eUniverse Buys Web Loyalty Marketer

Despite recent indications that the Web loyalty and sweepstakes space is proving a difficult arena, Web publisher eUniverse aims to become a player in the field, snapping up the assets of Los Angeles-based funBug.

Financial terms of the deal weren’t disclosed.

FunBug, which ceased operations in April citing market conditions, provided the back-end technology behind Web loyalty marketing campaigns — mainly, tracking distribution of its funBugs loyalty points, which serve as entries into weekly sweepstakes. funBug also provided a portal where Web surfers could register for deals and discounts and play games in return for points.

At the time of its closing, funBug executives said the company had been talking to “a few” companies interested in purchasing some or all of the firm. But since then, players in the loyalty marketing space like FreeRide.com and 24/7 Media have exited the business — FreeRide due to a lack of funds, and 24/7 Media by selling off its cash-losing AwardTrack unit — citing similarly difficult market conditions.

But Los Angeles-based eUniverse said it’s seeing nothing but benefits to its acquisition of funBug’s technology, which it promised it would have up and running across its network of Web properties in 60 days’ time.

It’s a proposition similar to that of iWon.com — which rewards users with sweepstakes entries for using the site and for clicking on advertisements. The plan is for eUniverse to promote funBug-powered loyalty programs to its users, on behalf of advertisers.

In addition, the publisher said the acquisition would benefit existing advertisers on its sites by increasing the amount of time users are likely to spend on them — and thus, the amount of time they’re exposed to ads. Furthermore, the company said it would boost advertising efforts by encouraging users with funBug incentives to opt-into email marketing from clients.

“FunBug fits perfectly into the diversionary entertainment offerings of our network,” said eUniverse chairman and chief executive Brad Greenspan. “From a business perspective, we expect the funBug platform will increase the activity of our user base, allowing more opportunities for our partners as well as eUniverse owned services to be promoted to our audience.”

But even iWon.com, the originator of the concept, has faced difficulties as of late. In May, the company revised its prize structure, opting to dole out more sweepstakes of lesser value, to save money in the long run.

“Nearly every business has been impacted in some way by the difficult economy,” iWon said in a notice to its users at the time. “While we’ve navigated through it with flying colors, running a successful Web portal is a long-distance race.”