TechCrunch Drags Social Gaming Into The Trenches
It started with Michael Arrington's post, "Scamville: The Social Gaming Ecosystem of Hell" -- which essentially laid bare accusations that behind the Mafia wars, the farms, and the Texas-styled poker lie affiliate marketing scams that sign users up for expensive things they don't need (which appear free at first glance) in exchange for in-game currency. The piece has since drawn a number of press releases, confessions of past misdeeds, and claims of having turned over new leaves. Execs were replaced. It's also created a bad taste in the mouth for larger advertisers considering the social games space.
There's an underlying issue of scale. Currently, ad inventory exceeds demand by credible advertisers in most of these markets. Excess inventory drives down CPMs, and publishers are stuck between a rock and a hard place. If they don't allow the more unsavory advertisers, it'll be much harder to turn a profit and remain competitive, and they'll just burn through their VC money. If they do allow the unsavory scams, it's going to turn off legitimate advertisers who might be interested in reaching the game's audience. It's the AdSense problem. No self-respecting brand wants to appear in the same spot as a "punch the monkey" ad.
It will be very interesting to see how EA monetizes Playfish. Playfish was one of the major players using fewer scams than competitors, and if EA can embrace advertising solutions and innovation as heavily as they've done in the core market, it could prove to be a shining example of best practices for the publishers.
Yet even big companies in gaming are succumbing to these types of scams. I recently placed a pre-order for a game at GameStop's site, and lo and behold, at the bottom of the page I was offered a "deal" of $20 off to sign up for a "free" month of what looked to be utter spam (which was $12 a month thereafter). Perhaps it's going to be a while until the space truly cleans up its act.