The Rise of Incentivized Marketing in Facebook Apps

This article delves into the emerging trend of incentivized marketing within the realm of Facebook apps. It examines the business model of alternative payment platforms and the role they play in app monetization.

• The author explores how performance-based advertising, often associated with lower-brow offerings, has intersected with the higher-brow world of social media.
• He discusses the concept of “surplus inventory” in social media, particularly within app traffic, and how this inventory is being monetized by companies like OfferPal Media, Super Rewards, Peanut Labs, Gambit, etc.
• The article highlights the significant revenue streams generated by these alternative payment platforms, exceeding even Facebook's monetization efforts in some cases.

Incentivized Marketing: History Repeats?

The article draws parallels between the current incentivized marketing landscape within Facebook apps and the earlier wave of “incentive promotion” ads, such as those offering free iPods. Both models rely on users completing offers to earn rewards.

• The author acknowledges the boom-and-bust cycle that characterized the original incentive promotion companies and questions the long-term viability of the newer “Incentivized Marketing 2.0” model.
• He raises concerns about the potential for low-quality leads and the risk of advertisers becoming disillusioned with the model.

Understanding the Types of Offers

The article breaks down the various types of offers used in this ecosystem, including:

• Per Lead (CPL): Offers where users provide their information in exchange for rewards.
• Per Sale (CPS): Offers where users make a purchase to earn rewards.
• Mobile Subscriptions: Offers that involve subscribing to mobile services.
• Credit Card Subscriptions: Offers that require credit card information for subscriptions.

The author provides examples of such offers within the Lunch Money app, a virtual currency managed by OfferPal Media.

Conversion Economics: Analyzing Offer Value

The article dives into the economics of incentivized offers, examining the relationship between price per action (CPA) and the quality of leads generated.

• It highlights how the price of a lead or a sale reflects its value to advertisers based on conversion rates (e.g., leads turning into policies or subscriptions).
• The author uses examples like Netflix and IQ Challenge to illustrate the discrepancy between the value of rewards in virtual currency (Lunch Money) and their actual dollar equivalent.
• He points out that the exchange rate between virtual currency and real dollars doesn't always accurately reflect the actual economics of the offers, leading to potential for users to choose offers over paying real money.

The Quality of Traffic: Scenario A vs. Scenario B

The article discusses the ongoing debate about the quality of traffic generated through Facebook apps and alternative payment platforms. It presents two scenarios:

• Scenario A: Traffic quality is closer to the low-quality leads seen in the original incentive promotion space.
• Scenario B: Traffic quality is better and closer to true intent, potentially exceeding the quality of traditional incentive promotion traffic.

The article acknowledges that the results are mixed and that the overall quality is still being determined.

Traffic Blend and Transparency

The article examines the complexities of traffic sourcing within this ecosystem, where both direct and indirect relationships exist between offer platforms, advertisers, and CPA networks (aggregators of offers).

• The author notes that CPA networks often don't fully understand the quality of traffic coming from Facebook apps, so they distribute it cautiously to advertisers.
• He highlights the potential for conflict of interest as offer platforms may receive a particular campaign from multiple providers, leading to a "traffic round-robin" situation.
• The article raises concerns about the lack of complete transparency and the potential for advertisers to be unaware of the source of their traffic.

Standing Hypothesis: The Future of Facebook Apps

The article presents its hypothesis on the long-term viability of Facebook apps and incentivized marketing.

• The author anticipates a decline in pricing due to the high profitability of this model.
• He believes that the quality of traffic will continue to improve and will likely resemble Scenario B, closer to true intent than the original incentive promotion space.
• The article argues that the Facebook app ecosystem is unlikely to die out, citing the resilience of the incentive promotion industry and the unique features of this new model.

Saving Grace: The Value of Access and Location

The article highlights the key advantage that offer platforms possess: access to prime real estate within the social media landscape.

• It emphasizes the importance of location in advertising, as seen in the success of ad networks with strong inventory despite weaker technology.
• The author positions offer platforms as gatekeepers to this valuable inventory, allowing them to control and leverage app traffic.
• He predicts that these platforms will continue to evolve and adapt to changing traffic sources and advertising trends, securing their relevance in the growing social media monetization market.

Conclusion: The Future of Incentivized Marketing in Facebook Apps

The article concludes by suggesting that the future of Facebook apps and incentivized marketing is uncertain, but that the offer platforms possess the necessary assets and adaptability to thrive in the evolving social media landscape.

The article leaves readers with a sense of cautious optimism, acknowledging the potential for challenges but emphasizing the strategic advantages held by these platforms in the growing world of app monetization and social media advertising.