In the last post I provided some background on offers and the confusion they may cause. I also pointed out the potential for scams. In this article, I’ll put a little more focus into the complexity of the offer systems and show another example of how confusing offers could lead to complaints. For the sake of this argument, the values used in my examples are chosen for effect and are not accurate for any specific offer system.
Previously I described an offer for a free Walmart gift card. The offer awards 21 points for participation in and promises to earn you a $1,000 Walmart gift card as well. But what are the economics behind the offer? How is it fiscally viable for a free survey or trial to result in you getting 21 points that would actually cost you $5 to purchase? In this case, it seems too good to be true, and it is. There are two views of the systems. First, the positive view: cost of acquisition.
In this model, when a company knows it typically takes $3 in direct and indirect advertising to acquire a customer they might decide to spend an amount less than $3 to acquire a new customer. For example, an offer may yield a $9 a month subscription to Netflix, at say a $2 cost of acquisition, and a subscriber who may or may not use the service. Typically, the offer would yield a trial customer, costing Netflix $2 in marketing, plus the gross operating costs to support that subscription, but no continuing subscription. For illustrative purposes, let’s say the trial included four discs, sent and returned, at a cash flow cost of $0.80 per disc (due to an estimated cost of $0.40 shipping each way for each disc) for a total of $3.20. The non-converting trial user cost is then $5.20 (or $2 + $3.20). Again, these numbers are estimates that may be off, but have some anchor to the real costs of the offer.
Then, there’s the negative view of the system in which advertisers get fleeced and users get scammed.
This model is comprised of two components: in point A, users take offers with no intention of spending any money with the advertisers, and (B) unknowing users sign-up for subscriptions without intending to. To illustrate point A, I encourage users to briefly visit the sites mafiawarstrategy.com or their sister site mobsterstrategy.com, both which cater to players of mafia/mobster games by Zynga, mentioned in the first part of this series, and Playdom, another large social gaming company. On these sites, and sites like them, you can find instructions on how to pick and choose offers, which offers are free, which offers to avoid due to spam, and how to manage your offers to insure you don’t get charged a penny.
My favorite part of the posts at these sites is that they carefully explain how to spot and avoid confusing offers that may never result in points. Worried about getting scammed? Well, these sites tell you what proof you need to get your points, the minimum actions needed to get your points, and what happens if you don’t do enough or don’t have proof. Be warned that you can’t access the content of these articles unless you do an offer. Of course, I make no guarantees on the quality of the offer that you’ll be shown. And you should know that the ad network for the sites claims that publishers are paid $1 per action/offer completed.
So if you’re ready, go here. An image of the page you’ll see is below:

Note the phrasing on the page from the ad network: “These DO NOT require credit cards or trial signup offers”. Remember this screen for later in this article. If you click through or at least believe what I’m saying, you’ve already noticed that the article is all about getting points for free and not sending any money to the advertisers.
Now, on to point B and the risk users run for getting scammed. Let’s start by looking at the ‘free survey’ selections.

When you choose the IQ quiz you’re given a series of questions. The two images below display the survey start and the first question. The IQ quiz seems harmless enough, and even better, I’m promised 21 points for answering a few simple questions.
Now, as you advance to the last quiz question, you get used to quickly clicking answers and never scrolling down. The questions are simple and nicely framed and there is no need to look below the frame of the quiz. Once you reach the last screen, below, by rushing through the ten easy questions you’re faced with an innocuous phone number entry box and the prompt: “Enter your phone to get your results”.

The blackboard frame in the picture provides a psychological cue to stay focused on the quiz and NOT scroll down to the bottom of the page. So if you don’t scroll down and just enter your phone number, you would have just subscribed to a $4.99/month mobile phone service (see the small print). If you don’t enter your phone number, you would still have completed the survey, right? The only reason to enter your phone number was to get the results. Now, if you try to exit the survey, another page pops up trying to entice you to do another survey:

And if you close that, you end up on the article where you started, but the blocking overlay has changed:

You completed the offer by taking the “no credit card/no trial” quiz, but you did not take the final step to get your results and subscribe to the $4.99 monthly service. By the letter of the offer, you should have earned a reward; access to the article, or your 21 game points.
But the reality of the situation is that the ad network has to pay the publisher, so unless the user subscribes there’s no money to sponsor the offer. Users need to pay somehow, and these offers depend on people not reading the fine print and not scrolling down the page.
So what just happened? A user wasted his time, did not get his points, and the advertiser got nothing since the user failed to subscribe. And even if the user did subscribe they would likely unsubscribe immediately, as instructed by the article behind the offer wall.
Confused? Most people are. These offers have lead to various tech magazines citing revenues over $300 million for these types of offers, while related reward offers have been cited at $1.4 billion in a recent senate report.
So with 100 million teens and tweens looking for a leg up as well as ‘points’ to help them in games, do you really believe that they all read the fine print? Or that they will be able to find the fine print in an easy and non-confusing manner? It doesn’t take a high IQ to figure out the answer to those questions. And that’s somthing the scammers will try to take to the bank.


Excerpt from:
Virtual Goods, Offers, and Scams: Part 2