What To Do About Deceptive Offers In Social Gaming
The latest brouhaha in social gaming revolves around the industry use of “offers” to fuel consumer purchases of virtual goods. Today’s social gaming offers are an evolved form of ye olde incentivized lead gen and co-reg. 
Both of these Web marketing tactics have been around for many years and have a checkered but lucrative history. The checkered bit coming, as it does for many ad formats, from black hat practitioners who push the limits of propriety and end up poisoning the well to some degree, pissing off consumers, and reducing the utility of the format. As I noted this Spring, the writing has been on the wall for social game offers for quite awhile:
“The offer ecosystem that many social games rely on is on thin ice. Incentivized lead-gen imploded once in the Web 1.0 days and the seeds for Implosion 2.0 are in the wind. The offer providers are well aware of this however and are working heroically to ensure that their advertisers continue to see value by reducing rates on offers that become targets of abuse. This dynamic writ large over time will result in erosion of payout rates to game operators. Successful games will be those that have a strong direct payment strategy in addition to offers.”
How to combat black hat leadgen in social games has never been much of a secret. Dan Felter, Chairman of Online Lead Generation Association, put it pretty succinctly back in 2007 - “If you choke off the distribution, you choke off the problem,” he said. Not so coincidentally, one of the most requested features from game developers when offers first came on the scene was the ability to remove specific offers they did not want put in front of their players. This feature has since been added by many of the offer providers and likely enabled Zynga’s quick action over the past weekend wherein they purged the most deceptive offers from their games literally overnight.
While the recent policy changes from Facebook and MySpace are steps in the right direction, there is a definite enforcement problem. My sense is that the major players in the social gaming community want to build an enduring industry and grok that it is not in their long-term best interest to scam their own players or the advertisers that underwrite the offers ecosystem - see below diagram from Gambit. 
Ideally, all developers would take this to heart and weed their offer streams with equal diligence. But, there will always be cases where the temptation to improve conversion to pay will win out over best intentions and good judgment. Best to remove the temptation.
How to do that exactly is an interesting challenge. Small game developers are unlikely to have the resources to devote to monitoring offers. The social networks have stepped into the gap from a PR perspective by threatening developers but also do not want to take on the chore of actively policing the offer stream. In my opinion, the offer providers are uniquely positioned to shoulder this burden. To do so however, they will likely need a transparent structure that aligns their collective interests with that of the platform holders and consumers. One way to do this might be a certification and enforcement process wherein an accredited third party (probably the social networks but maybe an industry org) would certify offer providers periodically. The social networks could then require that app developers use a certified offer provider. Complaints of black hat practices would be brought to the accredited third party and quickly adjudicated in the open. Punishments could include fines, de-certification, etc. Given the revenues involved and ease with which developers can switch offer providers, a new conservatism would likely be born as the losses from de-certification would be a powerful deterrent. Developers could use offer providers without looking over their shoulders or worrying that they were somehow inadvertently abusing their players. Just one idea. There are others being put forward as well. Personally though, I think it makes sense that the offer providers should own this issue as part of their value add.
As always, feedback and tweets are most welcome.
-Shanti
UPDATE 1, Nov. 8, 2009: Facebook shut down Zynga’s most recent game, Fishville, for failure to comply with its offer-related policy. Zynga has responded by removing offers from ALL its games. A certification regime for offer providers is sounding better and better…
UPDATE 2, Nov. 25, 2009: Facebook has created safe/banned lists on its wiki from which developers can choose advertising and offer partners. This is similar to the certification idea in the above post except that the adjudication process is not public. Gambit for example is on the banned list and there is speculation as to why them versus larger players like Offerpal and SuperRewards.
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