad about water safety from the Red Cross, Mr. Hoffman, who had let his lifeguard certification lapse, signed up for a course to be recertified.
Mr. Hoffman, who registered on Loffles six weeks ago, spends one to two hours daily on the site, he said. He has won prizes including luggage, a video game and Amazon gift cards — all totaling $310.
“I see it as a few hours of watching advertising is worth getting a $50 gift certificate,” Mr. Hoffman said. “And I think other people will see pretty much the same thing.”
Mr. Hoffman, 21, will begin his senior year at Central Florida University in the fall. His major: marketing.
“I understand what they’re doing here with whole marketing aspect,” said Mr. Hoffman, referring specifically to the fact that his demographics and interests are determining what ads he is being shown. “I’m not wasting time watching advertising that I really have no interest in.”
In June, Americans viewed nearly 5.3 billion video ads online for a total of more than 2.2 billion minutes, according to comScore.
But writing on the high-tech blog Betabeat in July, Adrianne Jeffries was doubtful that Internet users would flock to a Web site expressly to watch ads, even for the chance to win prizes.
“This is probably a terrible business idea,” wrote Ms. Jeffries, who also called Loffles, “the start-up with the cutesiest name.”
At least as cute as the name, a combination of “lottery” and “raffles,” is the brand mascot that appears throughout the site, a cartoon bunny.
That character has evolved, Mr. Yoshimura said. On the original landing page, the mascot was depicted missing a foot, as a sort of an inverse image of a lucky rabbit’s foot. But when the entire site went live in June, the mascot was intact.
“When we launched, we decided to go with a much more upbeat approach and give the bunny his paw back,” Mr. Yoshimura said.
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