April 19, 2011, 9:00 AM — 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.