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Freebie Sites Taking the Net by Storm
by Alexander LeBlanc
The first freebie site saw the light approximately four years ago. Since then,
millions of users have signed up for them and business owners have multiplied
their offerings a thousand fold. The industry continues to show tremendous
growth as browsers can't get enough of these sites and the people that run them
are capitalizing big time.
The basis of this business model is a simple one: "incentivized", or "forced
leads". Let's try and make those industry terms clear for the layman. It all
begins with online advertisers of the CPA variety. Advertisers in all shapes and
sizes offer a CPA or Cost Per Acquisition payout to affiliates that promote
their offers. When a user signs up for one of these offers, the affiliate makes
a commission.
Here is where the "incentivized" part comes in. The affiliate, in this case a
freebie site owner, shares this commission with the user that generated it. This
sharing takes many forms including gifts ranging form the original free iPod to
free Xbox 360s and just about anything in between. Cashback rewards have also
become increasingly popular and some users have made over $10,000 in easy money
just by completing various affiliate offers on freebie sites.
Beyond the opportunity to make free money or earn a gift, these sites have
something else working in their favor that make them spread like wild fire:
viral marketing. Word of mouth for these literally spreads like a virus, from
one person to their social network and so on. The reason for this is that
freebie sites offer rewards to users who refer new users.
On one side of the business model, users are required to complete one offer
themselves and refer a set number of friends to do the same so they can earn
their free gifts. On the other side, users earn a fixed cash bonus for every
person they refer to the site.
That's all well and good from the user's perspective, but what makes this model
so attractive to the business owners that run these sites? The simple answer is
of course money. Here is how these earnings break down.
In this first example, the site owner is offering a Video Ipod for eight
referrals. This means the user has to sign up to the site, complete one offer
and refer eight of their friends or family to do the same. Once this process is
complete, they receive their gift.
Here is the catch: 90 percent of users can fill an offer and refer one, two,
three friends. Then it gets hard and unless the user in question has a huge
social network or knowledge of how to get more referrals through forums or
advertising, it pretty much stops there. In this case, the site owner has
generated an average of $25 to 30 per completed offer and has not shipped a
gift. That's $25 to $120 in profit without doing a thing.
For this second example, the site uses the revenue share principle. When a user
completes an offer, they get 60 percent of the commission money. With thousands
of dollars in offers up for grabs, the site owner is pocketing 40 percent of
hundreds of dollars per user.
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