Slightly Shady SEO | Blackhat is Back, Baby.

No respectable SEO promotes Pyramid Schemes. Whitehat or blackhat. Whitehats because it’s ridiculously scammy and dirty. Blackhats, because we know that we could make more money by cutting out the middle man, and promoting on our own.

But either way, let’s take a look and figure out why these are so profitable, and so common in the more naive areas of the web.

The Modern Day Pyramid Scheme

In todays world, many pyramid schemes are hard to identify, since they’re not quite as “scammy” as they’ve been in the past. A typical example(no names, since I don’t feel like a cease and desist order) of one will provide you with “points” for completing offers. These points can be traded in for prizes, typically targeted at the under-25 crowd, like video games, and digital cameras. Now, they know which ones of those offers can be completed without spending money. The number of points you can get from these will always be lower than the number of points you need to have for a prize. They then offer you another option: recruiting others. By recruting other, active members, you can get points without spending money. This is the option taken by 99.9% of their users. Oh yes, and normally, 1 point will equal about 1 dollar for a purchase.

Why They Profit

They always make sure that if someone completes enough offers to actually recieve a product, the “offers” and “surveys” they have completed made the company at least as much money as the product+shipping costs. That way, if miraculously EVERYONE completes enough offers for a product, they break even. Now, most people will NEVER complete enough offers to get a product. For the upper tiers, maybe 1 in 10 at best. However, as the offer expands, it reaches critical saturation: everyone that wants to sign up has. Now, this is the largest stage, so it renders the largest profit. Here’s how it breaks down, assuming each person refers an average of 2 people.
Level 1: 5 Person
Level2: 20 People
Level3: 180 People
Level4: 540 People
And so forth and so forth. Now bear in mind, a lot of times you get a percentage commission of the points these people earn. Normally about 20%. And most people will never exceed 10 points. So if you need 50 points for a video game, this method, although it seems easy, will almost never stack up. One survey can be worth as low as .40 points. At that rate, ignoring the surveys you yourself complete, you need your referrals to complete 125 surveys. Now the people probably earn between $2-10 for each offer you complete. So if you manage to get that 125 completions, they have made between $250, and $1250 (minus the whopping $50 for your video game). Once all of those people are finally signed up, chances are saturation has been reached, and none of them will be able to refer anyone. By the bottom tier, (in one program I had the privilege of seeing the admin panel for, there were about 1800 people(on the bottom tier), and 98.5% of the people were below half way to their goal. Most had not logged in in about a week, signifying the fact that they had given up. Off the offers they completed, about $12 per person was made on average.

Why it’s a Scam

First off, I hate it when someone makes THAT much money off something I’m putting effort into. Secondly, it’s something that actually relies on the average person getting ripped off, and never getting a product. Secondly, keep in mind: The Person who Owns the Website Controls the Offers so if the program is large, and people are actually getting close to completing the offer, the owner is fully within his rights to cancel ALL available offers, and give no new ones. So everyone is completely dead in the water. And yes, this frequently happens. Beyond that, it takes forever for word to spread if the program never sends the products. Another common occurance. Really, nobody wins these things. Ever. Except the owner. Imagine him rolling around in his bath tub of cash, and your e-mail box drowning in spam. Makes ya pissy, eh?

Why are these Legal?

Well, they narrowly dodge the legal bullet. There’s a reason they offer products. If it was based solely off referrals, and referring was the point of the scheme, there would be some pretty decent legal implications. But by shifting the focus, they’re just dirtballs, even if they are legal.
-XMCP
PS: I’m going to be out of state for a few days on business. I’ll try and update, but I’m not sure how successful I’ll be. No matter what, I’ll be back by Thursday. I’ve got a few more blackhat entries saved up in my Wordpress Queue, I’ll try and put the finishing touches on them.

PPS: I’m also writing some code for all of you. If it works out, brace yourself, it’ll be a bit badass. A bit really badass.

Posted on Sunday, January 20th, 2008 at 2:16 pm in the category:Randomness. Comment RSS 2.0 feed. Comment it , or trackback this post.