business

Evite Wants You to Linger Longer

The Web invitation service is adding features like restaurant reviews to make surfers hang around -- and boost ad revenues

By Christopher Palmeri

If you haven't already gotten one, an Evite for a Halloween party may soon land in your e-mail box. It's the biggest holiday of the year for the popular online invitation service. This year Evite expects its users to send out over 4 million invitations -- decorated with witches, tombstones, ghosts, and such -- to over 100,000 scary parties.

Most online companies would kill for that kind of traffic. Thanks to all those invitations, Evite, a part of Barry Diller's giant InterActiveCorp (IACI ), has some 66 million e-mail addresses on file. The site generates 3.1 million visitors per month, according to Web tracker Nielsen/NetRatings.

YOUR CYBER CIRCLE.

  One thing Evite doesn't have, however, is profits. Its president, John Foley, declined to reveal Evite's revenues, but he says it's just breaking even from an earnings standpoint. Most visitors, he concedes, spend just a couple of minutes on the site. And they aren't looking to buy pricey airline tickets or jewelry. They click on the invite, get the event details, and -- like a partygoer with a busy night of commitments -- quickly shuffle out the door.

So on Oct. 14, Foley launched a new service that he hopes will both draw more people to Evite and get them stay a little longer. Eight months ago the outfit began asking visitors to make recommendations about bars and restaurants in their cities. Evite is now offering detailed information about local events and places to go. The content is fed in part by Evite's sister site Citysearch, but it's also sprinkled with candid reviews from more than 1 million Evite visitors.

Evite has an added twist. Based on prior party invitations, it figures out who your 350 closest friends are. Their event and restaurant reviews are given top billing. And visitors can shoot those friends a quick e-mail to ask more specific questions. Foley thinks those recommendations are worth more than ones from professional reviewers. "It's changing our business from an invitation tool to a destination for social planning," he says.

SOCIAL NICHE.

  Just as important is the goal of generating more advertising revenue, since Evite doesn't sell anything to consumers or charge user fees. Foley thinks the new content will attract advertising from local businesses. Eventually, he'd like the service to include recommendations on everything from doctors to babysitters. And by getting people to stay on Evite longer, Foley things he can do more promotions with national advertisers like Hewlett-Packard (HPQ ) and Bacardi.

Some industry participants like what they see. "It's a great idea," says Nate Elliott, associate analyst for online marketing and media at Jupiter Research. "If they can get the users to come rank their favorite places, this could be useful on an ongoing basis." But there are skeptics as well. "Evite is a nice way to get people to your birthday party," says Scott Heiferman, chief executive of Meetup.com, a site for organizing community groups. "I don't know what RSVPs will have to do with picking plumbers."

Evite's latest moves have the distinct flavor of what has become a popular niche on the Web -- social networking. Sites such as Friendster and Tickle generate millions of visitors, mostly by just providing a place for people to get together and discuss everything from politics to motorcycle parts. Other friend-based recommendations sites are also starting up. For example, Judy's Book, based in Seattle, recently got funding. The challenge for all such sites is finding a way to generate a steady stream of visitors that proves attractive to advertisers.

STAFFING UP.

  That's been Evite's problem since birth. The concern was founded in 1998 by two young Stanford University engineering graduates, Al Lieb and Selina Tobaccowala. In the ensuing years, the pair raised some $38 million in venture capital and, at one point, boasted 75 employees. Diller acquired the business three years ago for a tiny fraction of its former valuation.

Today the business, based in the decidedly nonposh Koreatown section of Los Angeles, has a 25-person staff -- up from a nadir of just 8, and that headcount could continue to grow if Evite's recommendations prove as popular as its party invitations. If not, it'll mean yet another Halloween with lots of parties -- but little candy in the bag at the end of the night.

Palmeri is a senior correspondent for BusinessWeek in the Los Angeles bureau

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