PerfSpot preps member marketing scheme, but will it work?

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PerfSpot is a MySpace-line social network which has rarely merited much mention, other than by TechCrunch UK last year when it was ranked as one of the UK’s fastest-growing social networking sites, beating Facebook at the time. Now the site, which claims 24 million members, is launching a word-of-mouth marketing service called Friendvouch. One can understand the desire to quickly monetise a social network in these tougher times. But is PerSpot poised to sow the seeds of its own demise?

Here’s the rub: social networks grew fast because they were effecively user generated, and trust oriented. The networks with few unique features just built as fast as they could. Perfspot – supposedly reminiscent of “Perfect Spot” – has built itself in that aggressive manner (see here or here). Others I’ve talked to say it’s really the kind of network where the aim is just to get an many ‘friends’ as possible.

An why did PerfSpot grow – in the UK a least – quite so fast? A PerfSpot’s spokeman tells me they have never spammed users, just that they offer the option to import users from Gmail, etc and they even have a customer phone number that is staffed live 24×7. “In a few instances, customers have inadvertently imported contacts and decided later to change their minds. In cases where people have contacted us with their decision, we have of course manually changed their account to prevent future emails from being sent,” he says.

Now PerfSpot plans to unveil a scheme called Friendvouch which essentially amounts to this: A Perfspot user subscribes to advertising offers, passes these on to their friends (pimp may be too strong a word, although it feels right), then sells… sorry, sends the details of those friends who are interested back to the advertisers. In return they get rewarded under the scheme. Friendvouch makes contact and vets the details and verifies the interest.

This sounds all very well in theory. My view is that it will start off innocently enough – but gradually you will realise that your ‘friend’ just keeps sending you these offers, not because you wanted them but because they will benefit if you respond. This is when the trust will break down in the network.

What’s PerfSot’s answer to this possibility of friend spam? They say Friendvouch makes contact to vet the details, but also verify interest and they’ve “capped” the number of contacts any subscriber can provided at the outset. So you can email 10 of your PerfSpot friends with these offers, and if some respond and their info is verified, then your “cap” is raised. Of course, if you start doing this a lot you’ll start getting unfriended pretty fast – I think the the whole system will becomes unworkable after that.

PerfSpot will be migrating its members to friendvouch in up to 3 million member “batches” over coming weeks.

As for Perfspot’s UK position, below is a chart illustrating Perfspot’s market share of UK Internet visits to HitWise’s Social Networking and Forums category over the last 12 months. It looks like the ‘fastest growing’ tag doesn’t hold much water, Hitwise’s Robin Goad tell me. The site’s market share of the social networking sector actually declined from 0.034% to 0.028% between October 2007 and 2007.

  • vrempire

    How long will be the lifespan of this application? It seems everybody now is copying the business model of the social web app.

  • wesley

    They got so big because they are using CPA affiliate companies to promote their site.. They pay (or paid) out $x per new signup to the site. Obviously alot of marketers promote(d) this offer.

  • George

    Network marketing is a very slippery slope. You really have to know what you’re doing. If done right, it could be extremely beneficial but a whole lot of room for error.

  • Alex Wilhelm

    I cannot describe how much I hate this. I almost left facebook under the original email/spam deluge when they launched their app platform. This would be worse!

  • Supreet

    Their idea of monetizing does not seems very appealing to me. I think its hard to generate substantial revenues this way.
    And as far as quick growth is concerned wesley has got it right and in addition I’ve seen their ads on adult forums alot

  • Derrick

    This is an expensive way of acquiring new users. Using money to lure friends in does come with a slight stigma.

  • FriendVouch: Word-of-mouth Marketing will one day kill social networks

    FriendVouch: Word-of-mouth Marketing will one day kill social networks…

    Perhaps FriendVouch should learn from the mistakes made by many greedy and unscrupulous internet marketers that have lost their businesses in the past. Here is a lesson for FriendVouch, never ever conduct aggressive marketing styles….

  • chance

    How are they creating revenue, just by selling ads. It doesn’t seem like it will have a sustained life, maybe they are hoping for a buyout!

  • JD

    This is the shadiest social network on the market with a horrible name and a even worse logo.

    Notice the large spikes and declines in their traffic. This is a definite sign of purchasing traffic.

  • Martin Edic

    This is a sad statement about the lack of innovation in building a solid business model for web 2.0 ventures- spamming friends for personal gain is a terrible revenue model. In social media, unlike traditional media, doing something like this can backfire in a big way. The negative buzz will likely put them out of business.
    I would like to see Techcrunch do a series on innovative revenue models now that we’re in an economy that will kill off any marginal ones.

  • Conrad Hametner

    I agree, this is friend spam. User generated recommendations work because they are passive. Users seek out the information. We all have “that friend” who abuses our trust. Back in the mid to late 90’s and early 00’s, they were the ones that forwarded every joke and chain email. Now they are the ones that go crazy with recommending friends or facebook applications. This “feature” could potentially ruin a social network, I hope facebook does not follow suit.

  • Frank

    No. Fucking. Way.

    The assumption must be that people are generally opportunistic, greed machines while simultaneously being grossly materialistic. This company has no vision whtsoever.

  • Ian Hendry

    This smells bad. I have never heard of this network even though I am in social media AND in the UK, but then I tend to avoid all those services that promise money for nothing and smack of MLM.

    I am keen to start seeing more Web 2.0 initiatives where there is enough value in the service that the guys beyhind it have the guts to charge. That will sort the wheat from the chaff — and quickly.

    Perfspot is less than chaff, as it knows it has nothing to offer except rewards for signing up and sponging off your friends. I am amazed and saddened in equal measure that they managed to find 24 million people that see their buddies as a dollar sign.

    Ian Hendry
    CEO, WeCanDo.BIZ

  • Maria

    If PerfSpot is a place where it’s a race to amount loads of ‘contacts’ (imaginary friends) then this community is built on a gaming mindset. The quality of connections would be low and the interests and needs of one’s network would be extremely fragmented. So how could an advertisement delivered by a loose contact be relevant and interesting and achieve healthy results for the advertiser? Perhaps targeting specific advertisements tailored to the mindset of the community could work such as games, viral videos, competitions, etc.

  • Korey Bachelder

    This has to be a bad experiment. Look at all the flack Facebook took for Beacon (which wasn’t nearly as in your face as this idea).

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  • John Adams

    Yes, it also helps that the CEO of this company, Hart Cunningham ran a fairly successful MLM called as well as

  • Josh Gray

    Though the spin of this article and the subsequent comments are quite negative, I’d like to thank everyone for weighing in, regardless. As a small point of fact, the enthusiasm for friendvouch at AdTech has really been overwhelmingly positive.

    One of the most important considerations here is this: the friendvouch system works only if the referrer acts with transparency and integrity. Spamming your friends isn’t a viable approach. What is viable is being up-front with the people you’re referring, extending offers to that that are truly relevant, and not being excessive. Likewise, from the advertiser’s perspective, this system works if that offers being extended are relevant and valuable.

    For our part, we’ve worked hard to design a system that protects people. Part of that involves the “cap” we place on the number of referrals that can be made. That cap is in place at the outset, and a cap always remains in place in some form, correlated directly to the customer’s performance. Additionally — though the article seems to take these steps out of sequence — friendvouch actually verifies the information, and the interest of the contact, BEFORE any information is shared with an advertiser. That’s a critical component to the friendvouch system.

    Lastly, we do in fact pride ourselves on being one of the few social networks that actually has a customer service phone number that is staffed 24×7. I think that’s one testament to the kind of value we place on our customers and our relationship with them.

    We’ve spent a good deal of time thinking this through, talking with others, and building a system we think will work from the outset. Obviously, we’ll make refinements as we go, as any responsible company would. In the meantime, we think this is a good way for influential folks to bring relevant offers to others and get compensated for it, provided the approach is honest and up-front.

    Thanks again for the feedback.

  • Mike Butcher

    Josh, the people at AdTech are enthusiastic because they are marketers, not users of PerfSpot.

    Yes, I may, as a PerfSpot user, use Friendvouch to send interesting offers to my friends “with transparency and integrity” but even if they are relevant I can guarantee that my friends would start getting annoyed by this. To act otherwise is to not be human.

    My view is that the “cap” you place on the number of referrals that can be made should start and end at zero.

    I really don’t think it’s going to work.

    However, if you users like it, then that’s fine by me. I just don’t think they will.

  • jas

    The world’s worst name for a social network what no one’s heard of……..i don’t know anybody on it…… should be renamed because that’s what it is a Multi level Marketing network but without the tiers…….None actually gives a toss about this site apart from making a few bucks,without the MLM this site would be dead..buta dolar a day keeps people alive in some parts of the world.

  • jas

    The world’s worst name for a social network what no one’s heard of……..i don’t know anybody on it…… should be renamed because that’s what it is a Multi level Marketing network but without the tiers…….None actually gives a toss about this site apart from making a few bucks,without the MLM this site would be dead..but a dollar a day keeps people alive in some parts of the world.

  • Jay Vaidya

    This sounds like a pyramid scheme you see in old-school cartoons.

    In the end, this is nothing more than turn people into glorified spammers. Although I acknowledge the creators of Friendvouch for their effort, Butcher is right, when people are openly benefiting from a transaction such as this, the trust isn’t there and the medium won’t prosper.

    They would have been better off offering the tool without compensation . Customers invested with the products will then voluntarily act as ambassadors, rather than losing credibility through self-interest driven promotions.

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  • sophia8

    They DO spam. The first I heard of them was this morning, when I found the following in my ‘please-deposit-spam-here’ Gmail account:

    Dell Computer Center
    to xxxxx
    Dell™ Laptop delivery receipt #469e-319G
    To: Member
    To receive your delivery, please click on or cut and paste:
    (snip rest)

    That URL took me to the Perfspot registration page. Spam recipe time, methinks…

  •;u=13140 Stymnnext

    hmm.. funny :)

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