Peter Kafka

Recent Posts by Peter Kafka

Watch an Ad, Make a (Virtual) Buck

You don’t really like ads–but you don’t hate them. And you really like Farmville.

So SVnetwork has a proposition for you: Take a quick break from the virtual farming game, click through this Toyota ad and you’ll get free credits to buy more sheep. Or whatever.

If this sounds familiar, there’s a good reason: It’s similar to the “offers” programs that generated so much controversy for Farmville publisher Zynga last year.

But there’s a big difference here: Consumers aren’t asked to sign up for anything more binding than a Facebook fan page. And generally, SVnetwork’s advertisers are happy if surfers just agree to soak up some brand advertising.

SVnetwork has done 100 campaigns like this, for big advertisers like Apple (AAPL), Disney (DIS) and Microsoft (MSFT)–that’s an example of a Bing campaign above. And CEO Jay Samit, who came to the start-up after stints in the digital divisions of Sony (SNE) and EMI Music, thinks the company is onto something. It might be.

Right now, the two big display ad strategies on the Web are:

  1. Target Web surfers by tracking their online behavior, and hope that doesn’t freak them out too much, and/or…
  2. Run ads at ever-increasing sizes–blotting out the whole page, if you can get away with it–and hope that doesn’t annoy them too much.

SVnetwork’s seems like a pretty good compromise: Consumers opt in, and they know they’re getting a reward at the end. They might even generate warm feelings for the advertiser, and/or decide to share the ad with their pals via Facebook.

Zynga still runs offers, by the way, though it insists it has become very picky about the advertisers it works with, and that the offer dollars make up a small slice of its revenue.

And people familiar with the company say that offers generate more money for the game company than SVnetwork’s spots do. Advertisers pay something in the $0.50 to $1 range for each user who clicks through, while a Netflix (NFLX) may still pay Zynga north of $20 for each successful offer. But it’s possible that the ads will eclipse offers down the line.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work