I am the CMO of a new social networking site (similar to that of myspace or facebook) but we are paying back 100% of our net profits to the users.

We launched our open beta at the U of M campus in Michigan. We are doing a Big Ten Promotional tour, along w/ Monster Energy Drink. We are passing our promotional cards out that give users a 500 point bonus for signing up. (Points are how we monitor how much profit sharing you are alloted). The top ten point earners during our beta round win an iPhone. the top point earner from each campus while we are there (two week period) also win an iPhone.

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Jay’s Answer: The problem that I see is that you’ll get people to sign up (to win a prize) but people will continue to use their default social networking site to communicate with their friends.

Focus on what will make your site better than your competitors, rather than simply getting sign-ups. That way you’ll grow your traffic, not just your membership.