Trendsurfing: 'Free gadget' marketing (The Times)
By David Rowan
Psst - fancy a free iPod Shuffle? Well, how about a Panasonic flat-screen TV or an IBM notebook computer? No strings, guv, honest - they won't cost you a bean. All you need do is succumb to the latest US marketing craze that is about to hit Britain.
It is called "incentivised affiliate marketing", and it relies on networks of websites with names like Cameras4Free and FreeDesktopPC to promote third-party commercial services. Hundreds of these sites have proliferated since last summer, promising anything from Mac Mini computers to new Prada handbags in exchange for your commitment to sample an advertiser's products. Sign up to try a DVD rental service or a new credit-card, and encourage a bunch of friends to do the same, and in return you are promised free goodies worth hundreds of pounds. You can even drop out of the trial once you have received your expensive free gift.
It all sounds suspiciously generous, the sort of unsustainable giveaway that can only be another internet scam. Yet the marketers behind these sites claim to have hit on a viable economic model. With conventional advertising, they say, it can easily cost £40 or £60 for a bank or a cable company to acquire a new customer. But if that advertiser can attract the attention of half a dozen potential clients for the price of an iPod, then everybody in the chain stands to benefit.
Gratis Internet, a Washington DC-based marketing firm that started giving away iPods last June, claims that advertiser demand is so great that it is actively preparing a UK launch. In eight months, it says its FreeiPods.com website has given away 11,000 iPods in the US, worth around £2 million. "There's a natural scepticism when people see anything for free," admits co-owner Peter Martin. "They just need to be educated. It's simple: we're making money from advertisers who are looking to acquire new customers. The money for these goods is coming ultimately from those advertisers."
Gratis began five years ago giving away condoms in exchange for clicking on internet ads. Now it offers flat-screen TVs, digital video recorders and other hi-tech gear paid for by partners including AOL and Visa. To qualify for the television, you and eight people you sign up must "complete an offer", such as acquiring a Citibank credit-card. The desktop PC requires 10 referrals, the iPod just five.
Does it work? Gratis gave The Times details of more than a dozen customers who claimed to be the happy owners of free iPods. It took Jenny Heisler, at George Washington University, around ten weeks to sign up five friends and receive her gift. To qualify, Heisler had to join a BMG Music club for a year, initially buying seven CDs. "I am not sure how long I plan to continue my membership," she says, "but in the end, it will cost me less than purchasing the iPod."
Not everyone's experience has been quite so positive. Some rival services have proved fraudulent, failing to send promised gifts or using individuals' personal details to bombard them with spam. Gratis, too, has faced its share of bad press, most recently after temporarily losing a privacy certificate for allegedly "violat[ing] promises involving the protection of children's information" (Gratis says this was a misunderstanding).
But with tens of thousands of users now signing up each week, Peter Martin insists that the giveaway model is the way forward. "Incentivising is where marketing is going," he reflects. "Nowadays, people expect something for free in return for their custom."
(The Times, March 12 2005)
Psst - fancy a free iPod Shuffle? Well, how about a Panasonic flat-screen TV or an IBM notebook computer? No strings, guv, honest - they won't cost you a bean. All you need do is succumb to the latest US marketing craze that is about to hit Britain.
It is called "incentivised affiliate marketing", and it relies on networks of websites with names like Cameras4Free and FreeDesktopPC to promote third-party commercial services. Hundreds of these sites have proliferated since last summer, promising anything from Mac Mini computers to new Prada handbags in exchange for your commitment to sample an advertiser's products. Sign up to try a DVD rental service or a new credit-card, and encourage a bunch of friends to do the same, and in return you are promised free goodies worth hundreds of pounds. You can even drop out of the trial once you have received your expensive free gift.
It all sounds suspiciously generous, the sort of unsustainable giveaway that can only be another internet scam. Yet the marketers behind these sites claim to have hit on a viable economic model. With conventional advertising, they say, it can easily cost £40 or £60 for a bank or a cable company to acquire a new customer. But if that advertiser can attract the attention of half a dozen potential clients for the price of an iPod, then everybody in the chain stands to benefit.
Gratis Internet, a Washington DC-based marketing firm that started giving away iPods last June, claims that advertiser demand is so great that it is actively preparing a UK launch. In eight months, it says its FreeiPods.com website has given away 11,000 iPods in the US, worth around £2 million. "There's a natural scepticism when people see anything for free," admits co-owner Peter Martin. "They just need to be educated. It's simple: we're making money from advertisers who are looking to acquire new customers. The money for these goods is coming ultimately from those advertisers."
Gratis began five years ago giving away condoms in exchange for clicking on internet ads. Now it offers flat-screen TVs, digital video recorders and other hi-tech gear paid for by partners including AOL and Visa. To qualify for the television, you and eight people you sign up must "complete an offer", such as acquiring a Citibank credit-card. The desktop PC requires 10 referrals, the iPod just five.
Does it work? Gratis gave The Times details of more than a dozen customers who claimed to be the happy owners of free iPods. It took Jenny Heisler, at George Washington University, around ten weeks to sign up five friends and receive her gift. To qualify, Heisler had to join a BMG Music club for a year, initially buying seven CDs. "I am not sure how long I plan to continue my membership," she says, "but in the end, it will cost me less than purchasing the iPod."
Not everyone's experience has been quite so positive. Some rival services have proved fraudulent, failing to send promised gifts or using individuals' personal details to bombard them with spam. Gratis, too, has faced its share of bad press, most recently after temporarily losing a privacy certificate for allegedly "violat[ing] promises involving the protection of children's information" (Gratis says this was a misunderstanding).
But with tens of thousands of users now signing up each week, Peter Martin insists that the giveaway model is the way forward. "Incentivising is where marketing is going," he reflects. "Nowadays, people expect something for free in return for their custom."
(The Times, March 12 2005)
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