Sebastien St-Laurent is a software engineer for the Microsoft Game Studios and author of several technical books. Read about my work and life.

Saturday, August 20, 2005

Free Ipods... The lowdown and my idea...

In my previous blog, I've posted extensively about my experience doing some of the free gift sites such as FreeIpods.com.

Although, I have received both an ipod and ipod shuffle for free, I have still to receive my PDA from PdaTech4Free.com. Now, the news is that the site is closing because they are not profitable. So this prompted me to try and understand why and take a look at their business model.

On all those sites, the idea is to complete a sponsor offer and to refer a certain number of people to the site in order to receive your free gift. So I decided to do some investigation to see why many of the home brew sites are closing down.

Taking a look at the sponsor offers on these sites, it seems that the the website gets an average of 20-30$ per completed offer. In the case of FreeIpods, you need 5 referrals, meaning that they earn about 150$ for each free gift completed. But even with a wholesale discount, they probably still are about 100$ short for each ipod they ship.

So how can they make money? All these sites run on the assumption that a good percentage of members joining will complete a few referrals but will not manage to get the five needed to get their gift. But recently, many people have formed groups, trading referrals and joining conga lines. Meaning that the ratio of users went up, reducing the overall profitability of most sites.

Being somewhat of a business man and liking the fun aspect of such sites, I've decided to create my own but changing the approach slightly so that I'm at least guaranteed to break even and maximize the number of free gifts given. Introducing RewardLadder (http://www.RewardLadder.com)

Right now, I'm starting with a free ipod site, but will expand to more free gifts as membership grows.

Ladder_Ipod_120_60.gif

The concept of the site is similar to other. Sign up, complete offers and refer friends. But the difference lies in the fact that you earn points for every offer you (and your referrals) complete. At the end of each month will take revenue from our advertisers and send free gifts to members with the highest point number first.

This doesn't mean you need to complete multiple offer, simply that you and your down line must be active to get to the top of the pack. In other words, the more you contribute, the quicker you get your gift. In addition, since gifts are allocated based on advertiser revenue, we can maximize the number of gifts while staying profitable.

4 Comments:

Blogger Shaun Bedingfield said...

Could you provide a way to search for orders we might want to use without angering sponsers? Maybe make it a ladder and a portal at the same time.

Top sponsers I'd like to see..

A technical bookstore or a regular bookstore like Amazon

Maybe an online technical library subscription like Safari(O'Reilly)

More computer parts places like Newegg..

A place that sells music

4:40 PM

 
Blogger Shaun Bedingfield said...

Another question.. Should points decay or rewards be based on monthly points rather than overall points?

If rewards are just based on overall points, there is little incentive for new members to join because older members will have a large stockpile of points and new members will have to contribute for a while before they start getting rewards.

4:49 PM

 
Blogger Sebastien St-Laurent said...

Guess, I need to make something more clear on RewardLadder. Essentially, its one gift per account so once you get it, you essentially "fall off the ladder" letting lower scored members to move to the top.

As for the first question, we are paid for completing purchases not for clicking. So searching the sponsor's sites, will not "anger" them. Will definetly look in to a better "categorizing" of offers, and see what can be done about a more extensive listing of sponsor products.

10:37 PM

 
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