Revenue-Share Model Turns Consumers Into Marketers

Revenue-Share Model Turns Consumers Into Marketers

by Laurie Sullivan, Friday, October 2, 2009, 6:53 PM

Peer2 has introduced a platform that pays members for spreading the word. The platform operates on the premise of peered marketing. Consumers become the marketers, and in exchange, earn points redeemable for merchandise.

The company operates on a cost-per-click (CPC) revenue model, 25 cents per engagement. Impressions are free, according to Joey Caroni, co-founder of Peer2, an online "marketing-endorsed" platform that advertising firm Creative Asylum invested in.

The business model relies on the theory that peer endorsements increase click-through rates. "We're not charging brands when someone posts content," Caroni says. "We only charge the brand when someone clicks on the content."

When someone becomes a Peer2 member, they are assigned a URL to embed in blogs or any of the supported social network sites, from Facebook to LinkedIn to Twitter. Signing up and delivering the content -- from video games to personality quizzes -- via Peer2's platform earns the member points.

The specific member URL identifies them. If someone takes a brand's link and embeds it on a blog, Peer2 can identify the blog site as well as the assigned person. Today, the brands participating include Ducati, Energie and Miss Sixty.

The earned points are redeemed for gifts through a white-label catalog of items. Peer2 purchases the items from Amazon.com and has them shipped to the person participating in the program. The program -- which launched about one week ago -- has about 2,000 members, but Caroni believes that will grow into the millions quickly.

"Each member generates about 10 engagements per week," Caroni says. "These are not impressions, but rather people clicking on the links that members post to interact with the content. On Facebook alone, people share something like 250 million pieces of content each day."

Caroni will also rely on search engine optimization (SEO) to build its member list. Google's PageRank algorithm is based on credible inbound links to the site. If there are 100,000 members posting Miss Sixty links, that's 100,000 people posting inbound links to Peer2. Those inbound links, in theory, should shoot Peer2's ranking to the top of the page one search list.

The same should work for the brands that participate in Peer2's programs. The challenge is getting people to embed the links and thinking about marketing, Caroni says.

Forrester Research Principal Analyst Lisa Bradner believes Peer2 management understands the challenges related to reaching people in social networks. "Everyone says, 'Okay, I have fans on Facebook, but what should I do with them now?'" she says. "It's a way to empower fans to work for you, but Peer2 needs to realize social networks are not an advertising medium first and foremost. So, the way the company manages the service will become very important."

Peer2 will have to walk a fine line to figure out how to take advantage of exposure in social networks without blowing the system, Bradner says. "That's the challenge -- whether it comes from a brand or a friend, inauthentic, or coming to you from every person in your social network 24/7 -- because at some point people will say, 'Enough! Go away,'" she says. "It's potentially interesting, but has to be very well managed."

Caroni points to the power of consumers who influence the premature closure of a theatrical movie by tweeting negative comments on Twitter. Katty Lein, analyst at Customer Insight, calls it the "Twitter Effect," saying Hollywood blames the site for the "severe drops in box office revenues in recent movies such as Sacha Baron Cohen's 'Bruno.'" The theory asserts that instant mini-reviews on opening night can make or break a movie's gross as early as the day after, according to Lein's post at Digital Connections.