Old is New Again
Every so often, new information changes our perspective. Every so often, some new bit of data comes along that causes us to take pause and reconcile what we thought we knew about an area with what we now know. It usually comes in the form of some revelation about an area which you thought you knew. For some people, their first discovery of email did this, or simply using a web browser. If you went to college during the Internet age, you most likely didn’t experience any of that paradigm altering until the much ballyhooed and poo-pooed Web 2.0 came into play. It deserves its name though, as it forced many of us who just finished making sense of the way we thought the web worked to how it can now work. Take Scribd.com, for example, which means we can now upload almost any document and have it embeddable for all to read. Sometimes, though, the difference a Web 1.0 business and a Web 2.0 idea just comes down to timing. What we’re seeing now are a plethora of ideas that people tried and failed, or tried and IPO’d and failed, etc. four to eight years ago but that today have found a new life under a new name and slightly different implementation. One of those we came across recently, and it produced that same moment of bewilderment and that same several days trying to figure out what it seemed the rest of the world already has. The thing is, we didn’t expect that moment to occur with incentivized marketing. Perhaps we shouldn’t be surprised though.
You could easily think that incentivized marketing as most know it has run its course. Only a handful of companies still operate actively in the space, thanks to consolidation, legislation, tightening inventory, and many who consequently shut their doors or transitioned their business model to something else. The amount of money earned by promoting "Free" offers has declined year over year for the past two years at least. Given the years of success with marketing free products – on display, search, and email – you could easily assume that the free product space invented the incentivized marketing space, but it didn’t. The use of the hot gadget simply provided the hook that leveraged the rather sophisticated infrastructure that many companies built for tracking user activity on offers and applying the credits toward the applicable item of interest. It’s like the technological version of playing games for tickets and using the tickets to redeem a teddy bear. Except using this platform you can modify the prize easily. The trick, as the companies that built these systems noticed, was attracting the user, and that’s what ultimately disrupted online incentivized marketing. Instead of those operating in the space being known for their technology or their platform, they became known for their marketing methods, and it led to good companies, like MetaReward, giving up on the space.
Throughout all the changes, one thing has not changed, user behavior. Users still want things, and they will frequently use irrational behavior in order to obtain them. Think back to the amusement park scenario, Jillian’s, Dave & Buster’s, or any place where you can play games that earn tickets based on your score, and where the number of tickets you have determines the prize. Talk about not working like the rational world. Try going to an electronics store and their asking you for two to five times retail. But, throw in flashing lights, hoops, balls, and a healthy dose of near misses and greater rewards if you try again, and all bets are off. It’s just like gambling and really closely related to the competitive drive. The "free ipod" style offers didn’t necessarily tap into this behavior. They leveraged an equally powerful impulsiveness, but it creates the same level of urgency that we allow to override our logical side, one that doesn’t have a competing emotion, not until after the fact. The difference between the free offers and the games, is in many ways analogous to the difference between Web 1.0 and Web 2.0. In the former, actions happen on an individual level; whereas, in the latter, actions happen in a social setting, that is they are influenced by the people around you. A friend won’t serve as a motivating force for you to sign up for an iPod, but your friends, will motivate you to spend that extra money trying to come out as King of the Tickets.
It’s too bad in many ways that MetaReward couldn’t make it until today, because they might just be powering the new wave of incentive marketers, but they shut down before Facebook could take off and offer the digital equivalent of Dave & Busters. For all the talk about monetization on social sites, such as News Corp’s admission that monetization of this inventory doesn’t happen easily, they must not have installed certain non-communication based applications and checked out their monetization model. If they had, they would see a whole new use of incentive marketing and speaking to some of the companies playing the MetaReward 2.0 you’d fall flat on your face at learning of the revenue numbers. We’ll see if the companies powering this round fair better than the companies powering the last round. As we saw then and might see now, owning the users keeps you valuable in this not-that valuable of a user space. The savvy ones will do what the savvy ones did then, build it in house. It didn’t take these guys that long to build it, and it won’t take their marketers long either. That still doesn’t stop human behavior and help make these leads actually valuable to marketers. At least with Dave&Busters or similar the cash used to get the tickets is still cash to Dave & Busters. They only arbitrage the price of the product and the ticketing process. Completing an offer for some benefit to your Facebook application might leverage the same urgency, but it doesn’t trade in the same currency.
