Free Gifts Websites, Completing Offers, Referring Friends.

The phenomenon of referral marketing has recently swept the U.S. by storm, allowing customers to receive highly sought after free gifts, through what is essentially an advertising website (known as a referrals website). Customers are required to encourage others to sign up to the referrals site in order to receive their free item, thus promoting the website and generating advertising revenue. The system is relatively new to UK shores, but already it is starting to have a similar impact here, with a steady influx of new UK referrals sites offering everything from Ipods to laptops.

Referrals websites are affiliated with a number of sponsor sites (Lovefim DVD rental, for example). Each of the sponsor sites advertise offers on the referral site, and a credit is received in return for completing one of these offers. Upon registering with the referrals website customers are required to complete one of these sponsored offers in order to activate their account. Customers are then required to refer a number of other people to the site; those who sign up are termed 'referrals'. Referrals who go on to complete a sponsored offer gain the original customer a credit and once the customer has gained enough credits in this way, they are sent their free item.

The key to the referrals system is that the referral website is paid by the sponsor for every customer who clicks on and signs up for a trial offer with that sponsor. So if someone signs up for a Lovefilm free trial through PS3 giveaway, PS3 giveaway will receive X amount of money from Lovefilm in the form of a commission. When this person then goes on to refer 13 other people to PS3 giveaway (and if each of the 13 people sign up for a free Lovefilm trial), then PS3 giveaway will receive payment from their affiliate sponsor for each of these 13 people, plus the original referrer. The result is that the referrals website receives sufficient funding to send the customer their free gift and to operate the referral site.

This system is a very clever and cost effective way of making money by directing traffic towards sponsors, with the direct benefit that the customer receives a share of their advertising revenue in the form of a free gift.

Affiliate Schemes, Commissions, And How The System Works.

The concept of advertising commissions, more commonly known as affiliate marketing, is not a new one in internet marketing. Many individual websites offer affiliate schemes, paying other websites to promote their goods or services. There are also a number of marketing companies, such as Tradedoubler, Affiliate Window and Commission Junction to name a few, which act as a middle man by hosting a large number of affilliate schemes from different websites. By using marketing companies such as these, it becomes easier for those promoting their goods/services (the publisher) to manage their accounts, whilst at the same time allowing those who wish to advertise products (the advertiser) to consolidate all of their affiliate partnerships into one account.

Most sites along the lines of Tradedoubler allow advertisers to join for free (or for a very small fee), allowing websites/blogs of all varieties to earn money by advertising products. Free gifts websites choose those offers which give the highest commissions, therefore maximising the revenue generated when members complete these offers. To put things in perspective, Lovefilm (through Tradedoubler) offer their affiliates £17.50 for every person referred who partipates in the 14 day free trial. A site such as PS3 Giveaway, who require 14 offer completions (the person who signed up, plus 13 referrals), would therefore earn £245.

Given that a Playstation 3 retails upwards of £400, it might seem that PS3 Giveaway would be operating at a loss. The first thing to bear in mind is that wholesale prices are significantly cheaper than retail prices, and it is likely that the larger free gifts websites obtain their goods wholesale. Whilst the wholesale price might still be higher than the £245 earned, it is also important to note that many people will not manage to refer the number of people required for their free gift, in which case PS3 Giveaway would earn the commission for all of these referrals, without having to ship any products. So, for example, if someone gives up at 8 referrals, when 13 are required, PS3 Giveaway will earn £140.

If only a percentage of the people who sign up for a free gift actually receive one, then the referrals website will earn a significant commission from accounts where offers were completed, but no gift shipped. That is why it is important to choose your referral site carefully, for example either by choosing one which offers a number of gifts starting from a low number of referrals, or by choosing a free gift which requires an achievable number of referrals. An Ipod shuffle from Ipods Giveaway, for example, requires only 2 referrals - something which most people should be able to achieve.