Within Mafia Wars you’re able to use “Godfather points” to level up quicker, transferring them into topping up energy or gaining additional skill points – you get a certain amount when you start the game and can buy points using Paypal.

In addition to buying the points, you can also go and complete some CPA offers (taken from Affiliate networks) and depending on the offer and payment from the network, different points are available. So basically a glorified incentive site…

So now you have the background we’ll go onto what has happened in the past few weeks.   The Virtual currency community had a conference (Virtual Goods Summit) and Mike Arrington (Techcrunch Owner/Editor) went off at the now ex-ceo of Offerpal – a Virtual currency platform that work with the game developers.

His argument was that “most” of the offers available to the end users to get these points were “scammy” – using an example of a Mobile offer that charges a subscription of $9.99 per month; whilst I’ve never been a fan of mobile offers like this they tend to be heavily regulated these days and do normally display the details of the subscription in the terms and conditions, however these are typically ignored by the end user who is just signing up to get the free points.

The other point example that Arrington uses is Netflix (the US equivalent of Lovefilm) – saying that the quality of the users will be very poor and that they will look to get around their policy of one payout per user.

The Techcrunch article covers off all his points in more detail and is worth a read.  You can also see a follow up post by Offerpal which covers off most of the points raised.

Personally I believe that Arrington has raised some good points – but most of them have been raised badly.

Are kids stealing their parents credit cards or mobile phones and signing up for these offers?  Perhaps a small amount are, but I wouldn’t think that this is a widescope issue – the wider problem with ringtone style offers is that they are not clear enough about the costs and perhaps the developers (or the aggregators such as Offerpal) should be careful about which merchants that they work with in this sector.  Typically these offers are not scams but customers are often stupid and don’t read the terms like they should.

The Netflix example in my mind shows that Arrington doesn’t really understand the Affiliate / CPA market – companies like this are fully aware of what incentive sites are and work with them to ensure that the CPAs that they are offering work for them and are typically very analytical to ensure that this provides them with a positive ROI – Arrington seems to suggest that they don’t de-dupe correctly and states:

Netflix sees an overall lowering of quality and pays less for leads.

I just don’t buy in to that statement above – whilst incentive sites in general may affect over CPA advertisers it’s more the cookies that they are potentially taking rather than lowering the overall payment from them.  Whilst I don’t have much knowledge of the Netflix campaign that’s certainly the case with the Lovefilms of the world who understand incentive sites and their customers very well.

So what now?

All said and done the questions that Arrington has asked have indeed started to change the landscape – Facebook (and the game developers) have taken note of the comments and are now enforcing the FB Advertising Guidelines; meaning that a number of the offers have been removed; Gambling clients, Sweepstakes, Mobile offers, etc are no longer able to use this as an advertising channel for them.

It will now be interesting to see if these guidelines are continued to be enforced (as the guidelines have been out there since July 09) as a lot of the offers removed, such as the bingo ones, are big revenue earners for the game developers and companies such as Offerpal.