More than a data play: SwagBucks acquires SodaHead polling platform to drive customer acquisition

By Michael Carney , written on July 31, 2014

From The News Desk

Data is the undisputed currency of the consumer Web. Whether it’s used to target ads or to personalize product recommendations every giant from Google to Facebook to Amazon relies on data to drive its user experience and fill its bank accounts.

It’s little surprise then that Prodege, the parent company to the popular consumer rewards and commerce platform SwagBucks, is making a play to increase its access to data. The company is acquiring polling technology startup SodaHead, which includes the company’s owned and operated destination website and native mobile apps – collectively attracting more than 3 million monthly unique visitors – as well as its Pollware distributed native polling ad product.

Terms of the transaction were not disclosed. SodaHead’s team of seven full-time employees will stay with the company, relocating from Sherman Oaks to SwagBucks’ El Segundo offices.

Swagbucks already has its own long-form survey product dubbed Answers, which will benefit under the deal through SodaHead’s extended reach, as well as the addition of a short-form polling product and access to the company’s roster of premium publisher partners, including, ESPN, FOX News, ABC News, Good Morning America, The Christian Post, and, among others.

“It’s a lot more than just answering simple questions. We’ve built an immersive experience, which is why these huge publishing brands have turned to us to power their polling back-ends,” SodaHead co-founder Jason Feffer tells Pando. “The Swagbucks team is world class. We realized that we could be really successful putting these people together with our technology and audience.”

Feffer describes SodaHead’s engagement rates as “off the charts,” explaining that the company’s polls typically get five to 30 percent engagement rates with its adds generating click-through-rates (CTRs) of 0.8 to 3 percent – well above industry average in both areas. The company also collects 17 demographic points of data per user, he boasts, including details like age and marital status.

While data can be a dirty word, the determining factor really comes down to transparency. In other words if I know you’re collecting data and how you’re using it, then all’s fair, particularly if I’m being compensated with access to a free product like Web search or, in Swagbucks’ case, rewards. With SodaHead known primarily for its polls around the entertainment and politics verticals, SwagBucks will be able to leverage the resulting data to deliver more personalized results within its content and commerce channels.

SodaHead previously raised $12.8 million from investors including Mission Ventures, Mohr Davidow Ventures, Wavemaker Partners (fka, Siemer Ventures), Tech Coast Angels, and Ron Conway – most recently a June 2008 Series A. The company effectively ran out of cash, SodaHead CEO Chris Dominguez tells Pando, necessitating a reduction in headcount to achieve break even operation and understandably handicapping future growth. The problem was, the company had a number of fits and stops before finally finding its groove. By that time, early investors were tapped out and the company struggled to bring in new capital.

The acquisition began initially as a business development discussion around SwagBucks integrating SodaHead’s Pollware. But as the discussions progressed, it became obvious to all involved that the best outcome for both parties was for the two companies to join forces permanently, according to SwagBucks founder and President Josef Gorowitz.

“What they’ve built is really dynamic, multi-level technology,” Gorowitz says. “It’s not something you could build in a weekend. They have a very talented team and there’s a lot we can do to help them monetize and continue to build out their platform. And for us, it means more content to pull in and more intelligence around our consumers.”

“Everyone thinks polling is easy, but it’s not,” Feffer says. “With ESPN, for example, we have to support up to 5,000 votes per second. We facilitate more than one billion poll impressions in total per month. And on FOX News, fraud protection is key, as people are always trying to take down their polls.”

Prodege recently raised $60 million from Technology Crossover Ventures in its first round of outside financing. While the round included a small secondary liquidity portion, the majority of the capital is earmarked for organic and inorganic growth initiatives, a company spokesperson tells Pando. Specifically, the company looks to make several more acquisitions within the scope of the round. All this suggests that the price on SodaHead was relatively nominal – though the cash component of which may have been further minimized by the inclusion of Prodege stock. (The companies declined to comment on the structure of the transaction.)

There’s no doubt that there’s real value in SodaHead’s technology. It’s the reason the company was able to attract premium publishers and it’s why the initial bizdev discussions with SwagBucks occurred. But plugging the SodaHead technology, audience, and publisher network into Prodege’s sizable sales machine, it’s likely that these assets will begin to generate significantly more revenue.

Taking that a step further, Gorowitz explains that the average lifetime value of a SwagBucks user is orders of magnitudes larger than even the most premium CPMs that SodaHead can generate during a polling session. So if SwagBucks can use SodaHead’s polls to acquire new rewards users, while at the same time collecting valuable data on their tastes and preferences, it will become a highly valuable asset for the company.

“Probably the most exciting thing is the opportunity to delivering a great consumer experience,” Gorowitz says. “Users feel empowered when they can share opinions and benefit on experience and economic level from that. And SodaHead already has a bit of a gamification currency for top users that will be a natural segway for us to integrate our swagbucks currency. This is much more than a data play.”