Virtual Goods Summit ‘09: What an ending!

Yesterday’s 2nd Annual Virtual Goods Summit was, by all accounts, a wild success. Organizers Charles Hudson and David Sachs once again brought together a who’s who of the industry’s best for a full day of informative, thought-provoking sessions and the most valuable networking opportunities of the year.

The single most talked about moment of the show, however, came at the very end, after the panel on Payments Infrastructure for Virtual Goods was opened up to questions, when one prominent tech blogger decided to chide practically the entire industry — payment providers, publishers, even the platforms — for what he described as unethical behavior.

The gist of his comments were that (1) payment providers were knowingly allowing children to steal their parents credit cards in order to purchase virtual currency or complete ad offers, (2) advertisers were being scammed into accepting leads (and oftentimes duplicate leads) that had no real interest or intention on following through on the offer, (3) that the game developers and even the platforms themselves were complicit in this behavior because it helped them generate considerable revenues, and (4) that the offers themselves are misleading.

Because our own Anu Shukla represented the only offer-based payment platform on the panel, she was in the best position to address the blogger’s claims. Since this blogger will no doubt use his platform to continue railing against the industry, we’d like to use our own blog to recount Anu’s points and help set the record straight.

1. In defense of the accusation that the industry knowingly allows children to steal their parents credit cards in order to purchase virtual currency or complete ad offers:

As Anu pointed out, this happens in such small quantities that it is hardly worth talking about. Of the millions of transactions Offerpal and other payment providers conduct every month, less than one-tenth of one percent of our customer service inquiries come from parents disputing charges on their credit cards of which they were unaware. Besides, this behavior is hardly unique to the gaming or virtual goods industries. If children are going to “borrow” their parents credit cards, they are just as likely to do so for material goods as they are for virtual goods. Why one tech blogger feels this problem is unique to the virtual goods industry or somehow a reflection on the payment providers who power it is entirely unclear. It should also be pointed out that Offerpal, like many others in the industry, is very proactively fighting fraud at every turn. As Sean Phinney, Playdom’s VP Business Development, pointed out in the press release announcing our suite of security and fraud prevention services, “As social games provide more immersive entertainment, player adoption of virtual currencies will only grow. Given our commitment to delivering a great player experience, Playdom sees this as a high priority issue. We commend Offerpal’s leadership putting safety measures in place to protect our players.”

2.) In defense of the accusation that advertisers are being scammed:

The blogger used the example of gamers signing up for offers from major advertisers such as Netflix in order to acquire virtual currency, only to immediately cancel their accounts and sign up again in order to game the system. For starters, the blogger couldn’t have picked a worse example. Netflix is perhaps the most sophisticated direct marketing advertiser on the Internet. To think that they don’t have a system in place for de-duping leads is ludicrous. And for those advertisers who don’t de-dupe themselves, we have our own de-duping system. Similarly, to suggest that the leads are so insincere and the lead quality so poor that advertisers are being “scammed” is just as erroneous. The truth is that Offerpal works with powerful, big-brand advertisers including not just Netflix but Disney, the New York Times, Discover Card, DirecTV, Blockbuster, Nielson RetRatings, Comscore and thousands of others who are quite happy with the quality of leads we generate for them. It’s not like this is an entirely new channel for them. Many of our advertising clients have been working with us for two years now and have done nothing but increase their orders every month. In fact, most advertisers are finding that the lead quality is by far better than they get through other channels such as affiliate programs, email, co-reg and the like. As we’ve pointed out in a previous blog post Offerpal is 100% committed to generating high quality leads for our advertising partners, and we’ll let the renewing of advertiser insertion orders speak for themselves. If advertisers were not happy with us as a source of consumer acquisition they would have turned us off long ago, since they are the final authority on whether the metrics meet their program goals. With hundreds of millions of ad spend at stake, it is naive to assert that they don’t have appropriate measurement tools in place.

3.) In defense of the accusation that developers and platforms are complicit in allowing this to happen:

Here, the blogger singled out Facebook, stating that they turned the other cheek to all of this “scamming” and “fraud” because they generate such incredible revenues from all of the game developers who pour their money into advertising on the platform. We can only assume that the blogger doesn’t follow Facebook’s policies very closely, or he would be aware that the company is extremely aggressive in enforcing its stringent advertising guidelines, which strictly prohibit anything misleading, unclear or scammy. In fact, as part of their platform changes announced just last week, the company announced that they were doing away with their Application Verification program because from now on they expect all applications — not just verified apps — to conform with these highest of standards as set forth in their Principles and Policies.

4.) In defense of the accusation that our offers are misleading:

The terms for completing every offer in our system are spelled out very plainly and very clearly in the language in our I-frame and on the advertiser’s landing page. We have a full team who constantly scour the offers to make sure they are in full compliance with our policies, which parallel Facebook’s policies against misleading copy or creative. Any landing pages that do not clearly spell out the terms of the offer are instantly removed and the advertiser is banned from our system. Are there some offers that are of higher quality than other offers? Absolutely. Is it our job to police the lower quality offers and remove them from the system, or at least make sure their terms are clearly spelled out? Yes, and we have been working very hard, in conjunction with Facebook and other platforms, to do exactly that.

It is unfortunate that someone from outside the industry decided to use the pulpit offered by the good folks at the Virtual Goods Summit to rail against those on the inside. The good news, however, is that his doing so gives us the opportunity to address these issues. This is, after all, still an emerging industry, and as it grows larger and larger it will attract more and more attention, and it is quite possible that many others outside the industry who do not necessarily know better might share the blogger’s sentiments. But for those on the inside — the payment providers, the publishers, the advertisers and the platforms — we are able to discern the misconstrued perception from reality.

We, personally, would like to thank Anu Shukla for so emphatically and enthusiastically dispelling the myths. Perhaps a sampling of Twitter references to the confrontation sum it up best:

• @TinaTranT: oh my, what a lively end to #VGS09 ! @Arrington and Anu Shukla of @OfferPal throw down. The lady is impressive.
• @milhaus12: just gained a helluva lot of respect for anu from offerpal. #vgs09
• @mitali: An[u] shukla puts arrington in his place!! #vgs09

 

Yesterday’s 2^nd Annual Virtual Goods Summit was, by all accounts, a wild success. Organizers Charles Hudson and David Sachs once again brought together a who’s who of the industry’s best for a full day of informative, thought-provoking sessions and the most valuable networking opportunities of the year.

The single most talked about moment of the show, however, came at the very end, after the panel on Payments Infrastructure for Virtual Goods was opened up to questions, when one prominent tech blogger decided to chide practically the entire industry – payment providers, publishers, even the platforms – for what he described as unethical behavior.

The gist of his comments were that (1) payment providers were knowingly allowing children to steal their parents credit cards in order to purchase virtual currency or complete ad offers, (2) advertisers were being scammed into accepting leads (and oftentimes duplicate leads) that had no real interest or intention on following through on the offer, and (3) that the game developers and even the platforms themselves were complicit in this behavior because it helped them generate considerable revenues.

Because our own Anu Shukla represented the only offer-based payment platform on the panel, she was in the best position to address the blogger’s hyped up claims. And boy, did she ever. By the time she was finished, the crowd erupted in applause, clearly proud that she had defended the industry so well against these uninformed accusations.

Since this blogger will no doubt use his platform to continue railing against the industry, we’d like to use our own blog to recount Anu’s points and help set the record straight.

1) In defense of the accusation that the industry knowingly allows children to steal their parents credit cards in order to purchase virtual currency or complete ad offers:

As Anu pointed out, this happens in such small quantities that it is hardly worth talking about. Of the millions of transactions Offerpal and other payment providers conduct every month, less than one-tenth of one percent of our customer service inquiries come from parents disputing charges on their credit cards of which they were unaware. Besides, this behavior is hardly unique to the gaming or virtual goods industries. If children are going to “borrow” their parents credit cards, they are just as likely to do so for material goods as they are for virtual goods. Why one tech blogger feels this problem is unique to the virtual goods industry or somehow a reflection on the payment providers who power it is entirely unclear. It should also be pointed out that Offerpal, like many others in the industry, is very proactively fighting fraud at every turn. As Sean Phinney, Playdom’s VP Business Development, pointed out in the press release (http://offerpalmedia.com/offerpal-secure.php) announcing our suite of security and fraud prevention services, “As social games provide more immersive entertainment, player adoption of virtual currencies will only grow. Given our commitment to delivering a great player experience, Playdom sees this as a high priority issue. We commend Offerpal’s leadership putting safety measures in place to protect our players.”

2) In defense of the accusation that advertisers are being scammed:

The blogger used the example of gamers signing up for offers from major advertisers such as Netflix in order to acquire virtual currency, only to immediately cancel their accounts and sign up again in order to game the system. For starters, the blogger couldn’t have picked a worse example. Netflix is perhaps the most sophisticated direct marketing advertiser on the Internet. To think that they don’t have a system in place for de-duping leads is ludicrous. And for those advertisers who don’t de-dupe themselves, we have our own de-duping system. Similarly, to suggest that the leads are so insincere and the lead quality so poor that advertisers are being “scammed” is just as erroneous. The truth is that Offerpal works with powerful, big-brand advertisers including not just Netflix but Disney, the New York Times, Discover Card, DirecTV, Blockbuster, Nielson RetRatings, Comscore and thousands of others who are quite happy with the quality of leads we generate for them. It’s not like this is an entirely new channel for them. Many of our advertising clients have been working with us for two years now and have done nothing but increase their orders every month. In fact, most advertisers are finding that the lead quality is by far better than they get through other channels such as affiliate programs, email, co-reg and the like. As we’ve pointed out in a previous blog post (http://myofferpal.wordpress.com/2009/04/30/offerpals-commitment-to-our-advertising-partners/) Offerpal is 100% committed to generating high quality leads for our advertising partners, and we’ll let the renewing of advertiser insertion orders speak for themselves. If advertisers were not happy with us as a source of consumer acquisition they would have turned us off long ago, since they are the final authority on whether the metrics meet their program goals. With hundreds of millions of ad spend at stake, it is naive to assert that they don’t have appropriate measurement tools in place.

3) In defense of the accusation that developers and platforms are complicit in allowing this to happen:

Here, the blogger singled out Facebook, stating that they turned the other cheek to all of this “scamming” and “fraud” because they generate such incredible revenues from all of the game developers who pour their money into advertising on the platform. We can only assume that the blogger doesn’t follow Facebook’s policies very closely, or he would be aware that the company is extremely aggressive in enforcing its stringent advertising guidelines (http://www.facebook.com/ad_guidelines.php), which strictly prohibit anything misleading, unclear or scammy. In fact, as part of their platform changes announced just last week (http://developers.facebook.com/news.php?blog=1&story=326), the company announced that they were doing away with their Application Verification program because from now on they expect all applications — not just verified apps — to conform with these highest of standards as set forth in their Principles and Policies (http://developers.facebook.com/news.php?blog=1&story=326).

It is unfortunate that someone from outside the industry decided to use the pulpit offered by the good folks at the Virtual Goods Summit to rail against those on the inside. The good news, however, is that his doing so gives us the opportunity to address these perceptions. This is, after all, still an emerging industry, and as it grows larger and larger it will attract more and more attention, and it is quite possible that many others outside the industry who do not necessarily know better might share the blogger’s sentiments. But for those on the inside — the payment providers, the publishers, the advertisers and the platforms — we are able to discern the misconstrued perception from reality.

We, personally, would like to thank Anu Shukla for so emphatically and enthusiastically dispelling the myths. Perhaps a sampling of Twitter references to the confrontation sum it up best:

· @TinaTranT: oh my, what a lively end to #VGS09 ! @Arrington and Anu Shukla of @OfferPal throw down. The lady is impressive.

· @milhaus12: just gained a helluva lot of respect for anu from offerpal. #vgs09

· @mitali: An[u] shukla puts arrington in his place!! #vgs09

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