Turning your social graph into money

TreatFeed pays you and your friends to spread the word about stuff you already like. So what’s not to Like?

Every time you “Like” something on Facebook, several things happen. One is that your friends know just a little bit more about you, and may discover something new that they like too. Two, Facebook also knows a little bit more about you, and uses that information to drive advertisements and enhance its revenue. Three, a puppy dies.

[ See also: Facebook's China Syndrome ]

OK, I’m kidding about the puppy. But number one and two are true. Social recommendations are rapidly becoming the engine that drives online ad revenue. The idea is that if you Like something, your friends might also like it – making that Like far more effective (and valuable from a $$$ perspective) than a mere ad.

That’s why Google added its Plus One (+1) scheme to search results, and why new CEO Larry Page has ordered all of his gMinions to get social or get packing. Contextual ads are so 2007; social ads are where the big bucks are.

A new startup launching this week has a slightly different idea about who should benefit from your social recommendations. TreatFeed believes that when you recommend a product or service and one of your friends ends up buying it, you deserve a slice of the revenue pie.

TreatFeed is built around the idea of affiliate ads – the kind beloved by bloggers that gives publishers a small percentage of every sale that happens when someone clicks through an ad on their site. The difference is that when you or one of your friends buys something via TreatFeed, they split the affiliate commission with you and your friends.

Here’s a hypothetical example. Say you join TreatFeed and sign up via the site for a Netflix subscription. Let’s say TreatFeed might collect $10 for that signup as a commission. Just for signing up you’d get 34 percent ($3.40) back off your purchase.

Let’s say a friend of yours whom you invited to join TreatFeed signs up for Netflix. They’d get $3.40 off the purchase, and you’d collect $1.

Now a friend of your friend joins TreatFeed and signs up for NetFlix. They would get $3.40, your friend would collect $1, and you’d pocket 30 cents.

A friend of the friend of your friend signs up? You’d still get 20 cents.

Under the TreatFeed scheme, your “Social Tree” can be up to four generations wide, with an unlimited number of friends in each one. Every time one of them makes a purchase via TreatFeed -- even if you didn’t recommend it -- you collect something.

As an aside, this is now the second Web 2.0 service I’ve written about that bears more than a passing resemblance to multi-level marketing schemes. (See “Yoholla: Privacy worth paying for?”). One more and I’m  going to officially declare it a trend.

Now for the caveats. (You knew this was coming, right?)

You don’t collect a dime until you’ve got at least 30 friends in your first generation. Until then you just collect points, which can be exchanged later for goods and other discounts, which at press time TreatFeed had yet to identify.

Once you’re in someone’s first generation of TreatFeed friends, you can’t be in anyone else’s first generation. (You can, of course, have your own posse of first-generation peeps.) And the more people you have in your Gen1, the more money you will ultimately make.

That suggests that aggressive types will try to sign up as many people as quickly as they possibly can in order to maximize their revenue. If this service actually takes off, I envision a mass of bot-generated TreatFeed spam.

Affiliate marketing has a reputation for being just a tad sleazy (sometimes very sleazy), and has been a primary driver of spam and adware in the past. If there’s money to be made, the scammers will find a way.

The big caveat for me of course, is that a) if you use TreatFeed a lot, it will have an extensive history of your purchases over time, and b) it collects a fair amount of other information via its Facebook app. What happens to all this data? TreatFeed's original privacy policy reserved the right to share this information with "carefully screened marketing partners." After I contacted TreatFeed asking them to clarify what this meant, company veep Scott Roback assured me TreatFeed has no plans to share personal information with third parties and that it's in the process of modifying that policy.

Will TreatFeed be the next Groupon or just fade into the ether like so many other startups? Your guess is as good as mine.

I’m not a big shopper, so you’re not likely to make much off of me if I’m in your TreatFeed tree. (My wife, on the other hand…) But it could be a nice way for some people to put a little money back in their pocket instead of Zuckerberg’s. And the puppies will thank you. 

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