Incentive Marketing - Better Practices for Incentive Marketers

Better Practices for Incentive Marketers

by Editor

After thinking that the incentive space might have slowed down, last week's analysis showed that if anything the opposite has occurred. Despite the competition on display, ongoing challenges with email marketing, and restrictions from the search companies, incentive marketers continue to drive millions of new signups monthly. They cover more areas of interest than ever before and have evolved from just spur of the moment offers to a full-fledged marketing platform. They can use this platform to monetize almost any type of user intent, from an interest in lawn tractors to the Simpsons Movie. It's a powerful system upon which many in the direct response have come to rely, and given the lack of true user consideration, it could spell trouble for incentive marketers and especially the companies who use them.

The trouble would come from two sources, the FTC, who has had incentive marketers on and off their radar for several years and bad press for public companies. I received, via email, a whitepaper covering online lead generation from Yun Kim of Pac Growth Equities that dedicated a section to this very topic. He writes, incentive traffic "has always been under close watch of the regulators, and our checks indicate that there remains a significant risk around potential regulatory action. If and when the regulatory action is taken, we believe that it will have a profound impact on all lead gen vendors in the customer acquisitions space that use incentives to drive traffic, whether or not they are guilty of any frivolous activity." Several public companies run ads there, e.g. Netflix, but it makes up such a small portion of their revenues that they could drop incentive marketing and recover quickly. The same does not hold true for those who operate the incentive promotion paths.

Quite a few of the largest incentive marketers, in this case companies that run and promote incentive offers do not answer to the public markets, but one in particular does - Valueclick whose Hi-Speed Media and Webclients make up a larger than might be guessed percent of its EBIDTA. Any regulatory action then would impact them. Public and certainly institutional investors simply don't understand what incentive marketing entails. Perhaps they have heard of the free ipod like offers, but I'd bet they haven't. Instead, they understand that ValueClick makes money better than others do in some places. What would happen if they actually went through the process? We did that and the results had us thinking they could do better. So what could Valueclick et al do to make the experience better? We present three. They aren't quite best practices, so we call them better practices.

1) Cash-Out Option - one of the offers we reviewed last week not only required a user to complete approximately 10 offers; it required two other unique households to do the same in order to get the prize. If for some reason, (go figure) only the one individual completed the offers, they would give you $50. That they offer some compensation sounds decent, but considering the level of effort that the user went through - six weeks of waiting and upwards of $250 in bounty to the incentive site; it seems quite low. Instead of offering a fixed, and frankly low amount, only when people complete all offers, do what Netflip used to do and allow users to take what they have earned and leave. You don't have to offer them the full value, but if you gave them a 50/50 rev share on the bounty and let everyone know they could quit at any time and still receive some compensation, they just might. If it doesn't increase overall user value, it goes a long way to making the experience more user friendly.

2) "Survey" Says: More Skip & Less Pre-check - we know that the incentive platform revolves around monetization, and a key to that monetization involves breakage. It involves users giving up after completing some offers; another form involves users who complete offers they felt helped them earn the good they wanted only to later realize they did not. In both cases, users ultimately abandon the process, leaving all CPA offer earnings with the incentive marketer. Our first suggestion, allowing users to cash-out at anytime helps alleviate one form of this disparity. Reducing the complexity of the survey process helps with the other main one. The second suggestion applies to the arduous, and in some cases, incredibly confusing survey piece where offer completion doesn't benefit the user at all, which is why the "survey" often only gets longer and more difficult as companies look to squeeze more money per submit. I think companies get stuck in doing what they have and avoid testing something easier on the user, thinking it can't work; our goal is to prove that easier on the user can mean more money. Perhaps we get rid of the survey 100% and turn it into a very low value incentive option. This way people fill it out knowing it won't help them really achieve their goal and we increase the average quality of conversion because those who do fill it out have a genuine interest. It works better than trying to tell an advertiser their offer is not-incentivized only to find out from those who call them that users can't distinguish between the two.

3) Save progress / bookmark / return later - incentive marketers know how to get people to enter the flow, and judging from experience, they sure know how to get them to leave. In the end, we wind up only encouraging fraud as people learn to use pre-paid credit cards to fill out trial offers and game a system they feel games them. It's a Catch 22. Unless they read the fine print, they won't know how to get what they came for, but incentive marketers don't want those who read fine print. What can we do? We can make it simpler; we can let them really know what's happening, and encourage them to come back by giving them options to save progress; let's make it easy for them to come back, to bookmark certain steps, flag certain offers, etc. While incentive marketing is decidedly Web 1.0, in this case a little Web 2.0 might go a long way.

Don't let our criticisms imply we want to restrict incentive marketing. If anything, we want to see it continue to thrive as it has today but in a manner where one party doesn't gain at another's expense, or in this case ignorance. Let's change our game, take a page from iWon, and prove that we can find the happy middle ground for advertisers and users.

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Editor
DM Confidential
www.dmconfidential.com
e: confi@digitalmoses.com

Share your Comments

The most successful companies in the space will come back to the realization of going with lower high-value incentives ($25-50 gift) where the control is solely with the individual that is completing the form. Completing anything more than 3 offers, or worse yet, recruiting that user into a salesperson to get family or friends involved in the same long process is extremely frustrating. While it will benefit the incentivized marketer in the short term, the long term affects will come into play when advertisers realize they have upset customers and their average lifetime value is in the toilet. It makes more sense to quickly find that middle ground where the customer is extremely pleased, the advertiser is happy with the long tail and increased revenue, and the incentive site is happy with revenues and can command a higher CPA for purchases due to increased quality. Unfortunately, I think it will take a while to get there because these longer term thinking incentive players will need to compete for market inventory from the short-term players. Only time will tell - hopefully the short-termers won't ruin a great model for some great long-term potential players.

Posted by: Walter Long Date: April 06, 2007
URL: www.adbrew.com
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"Completing anything more than 3 offers, or worse yet, recruiting that user into a salesperson to get family or friends involved in the same long process is extremely frustrating. While it will benefit the incentivized marketer in the short term, the long term affects will come into play when advertisers realize they have upset customers and their average lifetime value is in the toilet."

While I agree with that sentiment which is especially true in the mortgage and re-fi or insurance industries. More often than not the end purchaser of the leads has no clue about the origin of the lead or how many times it has been sold previously. This is where a fresh CPA 2.0 approach with full visual transparency will pave the way for larger brand advertisers involvement.
The weak won't need legislation to kill them off, it will happen because of the competitive nature of this business.

Posted by: Russell Rockefeller Date: April 13, 2007
URL: http://www.ExtravagantMedia.com
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