On Incentive Offers in Facebook, the truth lies somewhere in the middle

My old boss Michael Arrington has made headlines over the weekend when a video of him going mental at OfferPal CEO Anu Shukla at Friday’s Virtual Goods Summit in San Francisco emerged online.

Michael’s gripe seems to be that users of free Facebook applications are duped when they sign up for services in return for not having to pay cash for Facebook game goodies. What should have been a reasonable argument about some deceptive advertisers in the industry naturally broke down when Michael basically accused Zygna, OfferPal, and seemingly Netflix of defrauding users…oh, and for good measure he accused Facebook of being complicit.

Anu Shukla responded in kind, going hard against Michael’s accusations. According to Michael, “Shukla went on a tirade, calling my points “shit, doubleshit, and bullshit” (yes, really), but never really addressed the points,” which is a little like the pot calling the kettle black: what the hell did he expect after he basically got up and said that what her company did made them scammers? I would have thought Michael would have learned by now that not everyone rolls over and takes it when you criticize them in public or private, and I’m case in point.

(continues after video)

Taking away the venom of both, there’s truth from both sides. Michael is right in that some offers are at best dubious, at worst a full blown scam. But likewise to suggest that the only thing these businesses trade on, or to suggest that all incentive offers are a scam ignores that good legitimate lead based advertising provides, not only to application developers, but to those who rely on advertising across the board. Not all lead based advertising is evil just because some advertisers are.

The unknown from me, and I’d note Shukla touches on it, is how many of these dubious ads are delivered automatically as part of a network, vs a complicit action on behalf of OfferPal and others to show them. If you want an excellent example of automation, check out Quadzilla’s post on the issue, where he notes that against the same post on TechCrunch appeared a “make $1000 a day” ad…likely one of those get rich on Google scams that have been going around this year.

The solution

In recognizing that at least some of the ads shown by these companies could be defined as “scam” like (as opposed to all or even a simple majority), the better solution isn’t attacking someone at a conference, but lobbying for legislative change or legal intervention that targets the advertiser to begin with.

What surprised me with my Australian hat on is that the ad examples on TechCrunch could be legal to start with, because they wouldn’t be in Australia (and if they’re showing these ads to Australian’s, they’re in deep trouble.) The Australian Competition and Consumer Commission (ACCC) has taken action against similar ads on TV and elsewhere (one recent example) where the disclosure was small to non-existent…on the basis of “false and misleading and deceptive conduct.”

If consumers in the United States are viewing ads of a similar sort, shouldn’t this be a case for the FTC or similar? and if the law doesn’t back that, shouldn’t it be amended to provide that sort of consumer protection?

If Michael is truly passionate on the subject (and watching the video I believe that he is) he’d be better off calling on the FTC to act and not just simply attacking female CEO’s for Friday sport.