Last summer, a tiny Bahamas-based online travel agency named Travelzoo.com Corp. shook the marketing foundations of the Web. The company offered “free” shares of Travelzoo stock in blocks of up to 10 shares to the first 700,000 Web surfers who registered at its Web site. Registrants initially received an electronic credit for three shares and “earned” another share for each additional registrant who they referred to the site, up to a maximum of 10 shares. [FOOTNOTE 1]
The offer spread like wildfire. E-mail “chain letters” passed from person to person. An inaccurate “urban legend” sprang up among registrants that Yahoo! had done the same thing when it went public. [FOOTNOTE 2]In a matter of weeks, 700,000 Web surfers signed up at the Travelzoo.com Web site. As the number of visitors to the site increased, so did the site’s advertising revenue. For the quarter ending Sept. 30, 1998, Travelzoo.com reported its first profitable quarter ever. [FOOTNOTE 3]
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